Dan Morris KGO Radio Interview on Summer Tax Tips

I was interviewed by KGO’s Michael Finney on summer tax tips on behalf of CalCPA.

Michael Finney Interview of Dan Morris KGO Radio 06-22-2013

The Fun Side of a Service Failure: Or – Why a Company Should Have a Contact Us Connection

Once in a great while, we each encounter service challenges. The experience simply didn’t live up to its expectations (I think that is called the Expectation Gap) and my family and I survived one this evening.

We were in Bellevue, Washington for my daughter’s cheer leading competition – and we chose to go to dinner at McCormick & Schmick’s (now part of the Landry Group of restaurants). The menu offered three types of crab and I was in the mood for some Dungeness Crab. One option was Lemon and Garlic and before ordering I asked our waiter some questions (yes it would warm) and a couple of other small items and placed my order. When the meal arrived, there were 3 large sections (call that a crab and a half) and it was in a deep bowl presented on top of some greens, mushrooms, and other vegetables (which I assume were tasty – but never tasted (see copy of message to the leadership below).

Needless to say – I held two conversations with the manager and never did they offer any form of adjustment (mistake in my humble opinion). Now the story gets better. I decide I will contact the leadership and express my suggestions and observations. I went to their website and they do not have a contact us (via the website) button or link (or if they did – it was well hidden). They did have telephone numbers to call and a mailing address to write a letter, but no electronic communication. I could email banquets and make a reservation at one of their locations, but no direct communication option. But – at the bottom of the page was a Facebook button so I clicked it and landed on their Facebook page. So, humble readers, I used their Facebook page to share my story and I have provided a copy of my text here:

Dear Leadership of McCormick & Schmick’s –

I apologize for using Facebook for this message but your website appears to exclude an “e” connection to your leadership –

Suggestion Number 1: Add that to your website so I don’t have provide public feedback – or if it is on your website – make very easy to connect (examples – look at an airline – they have a contact us by multiple ways so they don’t add to a customer’s frustration).

So – here goes –

Suggestion Number 2: Bellevue, Washington – apparently I must have been the guinea pig on a new method for garlic/lemon crab. Now – I understood it was to be “goopy” as a dish- however I never anticipated a presentation with part of the meal below the crab sections, the crab was split but not cracked, I wasn’t provided any cracking tools (until I requested them) – I wasn’t provided a plate for my shells (they ultimately filled up my bowl with the vegetables (guess what – never tasted the vegetables – since heck, they were covered with shells, and then I had to ask for a picking fork (which the restaurant didn’t really have).

Now I have picked oh, maybe 200+ Dungeness in my life – so picking was no big issue – but it would have been nice if….

Hint #2: provide a plate with some wet (with lemon) towels so my hands could at least feel a little clean – never offered or provided

Hint #3: if the guest suggests there is a presentation dilemma as to how best to devour the dish – do not have the waiter suggest that no one will really complain if you “suck” it out of the shell – that may be fine in a backyard crab feed – but heck – we were sitting in your restaurant and I didn’t feel it was appropriate.

Hint 4: When the manager stops by because the waiter (smartly) suggested it since, – the presentation was a disaster and having been told it was a “new” dish – the manager should not only bring a bigger dish for my shells (thank you) but – offer some form of a comp – I wasn’t asking – but let me suggest

Hint 5: Study Marriott (or better yet the Ritz Carlton) and learn how to deal with a customer disappointment – as the best way to earn loyalty is to fix the hiccups while they are in progress and do not have the customer beg for something (not classy – was just simply going to write the CEO a letter – the old fashioned way – but I think Facebook may be better – since now all of your fans will learn from my experience)

Hint 6: When the waiter was advised that we were already Landry card holders – he might have considered that this wasn’t our first restaurant rodeo – but never even considered that and the manager apparently didn’t either

Hint 7: Fixing challenges is easier if your team handles them at the scene – I asked the manager about the job experience of our waiter and was informed that our waiter was in his first waiting job – he was pleasant but under coached – I suggest having a better education program – that is empower them to fix it – offer a free dessert, discount the meal – something – but nope nothing other than to discuss that maybe there could be a better presentation.

Hint 8: Pay attention to customers that care enough to write more than a simple message – plus I lead global seminars on Total Quality Service – and great real life experience stories are the best ones – you might want to follow up with me. Now – on that website version – you would have captured all of my contact information – now you’ll have to find me the old fashioned way – I hope you do I would like to learn how this experience isn’t repeated.

Hint 9: My wife reminded me that white wine should be served in chilled/cold glass and not in one recently warm from dishwasher – as warm glasses ruin cold wine.

Otherwise – nice location – food tasted well, service was genuine (if simply inexperienced – which I can live with as we all start out somewhere – if you want learn how to coach servers – visit Berns Steakhouse in Tampa – there a waiter will have been an assistant waiter for a year – before being allowed to serve alone and they rarely have service problems) but food quality is only 1/3rd of the challenge any restaurant faces – presentation/ease of eating the meal is another 1/3rd and this was, unfortunately, a failure. I hope you are able to remedy this.

