I believe a professionals will be more successful and create more value for their customers if they begin to view themselves as professional knowledge firms rather then professional service firms.
This presentation for media and industry analysts is an adapted version of the Firm of the Future Symposium that I deliver with the VeraSage Institute's founder, Ron Baker.
8. Four Assertions
1) Growth without profit is perilous
2) Nonrival assets have more leverage than
rival assets
3) Effectiveness is always and everywhere
more important than efficiency
4) Value-led pricing is superior to cost-plus
pricing for capturing value
9. Four Defenses of Timesheets
1) Pricing
2) Productivity
3) Cost accounting
4) Project management
10. Professional Knowledge Firm
Professional Knowledge Firm
Capital Pricing on
Profit = X Effectiveness X
management Purpose
11. Two Business Models
Professional Knowledge Firm
Capital Pricing on
Profit = X Effectiveness X
management Purpose
↑ ↑ ↑ ↑
20. How Knowledge Workers are Unique
• They own the means of production
• Firms need them more than they need firms—
balance has shifted
• Office is their servant, not their master
• Effectiveness is far more important than
efficiency
• Judgments are more important than
measurements
• Ultimately, they are volunteers
23. The Antithesis of Efficiency
• Continuing education
• Knowledge management/CKO
• Total Quality Service (Ritz-Carlton)
• Mentoring and coaching
• Networking
• Business development
• Social media
• Pricing on purpose
29. Warren Buffet
“The single most important decision in evaluating
a business is pricing power. If you’ve got the
power to raise prices without losing business to a
competitor, you’ve got a very good business. And
if you have to have a prayer session before
raising the price by 10 percent, then you’ve got a
terrible business.”
30. The 5 Cs of Value
• Comprehend the key value drivers for
customers
• Create value for customers
• Communicate the value that you create
• Convince customers that they must pay
for value
• Capture value with effective price
strategies
34. A Tale of Two Theories
The Labor Theory of Value
The Subjective Theory of Value
35. Salaries + Overhead + DNI
Expected Hours
= Hourly Rate
Precise, but precisely wrong
36. Cost-led Pricing
Service Cost Price Value Customer
Customer Value Price Cost Service
Value-led Pricing
37. Eight Steps to Pricing on Purpose
① Conversation with customer
② Pricing the customer, not the services
③ Developing and pricing options
④ Present options to customer
⑤ Option selected codified into an FPA
⑥ Proper project management
⑦ Utilize change requests
⑧ Perform after action reviews (AAR)
38. Five Ts to Offering Options
1) Terms
2) Technology
3) Timing
4) Talent
5) Training
39. Baron Joseph
von Neinbach’s Model
WA HF PF
C
B
A
*Because of the psychology of anchoring, the more you ask for the more you get.*This has been demonstrated in almost 50 years of experiments by behavioral psychologist, many of which are featured in the new book, Priceless.