Passion, People and Principles
post # 339 — March 27, 2007 — a Careers post
If you do a business degree, they will often assign you books on marketing, managing, organizational behavior and strategy. But many “classics†never get assigned because the topics they cover are seen as too “basic.”
For example, there are lots of people (like me) who took many courses on “Management†but never really had to think about supervising another human being.
This is not just about younger people getting their first education: it’s also relevant when large professional firms first start offering management training to senior officers appointed to managing positions for the first time.
Such organizations often arrange special executive education courses at elite universities, when what their new managers really need is to read The One-Minute Manager.
Rather than learning advanced topics such as market positioning, segmentation, etc., surely we should start by helping people understand what it feels like to sit across the table from someone who you are trying to get to hire you? Something like Dale Carnegie’s How to Win Friends And Influence People.
Yet the One-Minute Manager and Dale Carnegie are rarely assigned texts (unless I’m out of date with what’s happening.)
Here’s my question for all of you: what are the essential but neglected (basic) business books that YOU think people should read that tend not to get assigned in formal courses? Where wouldyou recommend that people read to START to understand management, marketing, and other business essentials?
post # 338 — March 26, 2007 — a General post
Two weeks ago I posted the last episode in my free podcast series on Career development, which completes the cycle of my original podcast plans. To date we have a series on each of my main topic areas. While my podcast and I will be moving on to new frontiers, the archives of all the 4 previous series continue to be available from my podcast page.
Starting today I’ll be launching a new series (still free) of concurrent video and audiocasts called “Maister Moments: David Maister Live.”
Due to feedback I’ve received from the widely growing audience for my podcast series (many of whom access the site only through Itunes and other feed-readers), I’ve decided to syndicate the content previously available on my video page in order to better share these resources with my blog and podcast audience. Each episode will be broadcast on both my existing audio feed (audio only) as well as on my new videocast feed. I will also be posting each episode here on my blog as they are released. For interested clients I will also be offering these videos for sale on DVD from my videocasting page in the coming weeks.
The first episode of my new series is called On Strategy: Profit Formula
What are the factors that lead to ultimate business and financial success? In this video, I discuss how to identify the fundamental factors that drive this process, showing you the links between causes and effect that leads to profitablility.
00:38 — Introduction
01:11 — The sequence of consistent, superior client satisfaction
02:10 — The necessity of excitement and enthusiasm
05:08 — It’s not only profits; It’s also peoples lives
06:13 — The character of the manager
06:53 — Conclusion
If you are already registered to receive my podcast series, then you need do nothing to start receiving the new audio version of the series. However, if you haven’t prevously signed up for my podcasts, or are interested in receiving the videocast, this would be a good week to do so, so that you can catch the beginning of the new series. You can subscribe to either or both by visiting my subscriptions page.
Oh, and if you know anyone else who could benefit from them, please spread the word about the existence of these free resources.
post # 337 — March 23, 2007 — a Managing post
If you don’t subscribe to my (free) articles, then you won’t know that I have just published a new article on my website entitled Selecting A Leader: Do We Know What We Want? (downloadabe in pdf form, as all my articles are.)
The article points out that many of the desired characteristics that firms say they want in a CEO or Managing Partner are inherently contradictory: for example, firms often say they want someone who is both decisive and consultative. It’s tough to be both.
Some other trade-offs include choosing someone who:
- Focuses on working inside firm versus focuses on a high profile with clients and marketplace
- Is good with numbers versus good with people
- Leads in accordance with a strong personal ideology of his or her own, versus is the kind of person who tolerates different views, values and approaches
In the article, I describe a simple approach to debating “forced choices†between a large number of these “paired virtues”, as a way of getting firms to clarify what they really want in a leader.
What contradictory or conflicting things do you see people include when they enumerate the desirable characteristics of a leader?
post # 336 — March 22, 2007 — a Strategy post
Over the years, I have had a lot of people ask me for definitions of (a) what is a profession (b) what is a professional (c) what is a professional service and (d) what is a professional service firm?
On the last question, I have always argued that a professional service firm, as a special type of organization, is one where the current partners develop and pass on the firm to the next generation. (It’s also called the partnership model)
In the old days, when professional firms acted like they cared, many of them ran on the principle of stewardship or “legacy.†The firm was run not only for the current generation, but with an eye to building an institution that would flourish and survive in future years. Partners, so the argument went, held the firm in trust for the next generation.
