Passion, People and Principles
post # 129 — July 11, 2006 — a General post
This week I posted the last episode in my free podcast series on Managing Professionals: Attitudes, Skills and Behaviors.
Starting next week (Monday, I think) I’ll be launching a new seminar series (still free) under the broad title of “David Maister’s Business Masterclass.”
The first series under this new title will be called “Strategy and Professional Businesses”, and the series begins with a seminar entitled “How to Create A Strategy.”
If you are already registered to receive my podcast series, then you need do nothing to start receiving the new series. However, if you haven’t prevously signed up for my podcasts, this would be a good week to do so, so that you can catch the beginning of the new 14-part series. You can subscribe by clicking on the podcast RSS link on my podcast 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 # 128 — — a Managing post
Here’s today’s question (via email):
I am the Marketing Manager for a Technology Consulting firm in Perú. The partners and I have held long discussions over the real benefit and application of industry performance ratios such as operational ratios for our business.
What is your take on these indicators? Are they actually available and if so are they useful as benchmarks?
While there are many reputable firms who make a living producing industry reports on performance ratios, I always find them so darn expensive to buy. On the surface, they look as if they give valuable information, but the longer you think about it, the less information content they really seem to contain.
Many of these industry studies are based on information collected from the companies themselves, with little attempt at external validation. As we all know from financial scandals, there’s more than one way for a company to present any set of financial statistics, and many of these studies do not spend much time trying to achieve consistency in what they report. In many cases they cannot.
For example, you say your firm has “partners.” That probably means they would like to know a ratio like “profit per partner.” But you can play a thousand games with that – who’s a partner? What’s profit?
There is so much potential for misunderstanding when each ratio is taken in isolation.
For example, you might look at one company and see it has a margin of 50 percent, while a second has only a margin of 3 percent. Does that mean the first company is doing better? No, it could just mean that the first company is a jewellery store (high-end consultants, high fees, low-leverage) and the second company is a supermarket (low prices, lots of leverage). The supermarket could still have a better return on investment than the jewellery store, which has to finance its own very large inventory.
This seems like an obvious example, but the reasoning applies to all ratios – they only make sense when you can put them in the context of all the other ratios and extract the whole picture.
Next, you have the problem of averaging. Suppose you relied on a survey company which averaged the margins of the two companies I described above, and reported that the average margin was 26.5% Does that average number have any meaning? Probably not, but that’s what gets reported in most surveys.
A third problem I have is that I suffer the tragic history that I have a masters’ degree in mathematical statistics. That means I can never look at a survey average without asking myself “But what’s the standard deviation?” It tells you nothing to know you’re 10 percent above the standard industry ratio if they don’t tell you what the normal variation around the average is. Is 10 percent above a great performance or just “noise?” But the information to judge the variance rarely gets reported.
I could go on, but now I have to reverse my conclusion on you. In spite of all of this (and the problems of inter-regional comparisons, etc, etc.) I still would want to look at the numbers. If you know what you’re doing (that’s a big IF) and you don’t rely on them too much, then it’s better to know the reported operational ratios than to not know them.
As someone trained in numbers, I always like to say that there is no such thing as an objective, stand-alone numerical measurement system. All measures are, at best, SIGNALS to prompt further investigation and reflection. Used that way, they can be very help[ful and I’d look at the industry ratios (as long as they weren’t too expensive to get.)
Anybody else want to help the questioner with some experiences and views?
post # 127 — July 10, 2006 — a Client Relations post
A question has been posed by a reader of this blog:
For a number of years I was a partner in a mid-sized accounting practice but I have recently relocated to another state and city for family reasons and have made the decision to commence practice as a sole practitioner and start again.
I have found that seminars (as you recommend) are the most successful method of initially attracting new clients. I am however interested on your views of how such seminars should be marketed when I do not have an existing base of clients. To date I have advertised in the press (this is however expensive). What have start up firms done in your experience that works?
The cheapest and most effective way to get people to a start-up seminar is to partner with some other organization. Meeting and conference planners are often looking for interesting speakers, and if you could offer a free seminar which can be offered as an optional choice in their program, there is virtually no downside for them. Your chamber of commerce (or local hotels and conference centers) should be able to tell you what meetings are coming to town.
You can also apply the same approach with local groups. Every town has various “semi-business / semi-social” interest groups that meet regularly, and they often would welcome an after-dinner speaker who could provide something informative without a hard sell.
Anyone else got any suggestions?
Our progress at work and in life depends on what other people think of us. What we think of ourselves is irrelevant data
There are a thousand things I wish somebody had told me early on in my professional (and personal) life, that I needed to work at improving and never knew about because I didn’t know how I was coming across, or what the other person’s expectations were. All too frequently, I only found out the hard way.
