The Marketing Concept

Peter Drucker has pointed out that "there is only one valid definition of business purpose: to create a customer"

I would also add to "keep a customer".

"There is only one boss: the customer. And he can fire everybody in the company, from the chairman on down, simply by spending his smoney somewhere else. ~Sam Walton, founder of Wal-Mart (1918-1992)

Qoute

Since I will be rather busy these days I will post a few quotes here and there.

"It's axiomatic: You’re as good - or as bad - as the character of your Client List. In a very real sense, you are your Client List!" ~Tom Peters

Billable Hours

In the last year I have become much discomforted about the fact that my professional work is billed by the hour. In my own little way I've started to do my proposals base on fixed pricing. I'm grateful that I have the freedom to do so. But when working for an organization that is driven by timesheets I have no other option right now then still reports my hours. (I'm saying this at the risk that some of my colleagues will read this and may not like me saying this)

About four years ago I started to realize the concept of value pricing but had no theoretical understanding of it; it was just something I did. Ed Kless from Sage Software and a senior fellow at Verasage Institute introduce me to the work of Ron Backer, the founder of Verasage Institute, at a project management course I took earlier this year. Today I understand hourly billing much better and what its fallacies are, especially after getting familiar with the work of Ron.

Billing by the hour is of no value to the customer and no risk is involved on part of the person who sells his time.

Here are some quotes from the work of Ron:

"...professionals are successful because they help people achieve their objectives. Mostly, this is a human endeavour and cannot be measured in a satisfaction survey or on a timesheet."

Ron writes about Intellectual Capital. One of them is Social Capital, "this includes your customers, the main reason a business exists....Of the three types of IC [Intellectual Capital], this is perhaps the most overlooked and least leveraged, and yet it is highly valued by customers."

"In a knowledge environment, the system should serve the worker"

Systematizing businesses trough processes is my passion and that is not for the worker to serve the system but as Ron says, “the system should serve the worker" System should create an environment like Thomas Edison once said; “there ain’t no rules around here! We’re trying to accomplish something!”

I just ordered Ron's book "Pricing on Purpose: Creating and Capturing Value". I will write more summaries base on his work.

Valuing our Time and Slavery

I recently watch the movie Amistand. The movie is about how African slaves freed themselves of their oppressors by taking over the Ship they were being transported in to be sold in to slavery, to then face justice for what they did (kill their oppressors) and ultimately gaining their freedom. Somehow after watching the movie I had the feeling that slavery and selling knowledge by the hour seem to have similarities but still selling knowledge by the hour is not as extreme.

It is really a question about what we value. Selling human knowledge by the hour is done when time is not valued. Selling humans in to slavery is when humans are of no value. I’m grateful that human slavery does not exist as it once did. I'll be grateful when the billable hour will be done away with as it exists today.

And the quote for the day, "There is nothing so practical as a good theory" - Ikujiro Nonala and Hirotoka Takeuchi

Ideas are valuable

The founder of VeraSage Institute and author of Mind Over Matter Ron Baker says "Ideas have always and everywhere been more valuable than the physical act of carrying them out." He goes on to say "Economies that create more ideas and test more ideas and turn those ideas into knowledge create a higher standard of living."

I have just finished reading three of Ron's Booklets called, Burying the Billable Hour, Trashing the Timesheet and You are your Customer List. They are fascinating reads and I highly recommend them to Accountants, Lawyers and people in my industry (Technology Consultants).

I will post some summaries from the reading later on.

NASA

In the last little while I've been going over project management material. I was part of a project management course earlier this year and enjoyed it immensely. Recently I obtained a copy of PM Network from Project Management Institute (PMI). One of the articles in the magazine outlines the benefits of sharing knowledge in organizations.

According to the article NASA publishes a magazine called “Ask” (nice title for a magazine) to improve in project management. “The magazine is devoted to profiling project case studies and lessons learned.” Dr. Hoffman from NASA says, “Every project has a degree of uniqueness, and part of the skill of the project team is to determine what they need and what will work.”

Project management is of interest to me, mainly because it is done so poorly in my industry that I work in (if done at all). I hope in some way to make a contribution in making project management better in my industry.

Success

A friend of a friend posted these 5 values on his blog and called them laws. I took the word law out because I tend not to think in terms of laws.

Value: Your true worth is determined by how much more you give in value than you take in payment
Compensation: Your income is determined by how many people you serve and how well you serve them
Influence: Your influence is determined by how abundantly you place other people's interests first
Authenticity: The most valuable gift you have to offer is yourself
Receptivity: The key to effective giving is to stay open to receiving