BTW – your website would have also requested, the date of my meal (tonight), the location (Bellevue), the time of reservation (8:15), etc. – to make it easier for you to reach out and connect with me.

I hope you do.

Now – I didn’t sign it since they have my Facebook name from the posting – we’ll see if they reach out. I will let you know if they do. Service failures occur frequently. It is how a business fixes the problem that separates success from failure. McCormick & Schmick’s was a Portland restaurant group (my home town) and they went bankrupt a few years ago and were acquired. Maybe I understand now why they did. Maybe they simply didn’t understand TQS – and all service businesses must master total quality service before they can ever achieve pricing power and above average profits. Failures in service lead to business failures and that is a cost a business can not afford to take.

Book Review: Heads in Beds: a Reckless Memoir of Hotels, Hustles, and So-Called Hospitality

I must admit I have been derelict in my responsibilities of sharing with our Community the wonderful learning I encounter when reading books that I find by merely browsing virtual and real bookstores. Although the recommended reads from our entire Book Club have nearly always lead to pleasant page turns – once in a great while I stumble upon an outlier and Heads in Beds: A Reckless Memoir of Hotels, Hustles, and So-Called Hospitality, by Jacob Tomsky is a 5-Star – belly busting – journey through the eyes of a front desk agent of 4 and 5 star properties. Tomsky writes about lodging like Greg Kyte writes about accounting. For the insiders and experienced travelers you’ll find the humor both funny and sick and you’ll never leave your toothbrush unlocked again nor will you ever turn down the opportunity to have a bellman schlep your bags to your room while you hand over your 1s, 5s, and 10s for the privilege.

Tomsky is a pseudonym as he is writing about real life and real people. He attempts to opaque the hotels where he has worked (albeit not overly opaque – just enough to keep the predator lawyers from preventing its publication). This is simply a joy to read. As a frequent guest, and one with my own set of horror stories and comic relief realities, I appreciated the frankness of Tomsky’s writing.

Tomsky begins in New Orleans after concluding that his recent Philosophy degree doesn’t provide easy career entry and figuring that any job was better than starvation, he begins working as a valet at a restaurant where he begins learning the hustles and ropes of true customer service. He also learns how detrimental negative leadership is (besides being a fun and enjoyable read about hotels, guests, and life and times a professional front desk agent – this book has some great lessons about the value of excellent leadership (aka the Ritz Carlton way) and the cancers created by toxic turds that focus on abuse of power and profits above customers and people).

After a short yet honest effort as the restaurant valet, Tomsky learns of a new 5 star hotel being renovated and about to be opened (pre-Katrina) in the heart of New Orleans and is hired as a valet. Here he learns about the value of Total Quality Service (TQS). At the new hotel, the entire pre-opening team is paid for two weeks, just for training in the hotel’s way of service. They have a pre-opening party and clearly the opening management team is dedicated to serving their customers beyond their expectations. When one of the valet’s inquires how that might happen, the instructor quips back and suggests he thinks about something that would be desired, appreciated, and yet unexpressed by the guest. The valet retorts, maybe a guest that arrives with a dirty car he would like his car washed and detailed and the instructor replies that is exactly the kind of service said was desirable. When the valet asked a follow-up by asking if he was “to drive the car over to his home in the 9th Ward, and wash/detail it there and drive it back”? the manager said, not only “Yes, but I’ll pay you extra for the service realizing you will have lost some tips while you were away”. Think about that – how are your team members thinking of providing service and would you back it up with your wallet?

Soon, our author is recognized as better than valet material and is offered a spot at the front desk as part of the “front of house”. Here he learns about systems and processes. Realizes why a bellman never retires (can’t handle the pay cut) – how to summon a bellman by yelling “front” and handing the keys to the bellman making the guest have to negotiate them back or be obliged to be served. He learns to remember names, preferences, and handle any sort of challenge. He works for caring leaders and management that actually support their entire team.

Tomsky reminds us that once a hotel opens it never closes and reminds the reader that you will generally never find a lock on the front doors of a luxury hotel. They can fail to be in business, but while in business they do not close. Tomsky notes that “hotels are methadone clinics for the travel addicted” – safe refuges from the insanity of being away from home.

Early on in his career as he was studying the hotel management program he noted that “….{it is} (A) strange thing to see a hotel translated into a program, every room and floor represented, every guest assigned a profile, rate, and requests. A portion of the work involved learning the room codes: NT = no tub. NC = no closet. SB = small bathroom. And here is a great one: Ne = near elevator. Or another guest favorite: NV = no view.” This level of understanding of the hotel’s capacity lead me to think about PKFs and how could we create such codes for our services, our team, and our customers. One I thought of was NF = No Future.

While learning how to balance 10 requests for 8 rooms with a view, Tomsky notes that “services is not about being up-front and honest. Service is about minimizing negatives and creating the illusion of perfection.” I must admit part of this perspective scares me but it certainly contains some wisdom.

