Golden Practices Blog

Defining Value

  With all the discussion going on about value pricing, at least half of the articles and posts on the subject seem to be seriously missing or misapplying this VERY key point:

That which goes into your product (time, materials, etc) has NOTHING whatsoever to do with its ACTUAL value to the buyer.

My VeraSage colleague, Ron Baker, posted "The Fundamental Economic Assumption" from which I quote (bolding for emphasis, and bracketed words, are mine):

Three economists, from three different countries, developed the theory of marginalism and created a revolution: William Stanley Jevons [1835-1882], from Great Britain, Leon Walras [1834-1910] from France, and Carl Menger [1840-1921] from Austria. Here is how Menger defined the true source of value in an economy in his book Principles of Economics, published in 1873:

Value is...nothing inherent in goods, no property of them. Value is judgment economizing men make about the importance of the goods at their disposal for the maintenance of their lives and well-being. Hence value does not exist outside the consciousness of men...The value of goods...is subjective in nature.

The determining factor in the value of a good, then, is neither the quantity of labor or other goods necessary for its production nor the quantity necessary for its reproduction, but rather the magnitude of importance of those satisfactions with respect to which we are conscious of being dependent on command of the good. This principle of value determination is universally valid, and no exception to it can be found in human economy.

The significance of this shift in thinking cannot be over-emphasized, especially since it hasn't happened yet among most professionals.

A coat is not worth eight times more than a hat because it takes eight times longer to make it. [RATHER] its producer is willing to invest eight times more labor into producing a coat because it is worth eight times more to a customer. [Think About That!]

You'd be willing to pay almost anything for a gallon of water if you were dying of thirst in the desert, but much less if you're washing your car. Water would have a negative value to you if it flooded your basement, as you'd have to pay to have it removed.

Value is dependent on time, place, context, and subjective judgments [OF THE BUYER] that cannot be precisely calculated. We are ruled by our theories, whether we admit it or not.

The labor theory of value is endemic in the cultures of most professional service firms, and it is past time to replace it with the subjective theory of value. We owe an enormous debt of gratitude to the Marginalist economists—let's start to repay it by at least catching up with their thinking and teachings on the true source of value.

Let's stop blabbering about billable hours being related to value. It's an idea from the day before yesterday. An idea whose time has passed.

And They're Off...

One off to Korea, one started high-school, another began 7th grade.

It's been quite a week.

The little one starts kindergarten next week. The years go so fast...

I remember when this one (pictured) started kindergarten like it was yesterday...and he turns 22 on Monday. <sigh>

I don't make very many personal posts, but I think this week changes me a bit and it seems important to note it. Ever have one of those weeks?

RSS & the Evolving Web

This post is primarily for attendees of our session today for the St. Louis Chapter of the International Association of Business Communicators (IABC) but it may be a good reference for others, too.

Not so ironically, the resources we are pointing to were learned of through blogs!

There are several wonderful sources for information we cited today and we want to share links with you.

1) the UMass study by Dr. Nora Ganim Barnes entitled Behind the Scenes in the Blogosphere: Advice from Established Bloggers

About the study, Steve Ruble of Micro Persuasion, one of the many successful bloggers interviewed, wrote:

A fascinating new UMass study...interviewed 74 different business bloggers to identify what makes some stand out more than others. The paper (PDF) is chock full of really interesting information....Dr. Barnes extracted the following "truths" from her research:

1. Blogs Take Time and Commitment
2. Blogs Must Be Part of A Plan
3. A Blog is a Conversation
4. Transparency, Authenticity, and Focus are good. Bland is Bad

2) Another important reference, especially for using blogs for internal communications, is the enterprise blogger and innovator I most admire, Rod Boothby. Rod's blog is Innovation Creators. Rod has so much valuable information it's hard to know where to start but here are three great ones:

• this is his Whitepaper page with two fascinating works: Turning Knowledge Workers into Innovation Creators and his Web Office Whitepaper (both in PDF and html formats)
• He also has this interesting recent post Enterprise blogs cost $50K - so why aren't there more?

3) A good resource and fun read is the guidebook (PDF) of The New Rules of PR: How to Create a Press Release Strategy for Reaching Buyers Directly by David Meerman Scott of Web Ink Now. His Creative Common License allows for distributing his work here (link below) but I recommend you check out his site, too!

Download New_Rules_of_PR.pdf

APPENDED 3:42pm

For those who wanted a copy of our presentation (1.6mb), here it is: Download iabc_2pp.pdf

The other resources we mentioned are:

www.bloglines.com
www.feedblitz.com
www.clustrmaps.com
www.technorati.com
and another traffic meter we didn't mention is www.sitemeter.com

First Things a New Marketer Should Know and Do

When starting in a new firm, the key starting point is that which should apply to all new jobs:

Inventory your situation and identify your resources.

In a professional service firm, a huge part of this is to know, "Who is each player and what is his or her game?"

To start this, make an effort to understand the business in general and to gain a sense of the talents of each of the individuals with whom you now work. Here's how.