This was not just a cultural issue. Under the stewardship model, equity in the firm was transferred at book value — in at book, out at book. Partners made their money from the income they earned while working at the firm, not by equity appreciation.
I got a call yesterday from a CPA firm partner who thinks that continuing to think this way today is all hogwash. Firms today aren’t REALLY run to leave a legacy or build an institution for the next generation, and firm leaders should stop pretending that they are. They’re fooling no-one, he says.
Today’s partners want not only to maximize their income, but also (when the time comes) they want to be bought out at fair market value when they leave the firm, not just depart with a token retirement pension.
In part, the commonality of the “stewardship†versus “if you want ownership you have to buy it from me†model depends on which profession / industry you’re talking about. PR firms, ad agencies and other marketing communications firms have ALWAYS been “owned.†They’ve always been “built to flip†(ie sell to one of the big conglomerates like Omnicom or WPP.) From the beginning, their founders ran them to create a “capital event.†They didn’t usually give away equity for nothing to rising young people.
On the other hand, in the profession of law (in the US, UK and Australia, but not necessarily elsewhere) there is still a history of running a partnership model, not a corporate model. The message is still (so far) “earn your income while you’re here, there’s no capital gains to be made from your ownership of the firm.†In part, that’s because in many countries there are barriers to who can own a law firm.
But what do you think is going to happen in the UK when the Clementi reforms are (finally) implemented and outsiders can buy the equity of a law firm? How long do you think it will take for the existing partners to rethink (even more than they have been doing) whether they want to admit new partners without forcing them to buy in at fair-market value? Why give away a part share of ownership in your law firm when you can sell it to Goldman Sachs?
In accounting firms, it depends on the size of the firm. Big global firms still pretend they are “passing on the heritageâ€, while many small CPA firms owners are unapologetic in saying: if you want ownership in my firm, you have to buy it from me!
So, what do the rest of you see going on out there?
- Is Stewardship (or the partnership model) dead, even among the firms that pretend to still have it?
- Should we all just admit that the way firms are being run today is to maximize the wealth of the current shareholders?
- If you ran a firm, would you run it on ownership or stewardship principles (be honest)
- Is there a price to be paid if firms switch from one approach to another?
post # 335 — March 21, 2007 — a Client Relations post
Here’s a question from “Eric”:
I am thinking of writing an article myself about how clients of consultants can create the right relationship with their consultant so that they get more bang for the buck (i.e. more insight from an objective viewpoint then they would normally get via the usually limited “statement of work”).
If my company gets called in to help out (with anything from strategy through technical implementations), we end up learning so much about their organization, how they build processes, how things really work and I feel that in some situations, the client puts barriers up that prevent effective communication.
If clients knew how to approach their consultants and their relationship with them, they could glean a lot of “insider” information that they would not normally get. We find out SO much about the inadequacies of client organizational structures, communication breakdowns, lack of effective change management etc. that I think the client management might benefit from if only they knew. Some know how to get this out of us and some don’t.
I understand some of the barriers: they might consider their consultants just money grubbing stiffs, may not trust them, are politically boxed in, etc.). Obviously, a bigpiece of a partnering relationship is the responsibility of the consultant lead. However, it does take two to tango, doesn’t it?
***
I think it’s a great idea for an article, Eric. But you haven’t really got us started.
Why don’t we all try and complete the following sentence:
“To get the most out of us, our clients should…..â€
(Self-serving actions like hire us some more are not allowed! The spirit of this is to avoid reinforcing the perceptions that Eric so readily identified — that if we are not careful, clients will see additional activities by us as the work of untrustworthy, money-grubbing people. Anything we suggest has to avoid reinforcing that, right?)
So, to get the most out of us/me, clients should:
- Help me/us understand, before we get in too deep, the real politics of what’s going on in their organization
- Tell us/me the truth, up-front, about what they’re really willing to change and what they are not
- Meet with us/me one-on-one informally, so that we/I can pass on “off the record†and informally some of the things we think we have learned.
- Allow for informal “what’s going well and what are you learning?†conversations on a regular basis during the work, not just at the end.
- Keep us/me informed if their priorities and goals have shifted, so that we/ can adapt along with them.
Anyone else want to join in? What could clients be doing (specifically) to get the most out of you and your firm?
post # 334 — March 20, 2007 — a Careers post
Here’s another reader question, from “D”:
For the last nine years I have worked for a sales and marketing firm. Almost every year I have received “Incentives†and “Bonuses†(of varying amounts) for the work I do. The “Bonus†is from a pool of funds paid to my company by my client. The “Incentive†is paid directly from my employer.
