Episode #122: Free-Rider Friday – December 2016

Ron’s Topics

Pot > Starbucks?

“Pot of gold,” The Economist, November 19, 2016

Three-fifths of the United States population live in states that allow cannabis (some 28 states allow some form of use, either recreational or medical).

32 million Americans use cannabis, a $6 billion industry in 2015, expected to triple by 2020.

Bigger firms may have edge (Coca-Cola licensing bottlers), interstate bans, regulations, etc. Tobacco companies might come into the industry and cause consolidation.

Colorado now has more cannabis stores than Starbucks outlets!

Are you in the top one percent?

“The one percenter next door,” The Economist, November 26, 2016

According to the Global Wealth Report by the Credit Suisse Research Institute:

• Survey counts household assets, not income

• $2,222 in net worth makes you wealthier than half the world’s population

• $71,560 puts you in the top tenth

• $744,400, you are in the global 1%

• World’s wealth = $256 trillion (3.4x world’s GDP)

• This wealth divided equally = $52,819/person

• Actual, top 10% own (created) 89% of it

• Over 40% of Americans belong to the top tenth

• 18M to top 1%

• 21 million have debts that exceed assets

Are our pets in the top one percent?

“Airbnb for canines,” The Economist, December 3, 2016

San Francisco and Seattle have more owned dogs than children. Americans spent $400+ million on Halloween costumes for its pets. The Pet food industry grew by 40%, a $43 billion industry. Rover and DogVacay, new startups that offer kennels away from home - $30/night paid to the sitter (20% goes to the company). GPS tracking allows owner to see how far the dog was walked.

Brexit Disaster?

“Put out more deck chairs,” The Economist, November 26, 2016

What is the collective noun for a group of economists? A gloom, a regression, an assumption. How about just, "Wrong."

Brexit was predicted to be a disaster for the UK, but:

• Apple is consolidating 8 offices, 1400 employees, could double in coming years

• Goolge is building a new HQ alongside King’s Cross station, creating 3,000 new jobs by 2020

• Facebook is expanding by ½, to 1,500, in a new London office to open 2017

• IBM is building four new data centers, tripling capacity, creating hundreds of jobs

The tech is one of the UK’s best sectors: it’s grown 32% faster from 2010-14 than the rest of the economy. Britain issues 200 visas to non-EU tech works (Exceptional Talent scheme).

GE wants “FastWorks,” not Six-Sigma

“Machines Learning,” The Economist, December 3, 2016

Siemens is half as profitable as GE. GE is reinventing itself, while Siemens is staying close to roots.

Internet of Things, $11 trillion in economic value annually, according to McKinsey Global Institute. One-third could be in manufacturing.

GE’s platform is Predix, an Android for machines to manage clusters it builds, from wind turbines to locomotives, and jet airplanes.

Siemens platform is Mindsphere, which is more vertical, and a closed system.

GE used to be obsessed with Six Sigma and incremental improvements. Now it wants to take a page from startups and start making mistakes—they call it “FastWorks.”

Create a minimum viable product, discard it quickly if it fails.

Ed’s Topics

Visit to the Las Vegas Neon Museum. It was a walk through the history of Las Vegas condensed into 90 minutes. 

Zappos Tour

• Name derived from Spanish word for shoe

• F.A.C.E. (Folks who Answer CEO Email) Team

• PEC—Personal Emotional Connections

Pope Francis, equating media interest to coprophilia [arousal from excrement].

Interview on Sage Podcast with Gret Glyer, founder of DonorSee (website and App).

Episode #121: Interview with Kirk Bowman, Visionary of Value at Art of Value

Kirk Bowman’s Biography

If you really want to talk shop, Kirk brings over 15 years of experience developing FileMaker databases and web applications as well as systems integration. As the principal of MightyData, Kirk heads an elite team of FileMaker Certified Developers and Authorized Trainers. He is a renowned speaker at the FileMaker Developer Conference and PauseOnError un-conference. Anyone who knows Kirk realizes that to become the Visionary of Value means walking the walk and talking the talk. To that end, Kirk is a Practicing Fellow at the VeraSage Institute and a proud graduate of EntreLeadership.

His podcast, which is excellent: ArtofValue.

Segment One—Ed’s Questions

Ed and Kirk live five minutes apart and both attended the Allen Father Daughter Ball. 

You used to be a naysayer with respect to hourly billing. Tell us your story of conversion, and transition to Value Pricing.

What big one or two mistakes did you make during the transition?

What were some of things that surprised you—including internally—of the transition?

Do you think you’ve gotten better at the value conversation?

Are there particular questions that you use to open the value conversation?

Where did you find more resistance in your transition, internal or from your customers?

Why were existing customers harder to convert than new ones?

Segment Two—Ron’s Questions

There are so many new podcasts coming out, and we hear so much about pricing. What do you think is the future of Value Pricing?

I have heard you say that hourly billing requires a calculator, but VP requires courage. Can you prove that statement?

My new mantra has been that value is a feeling, not a number. Professional’s don’t have a high tolerance for ambiguity; we rather be precisely wrong rather than approximately right. How do you deal with that when you help people transition?

In your transition, you started with new customers. I started, in 1989, with current customers first. If new customers like it, why wouldn’t current customers? Have you seen firms start with current customers?

Why do you think hourly billing sticks around and is endemic, and ubiquitous, as it is?

Are people just satisficing (satisfy + suffice)? In other, hourly billing is good enough?

With Value Pricing you learn from your successes and mistakes. Would you agree?

Do you think by offering options you are more focuses on the outcomes rather than delivering a series of tasks?