Schedule a 15-30 minute interview meeting with each practitioner in your firm—from new grads to seasoned senior partners.

Scheduling will probably be a hassle and it will take a lot of time to conduct all these meetings if you have a large firm. But it is worth it. When I was in-house, I had six offices and 180 attorneys, so it took about two months with meetings 2-3 days a week (I did still have to get other work done, too, after all). I still say it is well worth it!

Purpose
For many of your interviewees, this will be their first one-on-one conversation with you and an important first impression for you both. You'll begin to develop relationships that are crucial to your success in the firm.

You will learn more about your firm's profession than you might imagine and you'll be able to speak the firm's language much more quickly.

You will identify who is experienced at what. This is invaluable for proposals and internal referrals (until you establish an experience database to go on your Intranet, that is...). And you'll gain a good understanding of each person's personality type.

Meet in their offices if at all possible so you can take a visual inventory noting personal interests, family, client memorabilia, clutter versus extreme organization, etc. These insights can help you find common ground for your developing relationship.

The purpose for the meetings should be described as 'brief information gathering so you can better understand the practice nuances of each person.' Believe me, they all have them and they'll be eager to share and flattered you care.

Continue reading for Meeting Scheduling, Prep, and what to do During and After the meetings...

Commas And Lawyers

Most lawyers are pretty darn good writers. They have to be. Apparently a bad writing day for the counsel of Rogers Communications, Inc., though...

One misplaced comma in a 14-page contract cost the company $2.13 million.

Who says punctuation and grammar aren't important?

Hat tip to Diana Huff at the MarCom Writer Blog.

Seeking US-Based Non-Partner CPAs (or Future CPAs)

My friend and respected fellow consultant, Steve Erickson, is doing some excellent work on the recruiting and retention problems currently plaguing the accounting profession.

He is conducting important research--the results of which he will share with others who care about the future of the profession and want to do something to improve it!

If you are a CPA or a CPA candidate (non-partner) working in a public accounting practice in the US, please take this very quick and anonymous survey. Or, if you know of any, please forward this to them!

Note from Steve Erickson:

This survey has been designed to gain a better understanding of how staff feels about our profession. My intent is to get the broadest possible participation over the next 5 months with the hope that thousands of people will respond so the results will be truly meaningful.

The results should be available in January 2007 and will be posted on my website. Or, if you prefer, I will e-mail them to you. To receive the results by e-mail, please send an email to me with the subject line "Send 2006 Staff Survey Results."

I know many of us are currently working on the development of programs and approaches that will allow us to better recruit and retain quality people. These results will be shared with all that have this intent and interest to include the AICPA, State Societies, Associations, individual firms and consultants.

Please forward this e-mail to anyone you know that may be interested and encourage everyone to participate. It should just take a few minutes to complete. I sincerely appreciate your help with this most important endeavor.

Thank you!

Deadline for participation is December 31, 2006.

Take the Survey

Then spread the word!

RFPs for Website Development

We are occasionally asked if we have an RFP form that firms can use in shopping for Web developers.

We don't have a Website RFP form. I am opposed to the RFP approach to selecting vendors. There are many reasons I don't like them which I won't go into here (but Larry Bodine, on his blog post Avoiding RFP's for Suckers, bashes RFPs--worth a read...). I much prefer a conversation!

So, back to Website RFPs.

My firm received a rather poor one the other day (though, of course, we were honored to have been considered). I'll tell you why it was poor:

1. there is no indication of the site's size (number of pages, sections, etc) and complexity (anything that is at all dynamic or database driven) of the desired site...these two things pretty much drive the cost
2. there is no indication of the budget parameters for their site...however, they do say that the site will be a 2007 budget item which, while it means budget is apparently still flexible, it also means they don't intend to pay their vendor before 2007...
3. they do indicate their desired timing: site to be final in March 2007 (hmmm, I see a significant lack of alignment between the project timeline and the budget year--no vendor in his or her right mind will work with these terms: do the majority of the required work in 2006; don't get paid anything until Jan 2007!!)
4. they DO state that they want their site to be outstanding among those in the accounting profession--the downside is that they don't state how they want it to be different: design? functionality? content? Just how far are they willing to go to be different?

Without knowing at least the first three things, how could a vendor possibly provide a quote that won't shift once these critical scope decisions are made?

Does the firm want to compare apples to apples?

With the limited information they've offered, all they will compare is one apple seed to another. Unknown to them (and their vendor candidates) are the size, color or juiciness of the apple. Nor is it known how much care and energy will go into bringing the seeds to their best. This isn't they way they really want to shop, I'm sure of it. Nor is it the way Web developers want to sell.

(Is there a lesson in this for law and CPA firm service buyers/sellers and pricers?)

Steps for Shopping Out Web Development

1.  The first thing a firm needs to do is develop an idea of what your sitemap might include--at least approximately.

2.  The second thing a firm needs to do is consider its budget (within a few thousand dollars) for the project. Under $10K? $10-15K? $15-20K? $20-30K?  Have some idea for what you can spend on the project.

