there will always be someone who can do it cheaper

For most companies offering professional services, the business model is based on cost plus billing. This includes people like lawyers, consultants, accountants, marketing agencies, etc.

This is fine for starting up and getting the $ rolling to keep the lights on. However at some point you realize that that was fine for starting out and that it is completely flawed and doesn't make any economic sense in the long run.

I'll start with one issue with this model, basically you are capping yourself - I cannot generate anymore revenue than:

Number Of Hours I can reasonable work per year X my hourly billing rate

You work an hour, you earn an hour. Growth is extremely tough because for professional services, you end up doing two things:

1. Hire more people to effectively generate more hours per day to sell (ex. just like a manufacturing company would build more and bigger factories)
2. Improve and automate certain processes so that you focus on tasks that add the most value. (ex. just like a manufacturing company invests in better technology like robotics to increase throughput)

Number 1 is bad. Number 2 is great.

But the biggest problem is that you are now distracted. You are doing everything you can to generate more hours because that is what your business model is telling you need to do to make money. You are now faced with a dilemma with your customer because your business model has put you in a position to choose quantity over quality in order to be profitable. You then get into the argument of convincing your customer some task will take that many hours, while they try to convince you it will take less. This wouldn't happen if you focused on selling and delivering value.

Nobody gets into the professional services business to sell time. They want to sell value. Not hours. A salesperson can talk you into buying a Hyundai. They can't talk you into buying a Ferrari. People who buy Ferraris say "I'm buying that". People who buy Hyundais say "I need a car". There are many providers for the Hyundai class of cars, you don't want to be in that ruthless, volatile, price based market. Just like the whole Mac vs. PCs. Apple isn't in the $500 computer market for a very very good reason. You don't want your competitive advantage to be your price or hourly rate. Just like driving on the highway there is always someone behind you driving faster; there will always be someone who can do it cheaper or quicker. And with a global economy that is a fact.

So what is one to do? Don't tie your price to effort - easier said than done of course. Its hard because you are selling something mostly invisible, something customers will not see until "it" has been delivered. But people usually like to see what they are getting for their investment. I don't want to just give money away, but since I can't see "it" I'll settle for seeing hours. Then you fall into the trap of believing that more hours equals more of "it" or better of "it" - which we all know is not the case.

You can't stop tying your price to effort if you are delivering the Hyundais . You need to have the Ferraris of whatever service you are providing. Take an accountant. At first you'll charge an hourly rate. After some time you realize you are consistently providing your customers a better tax return than other accountants in the area. Now you can step out of that ruthless, price based market and start charging a premium or a percentage around a service that kind of looks like a product. Now if customers want cheap, they can go to Joe Blow and Co for their tax needs. Why? because you don't deliver cheap. You deliver value, and you have the numbers to prove it.

So now you got rid of your hourly rate, and are focused on delivering value. What can go wrong? You could still get distracted about what value is. Your perception of value may not be shared by the customer. Here's an example. I did my taxes an H&R Block when I was a student. I loved it because I got my tax return right there, and it only cost me $50 or so. Why wouldn't I love it, I pay them $50, and they give me a cheque for a $1,000 on the spot. A couple of years ago, I went to do my taxes there, and their printer was broken; they couldn't print the cheque. They then sold me on taking my return on their H&R Block debit disaster card. They thought it was an added value, I can use it just like a debit card; and it will charge me a fee per transaction just like a debit card. I was livid. But it didn't end there. The bank that sponsored this debit card, wasn't the bank I use. That bank also stopped issuing bank drafts to non-customers, so I couldn't easily transfer my return to my own bank account. I was left with one option, go to my bank's ATM machine, withdraw the limit I can withdraw, walk to the teller, and deposit it. Rinse and repeat until my tax return was in my account. So here we have a typical case were one's "value add" idea wrecked havoc on a customer of at least five years.

Understand your customers' needs. Understand how to add value. Don't confuse value with effort, then learn how to charge for that value add. Don't be the "cheaper" or "quicker" service, its only a matter of time before someone else figures out how to do it for less or faster.

First Google Maps Mashup Turns 5 Years

Last Thursday the Google Maps mashup turned 5. Paul Rademacher posted this on Craigslist announcing a Google map mashup of housing properties. That post started it all. Back then, there wasn't even an official API for Google Maps. That mashup now lives at housingmaps.com.