My first indication this was a book Greg Kyte would appreciate is when learning that it is perfectly acceptable by the front desk to wipe out that in-room movie off your bill (along with mini-bar charges {I must admit that this doesn’t sit well with me but I appreciate the authority the front desk has for taking care of business and seeing that happy customers return}). As he is describing that he doesn’t really need the full story of the accidental movie click – he begins mid-sentence with a guest calling the front desk “Yeah , I’m in room 1205. I accidentally ordered a movie. Can you take it off my bill? “Certainly, sir”. Over to the movie console to cancel Asian Secretaries Rike it Rough (italics in original), two minutes and seven seconds into playback. I guess the opening credits were sufficient” (that last phrase is just so GK)

After a significant stint at the font desk and clearly demonstrating that his philosophy degree has provided a leg up on the others, Tomsky is offered his first opportunity into management where he is offered the assistant housekeeping manager position. This is clearly not for the faint of heart. He writes about the humorous and sad of housekeeping. The amount of work and coordination it takes to provide turn-down servicing while the guests are away, maintaining a clear hallway, and providing extra-ordinary service like it is just an everyday occurrence.

One thing the author is adamant about is that housekeepers do not steal. They are the first blamed when careless guests (frequently too drunk to remember being to frisky when they swept that diamond earring out of their ears playing some form of cat and mouse game awake the next morning and begin looking for their missing items. And you know what. I believe him. From his time in housekeeping it is clear that there is way more to what he refers to as the “heart of the house” then meets the eye of the common guest.

While standing hip deep in dirty sheet and towels in the bowels of the hotel, it hits him that it is time to leave and start a new journey. He leaves New Orleans for Europe where he spends his savings drinking and staring at the stars before he returns to the States and lands in New York City. Initially he applies for any job but one in the only industry he knows. And ultimately he applies at a 4 star NYC hotel as he is about to be evicted from his boarding house and again enters the life and times of a professional front desk agent. Here he is tested by the doorman for honesty, hustled by bellman, and begins again providing extraordinary service to commoners and celebrities alike. He learns the hustle of New York where he frequently explains that a $20 or $50 bill cleanly wrapped around your credit card as you check in will get you that ultimate upgrade if possible and will certainly provide ample dividends as a guest who understands the process.

When the venerable historic hotel is sold to a group of private equity trolls, life begins to unravel as the new owners short-change themselves as they chase a current dollar while the front desk is protecting the valuable thousands generated from loyal customers. Management is switched out. Massive controls from clamping down on complimentary items, goody bags, and common sense solutions all the way to switching out the knowledgeable security team, lead by retired NYC police officers that could direct any guest to their destination to an outsourced service that worked for $8/hour less but had no institutional knowledge. They just were currently cheaper. But at what cost.

There are too many great lines for this posting – however here is the ultimate recommendation. I thoroughly enjoyed this read. It took me three days to read and I haven’t laughed so deeply while reading a business book since the Clinton Administration. This is simply enjoyable. Pick it up. Learn some lessons in service and leadership. And whenever possible swap your firm or leadership for the hotel team or management and leverage the lessons that are so wonderfully illuminated throughout.

The Paradox of Value Pricing

The beauty (and wisdom) of Value Pricing is that services provided to, and received by, customers are fully customized. Customization fulfills a basic human need to be connected and to feel special. Fill a seminar room with 10, 100, or 1,000 professionals from all branches and they will almost unanimously agree with the horrors of the time sheet, of the pervasive inequity of hourly pricing, of the demoralizing results to a team of articulate and educated knowledge workers who are measured like an office assembly-line factory worker, and to the wasted (hence inefficient) use of firm talents to track and monitor and justify and think about all of the permutations associated with their beloved time and billing system. Yet, although they trot to the pond, gaze upon the crystal clear nourishing waters, the vast majority retreat to the ultimate comfort of what they know……….billing by the moment.


Why is it that really smart, essentially logical and well educated people, are able to acknowledge a better path, a brighter future, a more enjoyable life do they ultimately turn their hearts and minds off to commit the ultimate mentacide (killing of the brain) and keep doing what shouldn’t be done?

It may simply be that the paradox of Value Pricing is that the unconditioned brain tires too easily when forced to consider options. The paradox is that hourly billing is simple. It is Rate X Hours=Price (well at least as a start since nearly all firms never achieve their RxH, they receive closer to 80% of RxH – but that isn’t the message for this post). Hourly billing is simple. It is redundant. It is easily expressed. It is easily taught. Hourly billing has all the trappings of VD. It is easy to catch and damned difficult to get rid of. Logic, like antibiotics can only help so much and so often. The root cause of the disease is the rampant bad behaviors of the carriers (Managing Partners, Partners, Brown-Nosing Partner Wanna-bees, most Charlatans that masquerade as Consultants, and large software providers that like to write simple code rather than complex code). Since we can’t easily destroy the disease carrying hosts (DDT was outlawed years ago) (DDT = Dynamic Disruption of Totalitarians) – Since we can’t easily eradicate the hosts, we must find alternative treatments.