This year the company is taking a 12% “administration fee†(pre-tax) from the bonus and incentive monies. I’ve been in this business for over 20 years and have never heard of such a thing, let alone experience it first hand.
The oddity of this—to my thinking—is that someone who receives a $1,000 bonus pays $120 for the cost of being paid. Someone who receives $3,000 pays $360 and so on up the scale. Another way to look at it: My client paid the company almost $1,000,000 in bonus. My company is taking almost $120,000 in “fees†from its employees (and the employees are paying the tax as well).
So, my questions are (a) Have you ever heard of such a thing in any business? And (b) Isn’t it odd that the employee would pay a federal and state income tax on what the company is taking out as an administration fee? (In other words, we are paying the company’s income tax before them; at least, that’s the way it seems to me.)
***
D, I never expect to be surprised at the complex payment schemes that firms devise, and I’m rarely shocked that firms would put in place self-serving systems that adversely affect their employees (or independent subcontractors, in other instances.) If it’s the deal they offered at the beginning, and employees voluntarily accepted that deal when they came in, then so be it.
However, it’s the overnight change in the mutual understanding that would trouble me if I worked where you work. As you point out, a 12% administration fee burden on employees is a sizable sum, and if it were to be “imposed†without explanation and consultation, I’d expect a revolt. (Unless it’s the same in every competitive firm.)
I’m enough of a capitalist to say employers are allowed to structure their pay offer any way they want to. But I’m also enough of an idealist that I, personally, wouldn’t continue to work at a place where the mutual trust was broken in this way.
What think the rest of you?
post # 333 — March 19, 2007 — a Managing post
Bruce MacEwan (blogging as Adam Smith, Esq.) reports on and discusses a article by Guy Beringer, a senior partner at Allen & Overy, the major UK law firm, on the inadequacies (and unfortunate consequences) of using PROFIT PER EQUITY PARTNER (PEP) as a measure (or, perhaps more significantly) THE measure of firm performance.
This is not a new debate, in the law or in industry generally. The weaknesses of PEP are largely the same as the weaknesses of return on shareholders’ equity measures. As Messrs Beringer and MacEwan point out, many games can be played with both the numerator and denominator of PEP, but it’s not exactly news that companies can and do play games with both reported profits and invested equity, in order to bolster earnings per share numbers.
Welcome, leaders of professional firms, to the wonderful world and revered tradition of managed earnings and media games!
The problem with PEP is not that it’s a bad financial measure. ALL measures, especially financial ones, can be gamed. As a lot of people have pointed out over the last two decades, the problem arises when financial measures are not used as part of a “balanced scorecard.” It’s always been true that a firm needs to serve three constituencies to flourish: clients, people and owners.
Industry makes the same mistake that Mr. Beringer cautions us against: focusing on financials to please Wall Street, hoping that no-one will notice that (initially) degrees of client satisfaction and employee morale are allowed to slip. He’s absolutely right to propose the broader use of client and employee satisfaction measures.
One of the things that may cause this to actually happen would be if someone REALLY developed and put up on the web a “JD Powers-like” evaluation system which basically said: “evaluate your law firm and your lawyer here,†allowing ready access for furue clients and people to check out prospective firms (and individual practices) they might consider working with.
There are beginnings of this out there: Vault.com tries to rate the employee experience, and Chambers (in the UK) has print and on-line versions reporting firm’s and people’s reputations. But it could get a LOT more explicit, and high profile. I suspect there’s a great business available for anyone who wanted to develop that “Rate your law firm” web site.
Of course, I’d be nervous about a “rate your consultant” website, but that’s coming too, of course! Someday soon, we’re ALL going to be held accountable to a balanced scorecard, whether we like it or not.
post # 332 — March 16, 2007 — a Client Relations post
Rain Today.com has published the Future Of Lead Generation, in which they report on the answers given by over 700 professional service firm leaders about their lead generation activities — what works, what doesn’t, and what they are planning to do in the future in regards to tactics, offers, and budgets.
There is an excellent 20+ page free summary available and you should check it out. It offers the 6 key insights that come from the study:
- Brand Matters. Firms that said they were very well known in their target market were also more likely to say they were good or excellent at generating leads.
