By Tim Williams
Viewing entries in
Business Models
If you agree that time-based billing is a suboptimal way to capture the value you create, consider the implications of machine learning. Will you be sending your clients an invoice for the five seconds it took for artificial intelligence to review an elaborate contract, prepare a complex tax return, or produce multiple versions of a digital ad campaign?
During the 16-hour flight from Los Angeles to Sydney, 90 percent of the activity in the cockpit is ensuring the plane is staying its course with the help of automated navigation systems. But the other 10 percent — the takeoff/ascent and approach/landing — is where a pilot’s skill and experience are essential. It’s during these two brief periods that pilots really earn their money.
It’s performance review time, and John Adams is being praised by his boss for being 89% billable. His colleague Jane Austin — who has similar experience and plays a similar role — was only 62% billable this year. Which is the most productive employee?
If you work in the world of professional services — advertising, law, accounting, architecture, etc. — it’s more than likely your firm is missing a critical element in its business model. Without it, you're dealing with self-inflicted roadblocks to your long-term financial success…
No doubt you’ve heard a friend in business say something like, “That’s fine for Apple or BMW, but we’re selling a commodity.” Even if your friend works for a grain processing company, that’s a remarkably misguided statement. And if you work in professional services, it unconscionable to believe that what you do is difficult to distinguish…
If you have a hard-working team that seems to be working longer hours by the day, it’s likely because you don’t have a hard-working business strategy.
In the age of disintermediation, no firm that plays on a national stage can claim to be a monolithic stand-alone resource for its clients. Rather, the best professional service firms are part of an increasingly complex and interdependent ecosystem of specialized solutions providers.
What if the metrics of success used by most professional firms are wrong? What if law firms, accounting firms, ad agencies, and a wide variety of consultancies are investing their resources at getting better and better at measuring the wrong things?
Do you stumble when trying to describe your firm’s “elevator pitch?” Most business executives do. The unfortunate truth is that most of us don’t have a very thorough understanding of how our companies create value.
Paradigms take a long, long time to change. The mental maps we carry around in our heads are etched in neural pathways that both dictate and predict our behavior. If our paradigm is that the world is flat, we navigate very carefully to make sure we don’t sail off the edge.
The most highly-regarded firms on the planet aren't just good; they're different. They stand out not just because they're excellent at what they do, but because they have a deliberately different purpose, principles, and set of practices. In professional services, this is the 1%.
Can the same kind of "feature fatigue" made famous by over-engineered electronic devices apply just as well to a professional services firm? Absolutely it can, and it produces largely the same effects.
Is it possible to trade retainer-based client relationships for project work and still do great work, keep people happy, and earn healthy margins? In the increasingly disintermediated world of professional services, it's essential for firms to more effectively adapt to the new ways client organizations are parceling out work.
Professional firms who have come to terms with the fact they don't sell time still fear the prospect of trying to manage their staffing, workflow, and finances without the information provided by timesheets. They fear they'll be operating in the dark, devoid of the data they need to evaluate and manage their success. But trading hourly billing for modern pricing practices provides the perfect opportunity to start measuring the things that really matter -- effectiveness, innovation, accountability, profit growth, and true productivity.
Grow or die. It's embedded in the capitalist psyche. But is there such a thing as "bad" growth? Or more to the point, "bad" profit?
