On September 23, I wrote the post Two cheers for Gary Boomer, regarding Gary’s recurring column in Accounting Today where he advocated Value Pricing. I only gave him two cheers because he still insists on denominating accounting firm metrics in hours, even though this is like using a ruler to measure your oven’s temperature.
Since accounting firms sell intellectual capital (IC), dividing by the number of hours is useless. I will go even further. It’s down right dangerous, because it keeps professionals mired in the mentality they sell time. If you fill out a timesheet in 6-minute increments, day-in-and-day-out, how could you not believe that what you sell is time?
Well, Senior Fellow Michelle Golden took me to task for this post. She says it’s unfair that I single out Gary and criticize him while ignoring most of the other consultants to the profession who still profess the nonsense of both the billable hour and timesheets.
It’s a valid point.
As far as I can tell, Gary has made the most progress, of all the CPA consultants, in understanding that accounting firms sell intellectual capital, should not price by the hour, and should offer Fixed Price Agreements and Change Orders. He writes cogently about these topics. He even seems to be coming around to trashing the timesheet, although I’m waiting for him to take a stand and say they are a cancer that need to be cut out of all PKFs. Period. No equivocations. Better yet, Sign our Declaration of Independence.
Why don’t we take on the other consultants? Well, I have. I’ve debated just about everyone of them, to no avail. Though most of them do advocate Value Pricing, they seem to be paranoid at the thought of advocating eliminating timesheets. For some reason, they think this isn’t feasible, even though we have proved, conclusively, that it can be done. I guess I get tired of wasting intellectual capital on people who are intellectually lazy and refuse to read books, or learn anything new.
Gary is different. He has wrestled with this issue, as have I, for at least 15 years. I admire that greatly. We should wrestle with significant issues, especially when they challenge our firmly held beliefs of the way the world works. My five books have been a mea culpa, refuting my CPA view of the world as one of cost, while having no concept of value. It was a form of what is known as negative intellectual capital.
Gary’s recent article in the October 8-21, 2007 of Accounting Today is entitled “Pricing for Value,” and it documents his education on this topic. He advocates intellectual capital, creating a Chief Value Officer position, and even discusses the concept of negative intellectual capital.
It’s an excellent article, a clarion call for firm leaders to recognize the imperatives of a knowledge economy.
It leaves me wondering why more of Boomer’s firms haven’t trashed timesheets. If the objective is to leverage intellectual capital—and price it commensurate with value—firms must recognize the timesheet is one of the major obstacles to achieving this goal.
There is no doubt, based upon the empirical evidence: The best pricers across all PKF sectors—from advertising agencies to IT firms—have one thing in common: They don’t maintain timesheets. I believe this is a causal relationship, not just correlative.
Getting rid of timesheets is not the end in and of itself. Becoming a PKF that prices for value is. Eliminating timesheets is the means to the end.
He who says “A” must say “B.” If you want to price for value, you must dump timesheets.
That is where the education, not to mention logic, trail leads you. Gary is almost there.