The initial treatment is to simplify. To allow the unaccustomed mind time to get into VPC (Value Pricing Condition) — like the marathon runner who started with walking, jogging, 1k, 5k, 10k, 15k, 10k, 20k, 10k, 25k….until she reaches 26.2 miles of endurance, we must start out slow and simple. Although the logical mind likes the concept of choice and choosing, the survival brain doesn’t. As the Otis Redding lyrics said – “I can’t do what 10 people tell me to do, I think I’ll go sit on the dock of the bay”. When confronted with choice and option, it requires more energy then many are capable of investing, so the default is to do what has always been done. Hence they live inside a Firm of the Past rather than traverse to a Firm of the Future.

Never mind that these same professionals will agree that their decision is wrong, like an overweight person that wants to diet but chooses not to, the investment is beyond their current capacity.

So, how does one start on the journey of the VPC? Simple. On day one – choose to simply invoice all customers for their next fiscal year of services equal to their price in the current year and perform all of the same services, lock stock and barrel. This may not be elegant but it is simple. It is clean. It is clear cut. If you are risk adverse, add 10% to cover inflation, and your fear factor. Stop using your timesheet for all billing activities, and free up your day (and your team’s day) –

Think about it. If you are “an average firm” with “average people” (you know, the kind that bill by the hour, that write down more than you write up, and measure all of those balancing scorecards – face it you are average and mediocre) you will free up 30 minutes or more, per work day to spend on more fun activities like………..sleeping, reading, FaceBooking, Tweeting, avoiding porn-laced spam (unless you privately enjoy your porn-laced spam – just be smart and don’t share it at the office or you can spend quality time with lawyers who will most likely bill you by the hour and trust me that will treat you like you have been treating others – so maybe you should go ahead and freely share that pic-of-the-day your cousin sent you with your colleagues) – or, heavens sake, a conversation with your customers to learn more about them, to help them create their future, and to boldly become the penultimate advisor that is harboring in your DNA – but has yet to surface because of your disease.

The Paradox of Choosing is a significant barrier facing all of us. Too many choices leads to maintaining a comfortable habit even though it is killing me. Too many choices creates a world where you put off until tomorrow what you should start today. And we all know that tomorrow never arrives. The disease has us. The habit has us. We need a cure and the cure is a simple switch to a simple system where you free your mind to get into Value Pricing Shape by removing the inherent challenges of figuring out the perfect way to transition and hence stuck with too many choices – and choose a simple one and move on it. Trust in yourself. You will never look back and think you should have stayed with a timesheet and its cousin, hourly billing cancer.

Challenge your brain. A marathon begins one step at a time. The Firm of the Future begins the same way.

Now – call me (or anyone of us) and we’ll help you train for the best race in your professional life.

In Salute to Lazarus Long: Or Why Tasers, Bean Bag Bullets, and Seatbelts Kill People

Robert Heinlein, writing in notably the best classical science fiction story (IMHO), Time Enough for Love and a book that all readers should devour, demonstrated in essence that “Nature has a set of rules. Violating nature’s rules leads to death. Generally swiftly and without appeal.”

Now I don’t have one of my many copies readily at hand, but the essence is what he authored (along with other significant notions including “always store beer in a dark place” and “get your first shot off quickly as this will startle your opponent long enough to make the 2nd shote count”. Excellent advice. Time Enough for Love is so full of great suggestions and observations about life that I ran an entire championship high school speech tournament for impromptu speaking just from this book’s chapters called Interludes. But I digress.

Recently, in my home town of Portland, Oregon, another tragic event unfolded between the local police and a citizen. My understanding is that the man was harassing children in a park. He ignored the police officer’s request to cooperate. Ultimately, the police officer, fired, what he believed to be, bean bag bullets at the man. The man was hit (the officer has good aim) but not with bean bags but with real shotgun pellets.

Additionally, I understand that the man is still hospitalized with non-life threatening injuries because the shotgun pellets hit his hip area. Of course his attorney is already quibbling over some permanent issues related to the pelleting. You will be able to infer my thoughts about this attorney before you finish this posting.

Police intending to fire certain “safe” style weapons but instead inadvertently firing a more lethal style weapon is neither unique (look up the unfortunate incident on BART over New Years a couple of years ago when instead of a taser the officer pulled his service weapon and in that case, the offender died) or all that rare. These types of mistakes will happen because we are human, and we are asking our police officers to be hybrids between law and order influencers and social psychologists in real time and in very very dangerous situations.

While exercising last weekend (stop laughing) with my brother, we had an excellent conversation on this topic. Now for those of you who have yet to have the pleasure of meeting my brother, first of all he is tall (while I am short) and he is an engineer (while I am not). Lets say that he has a more binary personality when it comes to matters of respect for authority, right and wrong, good and evil, etc. as engineers are very careful to measure what they say and do not recognize grey as a social policy.

