Firm of the Future Symposium

On August 9-10 in San Francisco, Ron Baker and I will once again be presenting our Firm of the Future Symposium sponsored by Sage North America.

This symposium will be dedicated to the possibility that a professional organization can be run more effectively when it becomes a knowledge firm rather than a service firm. Creating such an organization is hard work and not for everyone as it requires professionals to think differently than they have in the past about what it is that they do.

Objectives

  • From a focus on revenue to a focus on profit
  • From a focus on capacity to a focus on capital management
  • From a focus on efficiency to a focus on effectiveness
  • From a focus on cost-plus pricing to a focus on pricing on purpose

Sage (Ed’s employer) has agreed to open a limited number of spots for firms that are not partners of Sage. If you are interested in joining us, please send me an email and I can get you registered. The price is $2,500 per person and comes with a 100 percent money back guarantee!

View the Firm of the Future Trailer

 

One of the more interesting stories to emerge from our previous FotFS, was that of Peter Coburn of Commercial Logic. They are publishers of, you guessed it, time and billing software. Peter underwent a conversion of sorts and posted a terrific article on it.

Building the Knowledge Worker Organization

Today, I welcome a guest post from Gary Crouch of CS3 Technology in Tulsa, OK. He wrote this article in the wake of the Firm of the Future session at Insights 2010.

Gary’s thoughts are flashes of brilliance and will take some effort to embrace and even more effort to fully understand and implement. His most profound insight is, “My function then as the leader of a team of knowledge workers is to attract intellectual capital to my team.”

Thanks, Gary for allowing me to post this.

Leader: someone who guides or directs others

Team: a number of people organized to function cooperatively as a group

Sometime back I read a book or article describing how the knowledge worker can and should maximize their own potential by playing the part of the hired gun (unfortunately I cannot locate the article to give credit where credit is due). For the knowledge worker, the author explained, it is in their best interest to manage their career path by hiring out to the highest bidder at every opportunistic step. This could be accomplished by promotions within the current organization or moving through various organizations that have an increasingly higher need for his/her services. Either way, the number one priority is to promote their skills and experience to the marketplace.

As I have personally benefited from implementing many ideas shared by Ed Kless in my business, I attend as many of his speaking sessions as possible. At Insights 2010, I heard Ed describe our employees as knowledge workers, our most important assets, who walk out of our doors each evening. As I had heard this before, my tendency was to get depressed thinking about just how fragile the culmination of my life’s work, our business, really has become. Then, a thought occurred to me and everything came into focus.

Earlier in the day, we reviewed the building blocks for a successful knowledge worker firm as the following formula:

Profits = Capital Management * Effectiveness * Pricing on Purpose

My thoughts focused on the capital management element of the equation. Capital is made up of various resources that the knowledge firm must manage on a continual basis. These resources include the following:

Financial Capital = Operating capital and cash flow

Intellectual Capital = The ability to maintain and grow knowledge within an organization such that it can be applied to solve customer problems

Structural Capital = The environmental components that allow an organization to function effectively such as processes, systems, methodologies, physical plant, communications facilities

Social Capital = The brand of the organization that includes relationships with vendors, customers, external influencers, product and service awareness, and so forth

It dawned on me; in many cases the ability of the knowledge worker to monetize their intellectual capital is limited. Most knowledge workers need to work within an organization for various forms of capital that they either do not possess, or do not have the ability to properly manage. For instance, they may not possess the cash flow for marketing themselves or for investing in new equipment; they may not be able to build systems to manage projects, bill their services, perform Q&A functions while chasing the next job; they may be great technical resources, but not know how to approach social networking effectively so they have a new project waiting for them when their current project is completed. These limitations of the hired gun are answered by participating in a team environment. When the knowledge worker’s specific expertise is combined with varying forms of expertise brought by other knowledge workers and multiple capital resources, only then does the application of intellectual capital bring value to the buyer.

My function then as the leader of a team of knowledge workers is to attract intellectual capital to my team. I can do this by providing the benefits of various forms of capital that the intellectual capital owner does not possess or does not have the ability to manage. If my team is effective to the point of profitability, then I am able to demonstrate the ability to monetize the knowledge worker’s intellectual capital.

Of course, money is not everything. If I also can help the knowledge worker grow in experience, knowledge and capital management abilities, then I have provided value beyond money. As long as the knowledge worker remains with the team, I also have built additional intellectual capital accessible to my team.

To be sure, the process will always be fluid. As the team gains additional experience and knowledge individually, we must recognize the additional value requiring either additional compensation or opportunities to grow. However, the combined growth inherent in the team provides even more reason for the team to remain intact.

Should a member of the organization find a more beneficial team for their situation, then the process begins again and is costly. However, the relationship has been mutually beneficial. Both the team and the organization have been profitable. In addition, intellectual capital is one form of capital that can be shared. When a knowledge worker shares his knowledge with a customer or a coworker, they do not diminish their own knowledge. In fact, through an exchange of ideas, the knowledge worker’s intellectual capital will grow as well. Concurrently, if our organization’s capital management process includes cross training the team members, the team can retain the exiting knowledge worker’s intellectual capital even as the knowledge worker leaves the team.