People very rarely tell you the truth about yourself, which makes it even more important that you develop ways to get feedback on how you REALLY come across to the rest of the world. (In many ways, I still don’t know the real truth about this.)
Even when they do try to get feedback, some people tend to wait until the end of things (a year, a project, an affair) to solicit feedback about what they COULD HAVE done better (or differently) This is all way too late.
The real key to success is being able to ask for feedback on a relationship, and act on it, while it is still going on.
Remember that people NEVER tell you the truth on formal occasions. It’s a rare boss that’s going to be completely candid during a formal appraisal, and a rare client that reveals something dramatically new or surprising in a formal feedback system. And you’re certainly not going to say “OK, darling, let’s sit down and make a list of what we don’t like about each other!”
If you’re ever going to develop the skill of getting feedback (and it is a skill) then you need to find ways to make it informal. Get out of the office to have this conversation. (Or if it’s a personal relationship, break the routine and do something like going out for walk together!)
As marketers have discovered with formal focus groups, if you really want to get at something useful, then you need to find out is not what people have to say when they are in a logical, analytical mode, but what they FEEL about you. Scary stuff, but absolutely essential to know this if you are to get on in life!
Try subtle, gentle language: “If I had to change one thing about how we interact, what would you recommend we work on?” Find a friend or colleague, at work or in your social crowd, who you think will tell you the truth about yourself. Some clients, over a drink, will give you an honest and helpful answer to that question. So will some subordinates.
Good or bad, you need to take time to think about what people say, avoid reacting in real time (REALLY tough!) and internalize it. You can neither ignore it nor overreact to it.
Most importantly, if you’re going to ask, be ready to change.
Anyone else got some tips about how you get good at what the Scots poet Robert Burns called “the power to see ourselves as others see us”? (Many people know that line, but how many know the rest of the poem? It’s about seeing an insect crawl out of the wig of a fine lady all dressed up!)
We all know we SHOULD be good at getting feedback. But how, exactly, DO you really get good at this?
Jim Bennett, a partner in a CPA firm, writes in to ask:
Once a staff person gets assigned to a client, we have always tried to keep them on that client for as long as they are with the firm. This certainly has advantages in reduced learning time, and clients don’t complain about “training” someone new.
But I’m wondering if there is also benefits to looking upon clients as learning opportunities and moving staff members into new client assignments to help them advance. Continuity of staff can be important to clients, and can be one reason that they use a small firm. But I’m also thinking that we need to make more of an effort to put people into the assignments that they need to grow.
Jim, I first analyzed this issue in a chapter called “On the Importance of Scheduling” in Managing the Professional Service Firm.
I argued there that scheduling and staffing of work determines darn near everything a professional business needs to accomplish. Tell me which people get to work on which jobs, and I’ll tell you with 95% certainty the following things:
a) Client Satisfaction Levels: (as your firm knows, continuity is important to clients for quality, efficiency and service reasons)
b) Skill Development and Learning (as you and your partners know, the pattern of work someone gets, and the degree of responsibility within the job, affects whether or not they are continuing become a more skilled professional.
This is JUST AS TRUE for senior people as it for juniors. If anyone (in any profession) does the same work for the same client repeatedly every year, that person will exposed to only limited developmental opportunities. More and more they will become a higher-priced person living off past skills, ie increasingly obsolescent.
c) Profitability. Over time profitability is only ever achieved by continually looking for ways to get the same quality job done at a lower cost than before. If you were to measure (on a fully-costed basis, as you should) the difference between revenues for a job and what it cost you to do the job, you will probably find that a policy of automatically reassigning the same people as last year is economically wasteful and not profit maximizing.
d) Motivation and morale. The single biggest determinant of excitement and enthusiasm (at ALL levels) in a professional business is the pattern of work people have to do. If they always do similar things, they will lapse into being good citizens, but will not be throwing themselves eagerly into the pursuit of excellence. Why should they, if they are going to end up (according to your firm’s shorthand rules)with the same mix of clients and business next year, no matter what they do?
The key lesson here is that decisions on scheduling are inherently strategic, with lots of consequences and should not be dealt with as matters of administrative convenience (“If you were on the job last year, you’re on it this year”) or considering only a subset of consequences: “Clients like it, so that’s the end of the discussion.”
You say that you are a small firm. Actually, that should make it easier, not harder, for you to take a more thoughtful, managerial approach to this set of decisions. You have the chance to have regular discussions with everyone (top to bottom) about what they should be working on and how, COLLECTIVELY, you’re going to handle the trade-offs. Large firms often suffer the disadvantage of having to deal with things like this through bureaucratic policies.