Mike (my brother) always enjoyed my colleague’s (Ron) thought experiment borrowed from esteemed economists like Steven Landsburg that if our society was really serious about car accidents from tailgating, that the solution was to place a 10 inch steel spike in the middle of the steering wheel pointed at the drivers heart – thereby making impact fatal instead of placing “pillow top” airbags to cushion the blow.

In essence, I said, that Tasers, Bean Bag Bullets, and do-gooder social psychology by police costs lives and kill people. The reason is simply part of those natural laws associated with unintended consequences. By trying to be nice, gentle, and thoughtful, bad things sometimes happen. My solution is simple. Lets remove the the Tasers, the Bean Bag Bullets, and the Psuedo Psychology from the policing. Lets simply clarify that bad things will always happen when malcontents fail to understand the simplest of rules and obligations associated with a polite society.

I don’t know about you, (but I am certain about my brother and me), life was simple while growing up in Portland, Oregon during the 1960’s. Besides none of the wonderful technological gadgets available today, our black and white television (with tubes no less) received maybe five channels, including that one that carried those British dramas. And it wasn’t allowed to be on during meals or until the chores were finished. But more importantly, we (my brother and I) understood consequences of our actions. Misbehave and well, there would be swift punishment. Everything from the classic “wait until your father gets home” to “you lost your driving privileges for thirty days” were well understood prior to any bad actions that one of us considered. And that didn’t mean we didn’t screw things up, we simply understood that consequences.

Compare that to today when frankly the consequences aren’t as clear. When police carry both Tasers and Revolvers, criminals, malcontents, gang bangers, thugs, druggies, idiots, and the all of their related misbehaving cousins, do not understand the consequences. We (that is society by being nice, gentle, soft, considerate, etc.) have let these people down. We have failed to protect them by surrounding them and their bad behaviors with kindness.

It is simple. By promoting less lethal methods misbehaving people frequently fail to alter their behaviors and follow police instructions. We harm them because, sometimes, the unintended weapon is deployed and then the Community is up in arms (and lawyers begin to book their next vacation at taxpayer’s expense) simply because some idiot didn’t have the sense (brains, ability, wisdom, smarts, etc.) to follow the directions of the armed police officer.

I can count the times I have had a close personal conversation with a police officer on less then two hands. For example, on those very rare times a police officer turned on his lights, thereby indicating I should pull over safely, I have always pulled over. When they approached my vehicle, I was polite, respectful, truthful, humble, and followed all instructions. And accordingly, even though I have received a ticket or two since earning my driver’s license back in the Ford Administration (in fact, I have received a total of five citations with three of them being upheld; the last was in 1982). Since 1982, I have been pulled over twice and both times I was allowed to continue with either a request or a warning. Why do I receive such nice treatment? Well maybe, because I simply understand the consequences of bad behavior and I act accordingly.

So, I want to stop the pain associated when some idiot creates a scene, disrespects our police officers, continues to be a threat to themselves and/or the public, and then receive a bullet instead of bean bag. People should understand immediately that when a police officer says” halt”, they are to stop, cease, or else. The “or else” part means a bullet. Additionally, I no longer want to pay stupid sums of money to reward bad behaviors by such idiots. I mean, truthfully, if you follow the police officer’s instructions, they aren’t going fire that weapon (yes there is police brutality, but that is so rare in the real world relative to idiotic misbehaving public to not warrant much attention in the first place).

Police officers should simply carry guns (with powerful bullets), shoot straight, protect themselves, and misbehaving people should readily know that really bad things will happen to them if they don’t wise up and do as they are told. They (these people being directed by the police) will have their day in court, their right to defend their actions, their ability to clear their name. The system works (even if you aren’t convinced, of course, if you denied your opportunity to serve on a jury, then you should stop complaining about our criminal/civil justice system as you are part of the problem).

Manners are effectively minor morals. For our society to operate, we all have to learn how to interact without causing harm and/or issues with others as they seek to live out their lives. You can certainly disagree with me, my thoughts, my opinions, and even my politics. We can debate, protest, contest, and express our opposing viewpoints. We simply have to agree to contest each other with dignity, manners, and morals. Failure to follow these simple precepts should have consequences and if a police officer must intervene, and one of us fails to heed his or her request, there shouldn’t be any misunderstanding that a bad thing is imminent. Whereas today, it appears that people simply accept the notion that although the soft weapon might sting – it isn’t really harmful only to be surprised when bad things happen.

Although I have individual sympathies for people that are too messed up for what ever reason to recognize that they have placed themselves in harms way, I generally don’t lose any sleep over their loss. For example, the hiker that severed his arm to save his life after having a boulder trap him, isn’t a hero to me. He was an idiot that got lucky and didn’t die. He violated the general principles of hiking (don’t hike alone, leave a note, tell others where you are, stay on the trail, etc.) He got lucky. He kept his wits about him, and saved his life. Good for him. A better decision would have been to follow the safe hiking procedures, and even though the rock trapped him, probably keep an arm (but I guess not get to write a book or have a movie made about him.