Congrats to Paul on this milestone. That experiment started the whole mashup building community, and the reason why Google Maps has an API today and why we have sites like zoocasa, University of Ottawa Campus map, twittervision, and many more mashups built on top of the Google Maps API.

If you are interested in building a Google Maps mashup, get in touch with ThinkWrap's Google Maps Gurus.

Microsoft courier

I just saw this concept video for "Microsoft Courier" and its pretty good. If it makes it out to market, and just based of this video it definitely kicks the iPad's ass! I was shocked that this is coming out of Microsoft; if this makes it out to market, then maybe Microsoft still has hope after all...

On advertising online. Be powerful, not desperate.

Okay, I'm giving Microsoft a break this time, so what could have been "why not microsoft (part 3 of many) turned to be quite a positive video from Microsoft...

This real life story is pretty good, there were no sneaky, below the belt punches. It showed how MS Office worked for this couple and helped them stay organized.

I don't mind witty commercials with side comments against competitors. What bugs me though is when the material is not entirely true and filled with FUD - fear, uncertainty, and doubt. Such commercials come out very weak and desperate.

Here are some examples of advertising that poke fun at competitors, but the difference is that they were powerful messages, and not desperate attempts.

And of course, we can't forget these excellent Mac vs PC ads on the NYT. This was my favorite.

Synchronized Cardioversion is print media's only chance

I just watched an interesting video posted on Mitch Joel's blog under the post "Print is Not Dead". The video is an attempt by some print magazine people to convince the rest of us that print magazines will still be around. Will they? 5 years from now? 10 years from now? I'm betting on no.

This video is exactly the problem with the current print industry. They are still in denial. And why wouldn't they be? It is not an easy to think about a technology killing another - especially when one works in the technology on the receiving end. Besides, what else could they have said? "Yes we are facing some challenges, but we are working on revolutionizing our model?" Yes that will work well for the advertising bottom line.

I absolutely agree with Mitch about the false thinking that Twitter or Facebook are challengers to print magazines. Those are not the technologies that will replace print. I'm surprised they didn't even mention mobile devices? The iPad? any other tablet? hello? However I disagree with the title.

On another blog, linked on Joel's. I read the following comment by "Jen":

If this story is best told in print, why are they telling it on a YouTube video?

Absolutely! Why? These print executive big wigs ought to reply.

So, why will print die? And by print I mean almost all variations of print media. National newspapers, books, national magazines, etc. I say national, because I still see some room for the local, neighborhood type of magazine/newspaper. Those serve the immediate community around them will still have a niche to fill.

1. Its not portable. Yes, yes I can carry it in my bag man-purse but I have to remember to take it with me of course, and I have to pick up the right one that had the article that I wanted to read on the train. So, it is not portable.
2. Its not searchable. You just can't do it with print. Gutenberg did not envision this when he started building the printing press. Way back then, the problem was copying and distributing books, not indexing them since there was no need for that. Unfortunately, these magazine executives are still stuck in the Gutenberg era.
3. I can't share it, I can't tweet it, I can't start a public discussion about it. I can't refer to it later. So I read an article in the latest Times. How do I share it? Well I can lend the magazine out. My dad used to cut out the articles he was interested in and would stick them in his own 1980s version of InstaPaper i.e. a filing cabinet living room floor. But then back to number (2), he couldn't search it, but he did however have an indexing system; that he only knew how to use. My dad would then photocopy that snippet and share it with whoever. Times have changed, and today's technologies simply do what generations before us have done; but better. I'm sure 10 years from now my beloved iPhone and InstaPaper will be prehistoric, so why is it hard to say that print is prehistoric? Its been around for hundreds of years.
4. Its not interactive. This is probably one of the things I have seen the print industry pay attention to. CBS apparently ran an video ad in a magazine in fall of 2009, and Esquire has an augmented reality edition of their magazine. I don't know how well these were received, did it work? well they do it again? who knows? But we know they tried to bring interactive material to a magazine. If you can say it with an interactive video then why just say it in words or pictures?
5. It doesn't know who I am. The last two points are close to me. I am an evangelist for personalized and location aware anything. I would be in fact very disappointed with technology if these two points don't become as main stream as a coffee lineup at Tim Hortons in 20 years. Serving ads blindly is retarded, just like crossing the street blind-folded is retarded. But, if you are being chased by Michael Myers downtown Toronto and you happen to be blind-folded and can't take them off, then sure I guess you have to cross the street blind. This is the state of print advertisement. I'm sure careful consideration is taken to match ads with content, but there is so much you can do when you know very little about who is actually reading.
6. It doesn't know where I am. This is an even bigger point with me. However, this one is not that far off from being realized - I think. The iPad whether it flops or succeeds will give this market the synchronized cardioversion it has been asking for. The ads will target me based on where I am. Advertisers will push their content to my device, and I will only see it if it matches certain criteria about me, my current location, or perhaps whereabouts, the time of day, weather, where I have been going, etc. In the crazy world between my ears I am able to subscribe to content I willingly publish on the Twitters, Facebooks, Foursquares, Flickrs, blog, etc. and present me with ads that match what I publish. If Foursquare shows I am bouncing between Cooksville and Union Station every day, maybe I'll see a Go Train ad when I'm reading an NYT article on an iPad? Or maybe when my kid loses their new cell phone and I go Kunfu Panda on Twitter I see an ad for someone selling the same phone on Kijiji - with the same serial number; then I'll see an ad for a new set of butcher knives on sale.

