Slides presented at the NY Accounting and Technology Show.

1. Introduction to the
Firm of the Future
Ed Kless
@edkless
#fotf
#laat2014

2. What is a Business Model?
How your firm creates
value for and captures
value from customers.

3. “Disruptive threats
come inherently
not from new
technology but
from new
business
models.”
Andy Grove, Founder,
Intel

4. Two Business Models
Professional Knowledge Firm
Profit =
Capital
management
X Effectiveness X
Pricing on
Purpose
↑ ↑ ↑ ↑

5. 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 created by PKFs

6. From Revenue
to Profit

8. $0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
Cost
Price
Value

10. From Capacity
to Capital

11. Four Forms of Capital
• Financial
• Intellectual
• Structural
• Social

12. Rival Asset
Non-Rival Asset

14. From Efficiency
to Effectiveness

15. The Antithesis of Efficiency
• This conference
• All continuing education
• Knowledge management
• Total quality service
• Mentoring and coaching
• Networking
• Business development
• Social media
• Pricing on purpose

16. What you can measure
you can manage
––The McKinsey maxim

17. “The only way to look into the future
is use theories since conclusive data
is only available about the past.”
–-Clayton Christensen, et. al.
Seeing What’s Next

18. From Cost-plus
to Value-led

19. 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 For scope creep, utilize Change Requests
⑧ Perform After Action Reviews (AAR)

20. “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.”
Warren Buffet

21. A 1% increase change in, yields
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
- Fixed Costs + Revenue - Variable
costs
+ Price
2.7%
3.7%
7.3%
11.0%
1.5%
2.5%
4.6%
7.1%
McKinsey AT Kearny

22. A Tale of Two Theories
The Labor Theory of Value
The Subjective Theory of Value

23. COST-LED PRICING
PRICE-LED COSTING
Customer Value Price Cost Service
Service Cost Price Value Customer

24. Seven Ts for creating choices
1) Terms
2) Technology
3) Timing
4) Talent
5) Transference
6) Tailoring
7) Travel

25. Behavioral Economics

26. Anchoring

27. Baron Joseph
von Neinbach’s Model
WA HF PF
C
B
A

28. Firm of the Future
Symposium
Ed Kless
@edkless
#fotf
#laat2014
Ed.Kless@Sage.com
NA.Sage.com/leap
http://bit.ly/1me9S7j