Ultimately, clients care about quality, efficency and service – continuity is just a short-hand rule-of-thumb to try to get to these things. If you can be more thoughtful about how you achieve these things, they will give you more leeway in pursuing your other goals and won’t insist on always seeing the same faces. And, with more thoughtful staffing, you’ll be able to improve leverage, profits, learning and morale. Go for it!
post # 124 — July 4, 2006 — a Managing post
There are organizations and managers out there who will tell you that they want you to experiment, but if you ever mess up, you are tarred with an indelible black mark on your reputation. Other organizations and people are so loose with their standards that they never get around to following-up if people fail to meet them. From this simple idea, I have developed what I call my “forgiveness index.”
A forgiveness index of 0 means that if you drop the ball once, the person or the organization will label you for life. You might just as well quit now, because you’re on your way out. The blade might not fall immediately, but the decision to drop it has been made.
Few people would want to live in an organization (or deal with individual people) this tough-minded, though I know a few institutions and people that operate this way. Some even pride themselves on so doing, on the grounds that as elite organizations, they need to test people in action and cannot afford to carry those who can’t make it.
Lets call people and organizations that have absolutely no forgiveness “The Warriors.”
At the opposite extreme, a forgiveness index of 100 means that you can break an organization’s (or person’s) declared standards for a very long time, and there really won’t be any adverse consequences. They are infinitely forgiving
This option also looks unattractive. An organization that has rules but never deals with departures from them is wasting their time, and an individual who preached a lot of things but ALWAYS forgave himself, herself or others clearly did not live them would lose a lot of respect immediately (not to mention being very annoying and frustrating to be around.)
Let’s call these people “The Infinitely Understanding”
BTW, I’m not making arguments here about valuing different aspects of performance, but how things are dealt with when an honest-to-goodness mistake or failure has occurred.
I’ve experienced both, personally and professionally, and have been on the receiving end of both high and low forgiveness.
As a manager and as a buyer, I’ve probably also been guilty of both GIVING too much and too little forgiveness.
It should be fairly clear that the ideal is to be somewhere in the middle, although it’s not clear which way the balance should be tilted.
I have a theory that super-successful organizations have a forgiveness index that is lower than average, but still well above 0 ( a level which would suppress innovation and experimentation.)
Anyone out there got any views on the right amount of forgiveness, and how you know when you have found it?
post # 123 — July 3, 2006 — a General post
It gives me a great feeling to be able to acknowledge all of you who joined in the June conversations on this blog. My thanks to the following individuals…
Stephanie West Allen, Annette, Debra Bender, Rich Berger, Bud Bilanich, Eric Boehme, Leo Bottary, David Bourgeois, Mark Brady/four , Lou Brothers, Jean-Claude Brunner, Duncan Bucknell, James Bullock, Sebastian Carey, Elizabeth Cockle, Geoff Considine, DUST!N, Jennifer Davis, Mike DeWitt, Ahmet Dogramaci, Ron Evans, Brad Farris, Doug Fletcher, John Flood, David Foster, Edward Gabrielse, Matt Ginn, Michelle Golden, Mark Gould, Gordon Gray, Charles H. Green, Tim Griffin, Ted Harro, GL Hoffman, Dennis Howlett, Jol Hunter, S. Anthony Iannarino, Eric C Jaffe, John, Joscelyn, Kevin, Dennis King, David Koopmans, John Kottcamp, Mark Kraemer, Mark Lee, Bruce Lewin, Dave Lorenzo, Karen Love, Tim MMF, Bruce MacEwen, Mark Maraia, Lex McCafferty, Erin McCune, Jeff Merrifield, Mike, Warren Miller, Eileen O’Hara, Mike O’Horo, Bill Peper, Tim Percival, Bill Perry, Peter, Lars Plougmann, Lyman Reed, Ric, Roman Rytov, Jeff Sansone, Mike Sansone, Scott, Roland Shankles, Gavin Sheehan, Bill Sherman, Carl Singer, Carl Singer, Sonnie, Dan T., Kathleen O’Brien Thompson, Ava Thorin, Joseph Thornley, Charles Tippett, Stefan Topfer, Coert Visser, Michael Wagner, Curt Wehrley, and Ed Wesemann
and blogs…
Adam Smith, Esq.
Blog Business World
Buyout Blog
Career Intensity Blog
Creating a Better Life (also: here)
Kathy Maister’s The Main Dish
legal sanity
Media Orchard
New World Man – always hopeful, yet discontent
ProPR
Rethink(IP)
Spooky Action (also: here)
The Agonist
The Airport Lawyer
The Bell Curve Scar (also: here)
Value Added HR – Four Groups
Value Investing, and a Few Cigar Butts
I’d also like to issue a special welcome to the new visitors who are joining us through ChangeThis.com — ChangeThis promotes thoughtful, provocative discussions about positive change and were kind enough to publish my article Strategy and the Fat Smoker for their subscribers this week.