Through the process, the organization has gained in reputation, customers, reference sources, finances, experience and any number of other resources. The departing knowledge worker may also add to our social capital as an external influencer or even by bringing the new employer organization to our team as a customer.

Business is the process of providing solutions for others. As we continue to build our organizations, we must recognize the impact of the knowledge worker on our business models. As we provide a valuable package of organizational attributes that the knowledge worker can monetize their intellectual capital, we can help them grow. At the same time, we can increase our retained resources of financial, structural and social capital.

All in all, it is not a zero-sum game; everybody can win.

Proposed Firm of the Future Symposium

Based on the success of the session at Insights on the same topic, we (Sage) are looking at delivering a Firm of the Future Symposium in Dallas on August 23-24.

This experience is dedicated to the possibility that a professional organization can be run more effectively when it becomes a knowledge firm rather than a service firm. Creating such an organization is hard work and not for everyone as it requires partners to think differently than they have in the past about what it is that they do.

The symposium will feature Ron Baker of the VeraSage Institute, Rob Johnson and myself from Sage and an as yet undetermined industry analyst. It will be held in Dallas at the Hilton DFW Lakes on August 23-24. The price is $3,500 for two people from your organization (or guest if you so choose, there is no price for one person only). Additional attendees are $1,000. If you are a Sage Select Partner, the first two attendees are free. You must pay hotel and airfare.

If you know for sure that you can make it, please let me know. In addition, please comment and submit thoughts and even proposed changes to the agenda! You can always email me at ed *dot* kless @ choosegreat.com.

Tentative Agenda (This is subject to change)

Day/Time

Item

Day 1, 7:15am

Breakfast

Day 1, 8:00am

Welcome and introductions

Day 1, 9:00am

Foundational information

  • How v. What matters
  • Peter Drucker’s knowledge worker
  • Dialogue on value

Day 1, 10:30am

The tale of two equations

  • The Professional Service Firm
  • The Professional Knowledge Firm

Day 1, noon

Lunch

Day 1, 1:00pm

From Revenue to Profit Workshops

  • Where does profit come from?
  • Managing cash flow
  • How the SaaS model effects profit

Day 1, 3:00pm

From Capacity to Capital Workshops I

  • Managing financial and structural capital
  • Developing intellectual capital (Using the knowledge matrix)
  • Conducting an after action review

Day 1, 6:00pm

Dinner

Day 1, 7:00pm

From Capacity to Capital Workshops II

  • Developing social capital (Building community with employees, customers, vendors, and stakeholders)
  • Creating a Results-only Work Environment
  • Developing a knowledge-firm compensation system

Day 2, 7:15am

Breakfast

Day 2, 8:00am

From Efficiency to Effectiveness Workshops

  • Developing and using key predictive indicators (Net Promoter, HSDs)
  • Leadership Development
  • Scope Development Issue List Management

Day 2, noon

Lunch

Day 2, 1:00pm

From Cost-plus to Pricing on Purpose Workshops

  • Pricing a small engagement for current customer
  • Pricing a large engagement for a new customer
  • Using a TIP clause

Day 2, 3:30pm

Wrap up and depart for home by 4:00pm

Firm of the Future Insights Session

For those of you who are so inclined (probably only my Mom), I present for your viewing pleasure the video feed from the dialogue session I did at Insights entitled Creating the Firm of the Future.

Here is the session description:

This session will be dedicated to the possibility that a professional organization can be run more effectively when it becomes a knowledge firm rather than a service firm. Creating such an organization is hard work and not for everyone. It requires us to think differently than we have in the past about what it is that we do. You are hereby invited to open a dialogue on a different model for creating success in a professional firm.

And, here, more importantly, is the warning slide I had on the screen as folks entered the room:

image

The video is in two parts.

Part One (runs 1 hour and 25 minutes)

Part Two (runs 1 hour and 40 minutes)

Insights MegaSession – Creating the Firm of the Future

On Wednesday, May 19th from 1:30pm to 5:30pm at Sage North America’s annual partner conference, Insights, I will be presenting a session entitled Creating the Firm of the Future (GEN52-1,2&3).

This session will be dedicated to the possibility that a professional organization can be run more effectively when it becomes a knowledge firm rather than a service firm. Creating such an organization is hard work and not for everyone. It requires us to think differently than we have in the past about what it is that we do. You are hereby invited to open a dialogue on a different model for creating success in a professional firm.

image

Learning Objectives:

  • What is a knowledge firm?
  • Moving from revenue to profit
  • Moving from capacity planning to knowledge management
  • Moving from efficiency to effectiveness
  • Moving from hourly billing to fixed pricing