As a society, we should stop complaining about individuals’ failures to accept responsibility for their actions (hey Congress and President Obama – are you reading any of this?) and start having people fully participate in their responsibilities. Newton understood that all actions have reactions. Ignore a cop’s request, suffer the consequences. We should stop pretending that the police are the evil doers and start forcing responsibilities where they exist. With the people that are lunatic enough to ignore the sound of a shotgun being loaded. That sound alone should stop one in their tracks. Instead of worrying about the criminal, lets start honoring our police, our ancestors, and our society by aligning the behaviors we desire while recognizing that playing nice and gentle with criminals fails frequently to deliver the results intended.

What If Series: USA Budget Games and an Option

What if the USA Congressional and Executive Leadership acted like adults and not toddlers?

One of the most prolific annual rites of gamesmanship is the USA Budget. Thousands of pages of special interest cutouts, allocations, gifts, grants, bribes, and hyperbole. Of course the government requires funding for its core and Constitutionally required functions. All spending above the legally required levels relates to promoting one person’s vision of a better world (generally at the expense of some other person’s money). The pseudo-scientific-voodoo that the both the Executive and Congressional leaders use to forecast revenue to justify their spending is a complete fraud. If IBM used such hokus-pokus, its CEO and CFO would be spending a decade or more at Club Fed.

There are too many challenges to the USA Budget issue for this or any other single blog posting. Yet, I have a proposed simple solution. Move to an Actual Cash Received (ACR) spending plan. The plan is simple, elegant, and unalterable (I admit my plan still lacks the benefits of an accrual accounting structure, but we are dealing with Congress, and politicians for the most part are simply White Collar Hookers incapable protecting anything more then their next re-election cycle).

Here is my plan:

  • For the next two (2) fiscal years, we agree on a budget and borrow 100% of our needs. Lets call that additional borrowing at say $8 Trillion (the actual amount is not relevant to the plan). Since there is something like $12 Trillion sitting idle in USA banks, it isn’t like the money isn’t available at a reasonable interest rate.
  • All tax receipts received each fiscal year shall be separated into a holding account (and I mean an actual accounting – not like the Social Security Trust Fund which is simply a Ponzi scheme style of record keeping). Each fiscal year’s receipts shall be maintained in a separate account.
  • Beginning with the third (3rd) year in this process, (and continuing each successive year utilizing the reach back 2 years budget plan) the actual spending plan for year 3 will be solely based upon the actual cash received and held from year 1. Hence, Congress can only spend that which they have in the bank. Excesses (ok, stop laughing) would be 1/2 spend on accelerating debt repayments and 1/2 for discretionary spending as directed by the President. Oh, and the total debt (call that now rounded to $30 trillion, will be amortized over 30 years (just like a mortgage).

    Under this plan, the gov’t stops all deficit spending (even though most illuminated economists all agree that deficits don’t matter except for ego) and the debt is erased in a systematic method. No more hocus pokus with the budget.

    And since there are times of true emergencies (e.g. War – and not something like Libya or Vietnam where the President forgets that only Congress can declare war), Congress would be allowed a limited cushion to tap a credit line with a reindexing of the amortization – but only by a Congressional War Declaration.

    We are a wealthy country and the other emergencies (e.g. Katrina, floods, fires, 9-11 type events, etc. that will continue to occur) will be funded by private and public sources with the understanding gov’t spending is still limited.

    The continual games of mental three year olds that currently lead both the Executive and Legislative Branches of our Nation – must stop. The amount of pork is embarrassing and since we are unable to utilize the Singapore Approach to bad behavior, we have to simply remove the temptation of proverbial cookie jar provided by the taxpayers.

  • Timesheets Facilitate Cheating: The Moral Challenge of the Billable Hour

    Dan Ariely presents his thoughts in an excellent Ted Talk about our Buggy Moral Code and discusses why he believes people cheat. His conclusions include:

    • We all can cheat just a little and still feel ok about ourselves (e.g. we can speed as long as we aren’t reckless)
    • When people around us and in our in-group cheat, we cheat more
    • When we remove items from money, like stock options, cheating goes up

      Ron Baker and I use this Ted Talk to stimulate conversations about cheating in our Ethics Class that we teach around the country for CPA Societies, law firms, PKFs, and a number of associations. And lively conversations they are. Additional key points include that when people are reminded about their duty to be truthful, cheating goes down and when leaders and/or peer groups don’t cheat, cheating goes down, and finally, when actions are more closely tied to money itself rather then say a timesheet, cheating goes down.

      For years (decades almost) I have inherently understood that one of the evils of timesheets and hourly pricing is that people lie on their timesheets and these lies end up as additional charges on invoices to customers. In other words, cheating. Now Ric Payne of Principa has argued with Ron Baker that although people lie on their timesheets, over time, the lies cancel each other out and and these lies aren’t a significant variance between actual time-based pricing invoices presented to customers and the ethical time-based efforts actually incurred. Now from a Kantian ethics perspective, if lying is wrong, it is universally wrong, and just because over a significant number of years/events, the overall invoiced value approximates the actually earned value, doesn’t justify leadership (e.g. partners, managing partners, directors, managers, seniors, supervisors, etc.) from perpetuating a firm culture of acceptable approximation of efforts in a time-based pricing paradigm.