New readers are welcome to subscribe to this blog by RSS or by email. You may also enjoy my free podcast masterclass series and my other articles. Finally, you can also sign up to be notified when I publish new articles.
I hope that new readers will join in with your comments and questions and I look forward to our conversation.
post # 122 — June 30, 2006 — a General post
This, via my brother-in-law, Tony Sacker.
Apparently, he heard a dinner speaker point out that Americans and Brits use the word “momentarily” to mean different things.
In Britain, it means “for a moment.” In the US, it means “in a moment.”
This led to some moments of fear for some Brits when an American airline pilot announced “We will be taking off momentarily.”
post # 121 — June 29, 2006 — a Careers, Managing post
In the old days, a professional business was a special kind of organization, one that was designed to bring into balance the demands of the client marketplace and the marketplace for talent.
The way firms or companies attracted young talent was to offer an apprenticeship – the expectation that people would join the firm and would be helped to progress along a reasonable well-defined career path until they either became one of the senior officers of the firm (partners, for example) or moved on. People joined the firm for careers, not jobs.
This didn’t necessarily mean that people planned to stay with one company for life. It did mean that, if the system was not exactly “up or out”, then it was at least “grow or go.” Talented people didn’t expect to stay at a given “level” for extended periods of time, and firms did not want them to.
Senior people, in the past, understood the aspirations of young professionals, their ambitions, their fears and their needs. After all, they had come up in the same system. And it was a system. Explicitly or implicitly, eveyone knew what the “deal” was – what was being exchanged for what.
All that’s gone now, of course. Companies did a number of things to abandon the apprenticeship model:
a) Lengthened the time and odds of making it to “partner-level” positions
b) Started hiring experienced people at advanced levels, thereby ‘blocking’ the path for those who were coming up the old way
c) Established permanent non-partner positions, also ‘blocking the path’ and signaling that not everyone was expected to have career advancement
d) Made partners lives so stressful and unattractive that many junior people increasingly question whether the benefits of partnership are worth the efforts that an apprenticeship would require
e) Placed greater pressure on partners to generate work and serve clients, thereby reducing the amount of partner time available for mentoring, coaching and development of juniors
f) Shifted responsibility for developing people away from senior professionals and reassigned it to trainers and HR departments (!)
g) Started holding back crucial feedback on whether or not people were going to ‘make it': ostensibly this was to avoid making misleading promises for future promotions, but increasingly gave the impression that the firm wanted people to hang around “one more year” without the firm having to give any reciprocal undertaking
h) Stopped viewing their employees as future partners, and started treating them like REAL employees – resources to be consumed, not assets to be grown
The problem with shift from an “apprenticeship” model to an “employee” model is that it couldn’t have been done at a worse time – right when there was a scarcity of talent, and when a new generation of people came along who could not conceive of investing seven or ten or twelve years of their lives to “make it.”
This is not just a minor change, but a major revolution. Every assumption on which the professional business model was built has gone out the window. Firms don’t offer apprenticeships, and younger people don’t want to serve one. (See the June 11 blogpost at Adam Smith, Esq .)
Firms that abandoned the apprenticeship model now bemoan the fact that turnover among the junior ranks is extraordinarily high and juniors are not “loyal.” Well, duh!
Apprenticeship is dead, but no-one is quite sure what has taken its place. Whatever it is, it doesn’t seem to me to be a well thought-out, internally consistent set of policies and practices. It’s a patchwork quilt covering up the gaps in an old fabric that has been forever torn.
post # 120 — June 28, 2006 — a Managing post
Today I posted a new article on my website entitled Why (Most) Training is Useless .
If training is viewed as an integral part of making change – and not as a stand-alone activity – it can be very powerful. However, the sad truth is that the majority of business training, by me and by everyone else, is a tragic waste of time and money.
Regular readers will note that the article is an expansion of what began as a series of posts on this blog, including Why Training Is Useless , Saving the Training Baby and The Keynote Speaker Charade .
By turning the blog discussion into an article, I hope to make it easier to download and circulate the thoughts to people who might benefit from them but not otherwise encounter them. Do pass on the article to someone who could usefully consider the issues it raises.
Thanks to everyone who contributed to those original discussions (and to my thinking) – in particular, those I quote in the article: Bill Peper, Ted Harro , Cem Kaner , and David G.
If you would like to be emailed automatically when I add future full-length articles to the site, (or know of anyone else that would benefit) I invite you (or them) to sign up for my (free) article email list.
Finally, the training conversation is far from over. Please join in by adding your thoughts and experiences to this blogpost.
