introduction to the firm of the future
DESCRIPTION
Slides presented at the NY Accounting and Technology Show.TRANSCRIPT
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Introduction to the Firm of the Future
Ed Kless@edkless
#fotf#laat2014
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What is a Business Model?
How your firm creates value for and captures value from customers.
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“Disruptive threats come inherently
not from new technology but
from new business models.”
Andy Grove, Founder, Intel
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Two Business Models
Professional Knowledge Firm
Profit = Capital management
X Effectiveness X Pricing on Purpose
↑ ↑ ↑ ↑
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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
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From Revenue to Profit
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Cost$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
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From Capacityto Capital
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Four Forms of Capital
• Financial• Intellectual• Structural• Social
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Rival Asset
Non-Rival Asset
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From Efficiency to Effectiveness
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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
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What you can measure you can manage
––The McKinsey maxim
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“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
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From Cost-plusto Value-led
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Eight Steps to Pricing on Purpose
① Conversation with customer② Pricing the customer, not the services③ Developing and pricing options④ Present options to customer⑤ Option selected codified into an FPA⑥ Proper project management⑦ For scope creep, utilize Change Requests⑧ Perform After Action Reviews (AAR)
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“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
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A 1% increase change in, yields
- Fixed Costs + Revenue - Variable costs
+ Price0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2.7%3.7%
7.3%
11.0%
1.5%2.5%
4.6%
7.1%
McKinsey AT Kearny
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A Tale of Two Theories
The Labor Theory of Value
The Subjective Theory of Value
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COST-LED PRICING
PRICE-LED COSTING
Customer Value Price Cost Service
Service Cost Price Value Customer
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Seven Ts for creating choices
1) Terms2) Technology3) Timing4) Talent5) Transference6) Tailoring7) Travel
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Behavioral Economics
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Anchoring
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Baron Joseph von Neinbach’s Model
WA HF PF
C
B
A
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Firm of the Future Symposium
Ed Kless@edkless
#fotf#laat2014
NA.Sage.com/leaphttp://bit.ly/1me9S7j