      There are many challenges associated with time-based pricing that have been fully discussed on this blog. Defenders of time-based pricing and timesheet based models justify themselves using any number of spurious and intellectually immature arguments surrounding their incapability of understanding the value of what they provide and based upon a misguided supervirsorial notion that as leaders/managers they wouldn’t know what their team (I refuse to use the word “staff” when it relates to people – as ‘staff’ is a homonym of Staph and Staph is a deadly infection and people aren’t infections – so there) and if that isn’t a self-incrmination of a person’s lack of leadership capabilities if their only and best tool for understanding what their colleagues are paying attention to is to wait until the timesheet is completed – that isn’t leadership – that is an historian’s recording – and such leaders should be demoted to below the level of their clear incapabilities. Beyond these defenses, the “I Love My Timesheet” crowd are seriously cowards afraid of a conversation about value (e.g. their ego is too weak to simply stand proud and express a price – or their communication skills lack the creativity and curiosity to hold a conversation with their customer about the scope and value of the proposed project, and appear to be satisfied to allow their lying timesheets to dictate the price (but never the value unless by pure coincidence) of a project.

      But, I digress. Timesheets and time-based pricing is for morons, buffoons, and idiots. As my colleague Ed Kless is found of saying, “if you suck at pricing, bill by the hour”. There is no adequate defense for timesheets or time-based billing methods. Just as there is no defense for the historical practice of “Separate but Equal”. Let just hope it doesn’t take another couple of generations for Billable Hour Luddites to learn that their thinking is akin to the “Flat Earth Society“.

      The problem with timesheets is that their recording and the ultimate invoice are separated by too much…………time (OMG – it is time that is the challenge here – another post I am sure – LOL). Hence, in Ariely terms, the separation of the event (cheating on your timesheet) is too distant from the invoice (the money) to have people recognize their cheating and this cheating is simply part of the PFF (personal fudge factors). It is like in the film, The Firm, staring Tom Cruise, when there is a scene between Cruise and one his clients about the Firm’s billings. The client expresses doubts that the Firm spent xxx hours on his projects, and Cruise response is akin to, “I have no idea………I just fill out my timesheet”

      The problem therefore (one of cheating) is acceptable by the firm and at the expense of their customers. No ethical professional would ever steal money from their clients. No ethical professional would lie about their “days” efforts and present an invoice on the spot (like a day laborer) to their client. Yet, firms knowingly and unknowingly, create an environment where small lies (and some whoppers) are presented on the daily timesheet. The lag between the Sin and the confrontation with the client via the submission of the invoice is frequently months, and when the responsible billing party reviews the tabloid of lies, unless it is outlandish, the calculated price is simply presented and the customer pays for cheating and when the check arrives, the partners celebrate. As leadership allows these fibs, lies, concealments, misdirections, and other assorted unethical behaviors, the message throughout the firm is clear, lying on your timesheet is a permissible activity within the firm, and since peers are promoted based upon billable hours, bonuses paid based upon billable hours, the measurement reinforces the internal values and cheating continues.

      Some partners and firm leaders trick themselves into believing that lying doesn’t exist in their firm. That their firm is an exception. The modern day version of the three most prolific lies should include (along with “I will love you in the morning, and the check is in the mail”) “we don’t lie on our timesheets”. Only a fool would be so duped. You don’t have to believe me, just ask the team. Or better yet, consider the internal inconsistency when say the firm prices tax returns on a (even after the fact) stated price without timesheet detail when it is in their favor and bills by the hour when it is not.

      Ultimately, the subtle challenge is the separation of the event and the invoice. When a firm separates the invoicing mechanics from the conversation with the customer, it allows the sewage to seep into the system, polluting the truth and spritzing the firm’s favorite cologne (Ode de Dollar) thereby masking the stench of lies. Whereas a Firm of the Future incorporates their value proposition, pricing, scope, and related service matters up front, there is no requirement for a timesheet, and without timesheets, firms no longer need to lie to their customers about efforts to justify an invoice.

      I call this a Win Win. What do you call it?

    • What If Series: What If We Could Allocate Votes

      Why, when voting (at least in significant elections), are we forced to select just one? What is it about a single selection that is superior? I don’t know about you, but I am generally uneasy about any singular selection. Except for me, (or in your case you), all we have to choose when choosing is – to paraphrase Plato – a mere approximation of what “I believe” in even the best of political choices. And, since I am not a candidate – no candidate is capable of measuring up to what I believe, how I feel, and how I measure the value of competing alternatives.

      So, what if? What if I had multiple choices – and so would you. Lets me described what I am thinking. Instead of playing the political version of the NCAA Tourney with its “bracketology” approach to selecting an ultimate finalist, we were allowed to share our votes amongst competing candidates (even in multiple parties).