3.  Find and note sites you like. Note what you like about them: colors; dimension; navigation; content amount, depth or style; formality/informality; personalization; etc. Be sure to look at all types of sites (not just those of your own profession) especially those of your most enjoyable clients' industries.

4.  Identify good web developers--design is different than content development and project management.

Design  Look at their work and see if it bears features you've noted above. Decide if it's important to you that they have expertise working in your industry. It may provide no advantage for a designer to be familiar with professional service firms; the designer brings a fresh approach if s/he does sites for other kinds of businesses. However, s/he may not be able to anticipate needs well or recognize if your sitemap is missing something key. (that's where project management helps)

Content  Good content is the most important part of your site! Content development is time consuming. An experienced copywriter will save your firm tons of time and allow you to focus on serving your clients. A copywriter's knowledge of your profession IS an advantage adding value because you don't have to teach basics. And they can provide more effective copy in the first draft. They would also have a good sense of what not to write because they know what other PSF sites say.

Project management  Do you know most firm sites take well over a year to develop? It's because the project management is a huge task. Bigger than anticipated. Outsourcing this instead of burdening an overly busy firm administrator or marketing director can enable a site's completion in 1/4 to 1/3 of the time. Plus, an experienced project manager knows all the steps that go into site development and in what order. They keep the project moving.

5.  Determine what you'll do inhouse and what you will outsource. Specify this when you talk to developers so they know how to accurately price your services the first time so that you don't get nailed with surprise add-on prices after you start.

What Drives Cost

The cost of design isn't really going to vary much. Nor is the project management cost.

The programming cost and the content development costs are the huge variables. Programming a site to do really cool things is MUCH less expensive than even five years ago. Also, most sites can be made in programs like DreamWeaver that can be maintained easily (at least basic changes) by your own firm with minimal training (i.e. one or two hours).

Recognize that content creation does not come cheap. And this isn't an area in which to skimp. Lack of interesting and fresh content on PSF sites is the number one problem cited by readers and users of these sites. Most firms sound the same and offer very little useful information.

Because of this, the one way firms can really differentiate themselves is with content!

For content do-it-yourselvers, read "Content Critical: Gaining Competitive Advantage Through High-Quality Content" by Gerry McGovern and Rob Norton.

Happy shopping.

Aug 8 St Louis Event for Creative Thinkers

Calling all creative thinkers in or near St. Louis...

Matt Homann is launching the first in what is sure to be a successful series of events. It's affectionately called the Soulard Idea Market and you can read about it here, on Matt's blog.

He says it's for: bloggers, lawyers, entrepreneurs, speakers, consultants, designers, webmasters, writers, artists, salespersons, technologists, or ??.

5:30 p.m. to ?, come on over. Close to 30 are already signed up. Matt's famous for the unconference events known as LexThink and BlawgThink. Great space, mind-opening format. Come check it out and be part of the newest chapter in unconferencing.

See you there!

Finding (or Becoming) a Great Mentor

An excellent post at Escape from Cubicle Nation is called How Can You Find a Great Mentor? in which author Pamela Slim discusses several facts about mentoring and offers must-read advice.

She notes there are three types of mentors:

1. The technical expert
2. The wise elder
3. The few-steps-ahead peer

She then discusses the characteristics of a great mentoring relationship:

• Encouragement.  A good mentor will not only provide you with valuable advice, he or she will also help you deal with the fear and stress involved in growing professionally and making a big change.
• Reciprocity.  Enduring mentoring relationships have mutual benefit built into them. Your mentor may have years of experience in his or her field, but you also must bring something to the table. Perhaps they are less familiar with technology so you can help them build a website. Whatever you do, make sure they are not the only ones offering support and advice.
• Chemistry.  A mentoring relationship is just that, a relationship. You must truly enjoy each other's company if it is to last. If you put each other at ease and make each other laugh, that will make your time together energizing and engaging.
• Gratitude.  Don't ever forget to acknowledge and thank your mentor for his guidance and advice. Lavish gifts or hollow praise are not necessary.  Good, old fashioned heartfelt thanks in the form of a handwritten note or sincere comment work the best. Let him know what his advice meant to you and how it changed the course of your life.
• Mutual respect. Even if people are very well-known in their field, they don't want to be surrounded by feet-kissing grovelers who deem themselves "not worthy." Let me rephrase that. The mentors you want do not want to be surrounded by arse-kissers. Be confident and present yourself as a humble, less-experienced equal.

She then discusses where to find mentors and how to kick off the mentoring relationship. Where to find mentors is an important topic all its own. I've never been comfortable with the notion that a firm can "appoint" a mentor for new team members.

On the contrary, smart people prefer to select their own members, if you please, and they probably are not the people to whom they report!

In fact, I just read a reference to this in a PRSA article called Ten Things You Didn’t Know About the Grad You Just Hired (And will he or she be working for you a year from now?) (hat tip to David Maister for pointing to the article today). Number 5....

Their bosses aren't their mentors.

Read both articles, you'll be glad you did.