I've got to hand it to Gary. He wrote a brief but meaty article that appears in the Oct 8 Accounting Today (on-line at WebCPA "Pricing for Value") about intellectual capital and firms innovating to price on value captured for clients, and not efforts.
In his article, Gary writes:
People create intellectual capital, yet many firms allow that intellectual capital to leave when people leave. They don't even account properly (from an economic sense) for intellectual capital - they expense it. They should take the time to package, name and differentiate unique processes. Much of what firms "give away" is what the client really values.
He's so right.
Gary goes on to list several steps to take to start thinking and operating in this newer, better way. Numerous firms really are doing it. Others who are thinking about it wonder, "how."
Select a "value champion" for your firm...This person should communicate frequently with clients and determine their perceptions. More importantly, she should understand each client's dangers, opportunities and strengths...By doing so, it is easier to provide services that clients perceive as valuable. (Many of these have less risk and greater margins than compliance services.)
Assign an intellectual capital task force. This team should inventory intellectual capital, then document, name and package it so that the firm can train to unique processes and price on value, rather than hours multiplied by dollars.
Reach outside the firm for help. Don't continue to let old paradigms limit value and profitability. Even though people mean well, it is what they don't know they don't know that costs them - and limits their growth and value. Get coaching, read and educate yourself.
Define the profile of your firm's ideal clients and filter out those who do not fit it. The plans, people, processes, technology and pricing that got you to this level will not enable you to transform into the emerging industry.
Embrace a training/learning culture. In such a culture, everyone learns and everyone teaches. It is a two-way street. Thorough training encompasses much more than technical continuing professional education - it also includes soft skills, as well as technology.
My friend and fellow VeraSage Fellow, Tim McKey (from Baton Rouge, LA) says, "I'd rather sleep under a bridge than go back to billing by the hour." If that doesn't convey how much of an improvement value pricing is, I don't know what will.
Gary says, above: "Reach outside the firm for help."
On Monday, Oct 22, in Las Vegas, meet and hear from Tim McKey and many others who have taken the path Gary describes (including me). If you really are curious about "how" you need to be in Las Vegas.
At least 7 or 8 VeraSage Fellows (from Accounting & Law) and several employees of these Fellows' firms will be there. The night before and the evening of the 22nd, many of us will be hanging out at a Rio lounge to talk with attendees.
It's a rare opportunity to have a whole bunch of "converts" in one place. Do come! And pick our brains.
Spend the day at the Rio with VeraSage. Seriously, it's only $129 (just to cover room & A/V costs...not to make $$). (Rio room nights Sun and Mon are about $100.)
Go here to sign up: https://www.onlineregistrationcenter.com/register.asp?m=187&c=53
Gary, I hope you'll come, too!