why not Microsoft (Part 2 of many)

Round 2 of this series. I'm about to gut this video and turn it inside out. Kids, cover your eyes, this will get ugly.

• Delegation of mail and calendar. Once upon a time, in a world when dinosaurs roamed freely on this Earth there was a need to do this. (Okay, it wasn't that long ago, but you get the point). However today, I don't think this is needed anymore. You get an e-mail invite, and you can quickly accept or reject it, find out if it conflicts with other meetings, etc. The need to delegate your mail and calendar is now obsolete. There is an exception to every thing, and some executives may still have a need for this, but come on, how many of these executives are there out there? This point is moot at best.
  
• Folders or labels. That is the question. Yes you can't create folders because the whole concept of organizing mail in folders is from that 'dinosaur era' I mentioned above. The problem with folders, is its one-to-one. How do I file an e-mail as "High priority, I'll lose my job if I don't get this sorted out ASAP" and "this is for project X". Then after completing this task, I want to tag it with my "followup" tag so that I remember to check in a month later. I don't want to lose the other tags. I haven't found a way. Again, once upon a time, when you got physical mail you had to file it somewhere, you can only file it once. E-mail is different, and if you haven't figured that one out yet, then yes you should get an assistant.
• Full corporate directory, and contact delegation. Ok you lost me here. There is an address book. I can search for people in it. Thats all most of us need.
  
• Folks, its called GMail, and not GRemoteWipePhone. If that is available via Outlook, then it shouldn't. Remember point #3 from the first part? A costly excess of tools for people who don't use them.
• Can't Manage Conference Rooms. These guys must be looking at the regular, public gmail and not the corporate google apps. You can manage conference rooms, and schedules. AND double booking still happens on Outlook. Don't blame the tools.
• Sure, lets say you do need to install all this stuff to hookup Outlook with GMail. Sounds like FUD to me, but for the sake of argument I will accept this. Here, the problem is really Outlook. The world is moving to web based applications, keep up. You only need a browser if you were using it via the web interface, which by the way does not contain a costly excess of tools for people that don't use them. On the other hand, if you are obsessed with Outlook or absolutely need it - for whatever reason - , then perhaps Google Apps and Gmail is not for you.

Judge for yourself.

Why not Microsoft (Part 1 of many)

I just saw this Microsoft channel on Youtube comparing Microsoft solutions with Google's. I couldn't resist writing this up.

1. If I need to mix different features in a blender then its not easy to manage. In fact it could very well turn out messy.
2. "Documents zip across back and forth without a hitch". Okay, but what usually happens when you have "documents zipping back and forth, and back and forth, and back and forth, and..." Think turning the blender on without closing the lid.
   I'm also not sure why the diagram above shows a "phone" between a "PC" and a "browser"? Are you seriously telling me to e-mail my 40MB powerpoint slide on dialup? back and forth..back and forth..back and forth?
3. "A costly excess of tools for people who don't use them" I just don't understand how the fool who approved this could have done so while keeping a straight face? Isn't MS Word and Outlook bloated beyond belief with tools that most people don't use?

Here's the video. Judge for yourself.