- It helps (a lot) to know the names of the key decision makers in the organizations you are targeting (and many firms do not.)
- Cold calling can work — if you use it to set a meeting to introduce yourself and to learn about the prospect, not to go into a detailed sales pitch.
- The most effective mix of tactics reported were ‘warm’ phone calls to existing contacts, speaking at conferences, running the firm’s own in-person events, becoming members of an industry association and (most surprising to me) connecting with the press to gain PR.
- Firms reported that 25% of their leads were considered “sales-ready’, 50% required further nurturing and 25% of their leads were disqualified.
- Actually, as you’ll see when you look at the free summary, insight number 6 is a well-designed ‘teaser’ entitled “Indicators of the Future of Lead generation†which does a good job of making you want to buy the full report.
Apart from offering substance, Rain Today.com does a superb job of marketing itself. They targeted me as a blogger to mention this report, and kept in touch (politely, but insistently) with helpful reminders until I responded with this blog. They can (and DO) give lessons in how to be effective marketers!
post # 331 — March 15, 2007 — a Strategy post
It’s always gratifying to hear stories about people who did (or did not) use your advice, and to find out what happened. Here’s an interesting tale, received by email yesterday:
Dear David, It’s extremely unlikely you will remember me, but I attended a management development workshop you ran in London in 1998. I had already read “Managing the Professional Service Firm†and found the time spent with you very valuable. After one of the sessions you and I had coffee and you recommended I start my own market research company. Subsequently I returned to Australia, ran Taylor Nelson Sofres for a while, and then took the plunge.
We started Celsius Research in 2002. We carefully thought about our positioning (heavy-duty quantitative market research with a strong predictive component) and stuck to it. Things went great and I bought an Aston Martin.
In 2003 we recognised the opportunities presented by on-line data collection and, in line with your opening chapters, launched a separate company, Information Research Management, instead of attempting to use the Celsius skill set and culture to undertake the more operationally focussed tasks associated with fieldwork. Things went well and I travelled around the world with my family.
In 2004 Celsius undertook a segmentation study for Microsoft Xbox inAustralia andNew Zealand. Our advanced analysis produced a fresh view of this market, which Microsoft embraced. As a result of this success, Microsoft sent us a RFQ for the building and management of panels of gamers in 20 countries. The brief called for a large amount of sample build, with quite simple data collection, although on a grand scale. There was little need for Celsius Research’s skills, although they appreciated our knowledge here.
Anyway, my partners and I had a meeting where we concluded that, “Maister would say we shouldn’t pitch on this work because it does not fit into the mission statement of either companyâ€. And, yes, you guessed it, we decided that you were probably wrong in this instance, and, after all, a $2.2 mill contract was very attractive. We pitched against the world’s biggest firms, and we won.
I can detail for you the rest of the story, but it ended in us losing $250k, our attention was taken away from our core competencies, no-one here enjoyed the work, and the only good thing to emerge out of this is that our reputation in Microsoft’s eyes is good.
You were right!
Please feel free to use this case-study as you wish. Maybe someone else won’t make the same mistake; maybe they will listen to you! Next time you are in Oz, let’s catch up for a beer. I owe you many. Regards, Martin. (Prof. Martin James, Managing Director, Celsius Research Pty Ltd.)
*****
For those of you who are not aware of the reference, the advice of mine that Martin is referring to was subsequently written up in my article Strategy Means Saying “Noâ€.
Does anyone else have examples of my advice gone right (or wrong?)
post # 330 — March 14, 2007 — a Client Relations post
A reader asks:
In light of some things you teach, ideas from Rob Nixon, and the VeraSage institute; it seems a very bad idea to bill by the hour, especially if you are a new consultant just beginning your practice. Yet, most smaller clients one would probably start with would think in terms of hours. Ultimately, you would want to find some way for them to pay you according to value added, right? But how is this done?
The best I can come up with is offer a free consultation (a few hours or whatever) just long enough to show them you are worth your fees and long enough to find out if you want to work with them). Have in mind what your time is worth to you. Estimate with them the length of the project. Come up with a (fixed price) estimate. If they feel like the price is worth it to them, then you are essentially measuring the value added (maybe lower than value added). Then if it takes longer or shorter, it was based on their value and not your hours. And in the future, as you get more efficient, you still bill the same for the project.
Is this the right approach for a beginning consultant?
***
So, what does everyone think? This seems to be toay’s conventional wisdom on pricing, but would anyone else provide different advice?
