Wednesday, September 28, 2005

David Maister Speaks and I'm Listening!

Responding to my Legal KM Economics & Realization Rates post, the professional services consulting guru was kind enough to send me his thoughts on the matter (published below). David will also be including a copy of this exchange under the 'Ask David a Question' feature on his website (highly recommended, btw).

Here is David Maister's response in it's entirely:
"You're not missing anything, but you've been sucked into a very old "short-term impact v. long-term impact" debate. I discussed all of this in the introduction to my book TRUE PROFESSIONALISM.

Look at it this way: is it ever profitable for any firm in any business to find new ways to produce whatever they produce to the same quality with lower cost? Is it ever worth getting more efficient than your competitors? The answer must be yes, surely?

If you can achieve the same quality with lesser cost, you get options: pass some savings on to clients, or keep some for yourself, or at a minimum, convince the client that you are acting professionally, keeping their interests at heart and looking for ways to save them money.

What would it be worth to have clients believe that you were that kind of provider? What does it cost you if they believe you are not looking for ways to be efficient but are looking for ways to maximize the bill, not minimize it.

Now think about your answers to all these questions when you are the buyer. How would you (do you) feel about these things if a consultant like me (or an accountant) was trying to serve you. Could you tell if he or she was looking to save you money, or was looking to get the number of billable hours up. If you could tell, would you care?

Yes, in the short run, it may cost you money to be efficient or give more value for a fixed cost, but come on, people, that's what competition is all about in a free market economy. Everything else is sophistry.

It's got nothing to do with my four key drivers, our methods of pricing or how we do the accounting. You make money if you are becoming more valuable or more efficient. Everything else is burying your head in the sand.

It does no good to remain inefficient until the marketplace forces you to reduce lower prices, and just hope no competitor gives the game away."
David's opinions are overwhelmingly powerful because of this big picture, long term approach. I suspect it's also why his books populate so many senior partner's bookshelves. Thanks David!

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