Segment Three—Ed’s Questions

Tell us about the creation and evolution of your podcast, The Art of Value.

An unfair question: Any particular guests, or particular moment that jumps out at you, from your show. Kirk replied:

• Joni Newkirk, former pricer at Disney who converted the pricing at Walt Disney World.

• Interview Rabbi Daniel Lapin

Have you recorded any shows that you didn’t publish?

What advice would you give to someone interested in starting a podcast?

Tell us about your Value Pricing consulting.

Segment Four—Ron’s Questions

What about the timesheet?

I think it inhibits good pricing because it never breaks that fundamental nexus between effort and value. Do you agree?

Ed says he can see a future where project management dies. Do think it could die?

You talk a lot on your show about the Value Lifestyle. Unpack what you mean by that term.

You’re a tech guy. What’s your take on Richard and Daniel Susskind book The Future of the Professions? Are you a pessimist or an optimist with respect to the future?

What one piece of advice would you give to firms with respect to pricing?

Episode #120: Strategic Planning: Efficient, effective, neither?

Ed’s LinkedIn Post

Five counterintuitive truths about strategic planning

1. Profit is not an adequate foundation for a strategy

2. We do not want for answers; we suffer from an inability to ask new and better questions

3. The Mother of All strategic Questions does not come back to revenue

4. Strategic planning is more creative than analytical

5. Strategy is about effectiveness, not efficiency

As modified by Great Plains Software leadership, circa 1990

Summary of The Rise and Fall of Strategic Planning, by Henry Mintzberg, 1994

Planning is future thinking, or controlling the future.

Planning = Latin = planum “meaning flat surface.” The word entered English language 17th century, referring principally to forms, such as maps or blueprints drawn on flat surfaces.

The squirrel plans (stores nuts): are they more sophisticated or is planning less so?

If only you dumbbells executed better!

If you so smart, why didn’t you take into account we are dumbbells?

To Michael Porter, strategy = position.

To Peter Drucker, strategy = perspective (the theory of thebusiness).

Fundamental fallacies of planning

• Predetermination (predicting the future)

• Detachment (from operations/managers

• Formalization

All three = The Grand Fallacy: that analysis can produce synthesis.

Analysis ≠ Synthesis, and strategic planning is not strategy formulation, so the term is an oxymoron.

Strategic planning (SP) is less about creativity and more about rearranging established categories; stability over adaptability, or institutionalized incrementalism.

It’s more extrapolation than invention.

The quantification of SP is not much more than quantification of goals as a means of control.

Jack Welch dismantled GE’s SP; he wanted more judgment not data.

PPBS = Planning-Programming-Budgeting System. Robert McNamara, Secretary of Defense under President Johnson. Vietnam was USA’s most humiliating military defeat, ever. PPBS has failed everywhere and at all times.

But the planners will say, “Any plan is better than none at all. It’s the process that counts (SP is not Utopia, only the road to it).

But SP is a rain dance, and the process improves the dancing not the weather.

SP assumes there’s “the one best way” to formulate and implement strategy, inspired by Frederick W. Taylor.

SP is not defended for what it accomplishes but for what it symbolizes—rationality.

Henry Kissinger referred to planning as “a sop to administrative theory.”

Pseudo-scientific knowledge can be more dangerous than plain ignorance or common sense.

Americans get off on strategy like French get off on good food.

How do you make God laugh? Tell him your plans.

Episode #119: Interview with Accounting Thought Leader Joe Woodard

Ed and I were honored to have Joe Woodard on the show.

As an author, consultant, Intuit contractor and national speaker, Joe has trained over 75,000 accounting professionals in the areas of practice development, changing technology trends, and how to maximize the use of QuickBooks in their accounting practices. 

In 2012, 2014 and 2015, Joe was recognized by Accounting Today as one of the Top 100 Influencers within the Accounting Profession. In 2008, Joe was recognized by CPA Practice Advisor as one of the top 40 up and coming thought leaders under the age of 40. 

Woodard's Vision

Woodard has adopted a powerful vision: “To transform small business through small business advisors.”

Woodard’s purpose is an extension of its vision – a single statement that shapes every task Woodard performs to achieve its vision: “We empower small business advisors.” 

What Woodard Does

As part of a larger purpose to empower small business advisors, Woodard fosters networking relationships among small business advisors, conducts the highest quality learning experiences for small business advisors, and builds relevant, powerful resources for small business advisors.

Questions We Asked Joe

• Explain your Vision Statement

• Why focus on small business as opposed to medium or large business?

• Why accountants, and not lawyers, or others who serve small businesses?

• What’s your view on the Efficiency vs. Effectiveness (Eff’ing) debate?

• What are the major challenges and opportunities you see facing the accounting profession? (Joe thinks Automation for both).

• Do you agree with the strategy of giving away compliance work for free in order to get the advisory services? After all, I’ve been hearing about the death of compliance services since I’ve been in the accounting profession. Do you really see compliance work going away?

• When you look out at the vast majority of the accounting profession, do you really think it’s possible for them to make the transition to advisory services?

• Do you see a lot of firms moving to Value PricingWhat is your opinion on timesheets? And why do consultants to the profession advocate for them?

• We’re all fans of the Susskind book, The Future of the Professions. Tell us about your “Rise of the Machines” webinars and work.

• The competition that kills you doesn’t look like you. What will disrupt the profession?

• Have you use Amy, the AI that helps you schedule meetings?

• Are you in alignment with Ray Kurzweil on the arrival of the Singularity by 2029?

• What advice would you give a young CPA about to launch his career?