      For simplistic purposes, I will provide each voter with a set number of votes, lets use 12 as my math friends explained onetime that Base 12 is superior to Base 10 (I am unclear as to why that is so, but they are really smart so I’ll accept their word for it).

      Accordingly, I have 12 votes to share. One option would allow voters to lump their votes to one candidate, thereby demonstrating that they really really like this candidate. I do not favor that option – but I would consider it. I think that votes should be shared – among several candidates – as frankly there is always an order in which I favor candidates. In other words, why I am forced to choose only the one when the one stands for so many things that I detest?

      This concept could be a real boom for alternate parties as they could become a force in moderating the wing-nuts that seem to overly influence the major parties and who so frequently appear to forget that Americans really are way more centrists then the political hack strategists ever want to admit.

      I support the ultimate winner winning with a couple of twists. One is that all primaries would be open forcing candidates to work towards representing all of the people and not simply the fringe, the donors, and the idealists. Each and every election would require candidates to think about representing the whole and not simply one of the parts.

      I would allocate my votes based upon the order I approve of the candidate. This would allow me to participate in selecting the ultimate winner – lets say (for example and only hypothetically) that I am true blue card carrying Democrat but even the best candidate represents only a minority of my complex beliefs. I doubt that any candidate is truly capable of altering their beliefs, I do believe that any candidate with an IQ greater then the mean temperature of Nome, Alaska is smart enough to modulate their opinions if only for the next election cycle.

      By allocating my votes, I would be able to send a clear message about my complex voter belief system and just maybe, I mean maybe, candidates would be forced to improve their representation of all of their constituents rather then just the simple majority that happen to elect them or worse yet, the money that keeps them there.

      People frequently lament the depth of voter apathy. One response is that voter apathy represents that people are generally pleased with either popular choice or that they are agreeable to whoever wins. That is a reasonable conclusion but again, wouldn’t it be better to incentive participation. And what better way then to allocate votes based upon complexity of choices in order provide a better picture of who each of us are, as voters and as individuals.

      Maybe this is just a whack job of an idea. Maybe, I am tired of frequently being on the minority side of the vote count. Maybe, I am an idealistic and naive closeted anarchists that simply wants to stir the pot. Or maybe, just maybe, this is an idea worth spreading.

      What if?………………

      What If Series: What If People Hustled in Crosswalks?

      Do you ever notice that significant segments of our population simply dawdle through life? All too frequently, people impact my life (negatively at that) simply because they march to the beat of their own rhythms without regard to those around them. Mostly this impacts me in crosswalks while I wait to proceed while pedestrians slowly stroll in the comfort provided by white lines of paint.

      Dawdling when one is putzing in their own habitat is absolutely fine with me. Yet when impacting others – bandying about at one’s own pace demonstrates poor manners. And manors are part of ethics and ethical behaviors facilitate commerce and joy in our world.

      And it isn’t just crosswalks – it is in all of our endeavors – we have an obligation to others to focus on the tasks at hand, volunteered for, assigned, delegated, and responsibilities to place our best “foot” forward and complete the respective project with effectiveness.

      From the express lane at the fueling station, to the security line at the airport, we have an obligation to perform our functions without delay. Not for us, but for others. It is our duty to mitigate our impact on others. Think of this as being Green as we impact others in our environment less thereby allowing them the opportunity to move along without delay.

      We all have places to go and people to see. If I am on a leisurely journey, that doesn’t mean those around me are. My stroll should not adversely impact others more than necessary. Yet what I witness is the exact opposite. Far too frequently I witness others simply acting like they are the center of the universe while they float slowly and without direction through life.

      Maybe it is just me, but what if people simply hustled in crosswalks – just think about how our lives would be improved.

      Now – gentle reader – have a great weekend.


      What If Series: What If Airlines Graded Passengers?

      Frequent readers of my posts, whether it be here at VeraSage, on Twitter (follow me @morriscpa), on FaceBook, or my any of my other ranting grounds, are aware that Customer Selection and De-Selection are both common themes and are core competencies necessary for any business to succeed long term. If you aren’t a frequent reader, then welcome to a glimpse of my inner thoughts and convictions.

      Any frequent flyer with an IQ greater then the mean temperature of San Francisco recognizes that operating an airline is an ever increasing futility against reason. Ignoring the external forces (weather, commodity prices, regulatory hurdles, management – labor ineffectiveness, etc.) – one significant challenge is simply its customer base. Frankly, airlines are poor at customer selection. And if you can’t select them, how would they ever be able to de-select them?

      Toxic customers ruin any business. Toxic customers are the complainers, whiners, cheapskates, abusers (physical, mental, and financial), and emotional drags on a firm’s emotional satisfaction, happiness, and well being. In my firm (www.cpadudes.com) we frequently terminate customers who do not meet our criteria for success. There is no obligation for an enterprise to serve all who desire service (of course {this is my Don Rickles moment} – I am not suggesting service discrimination on anything that remotely would be consider unethical, immoral, or down right illegal – that would be foolish, wrong, and stupid).

      Back to airlines, customer selection, de-selection, and the overall experience economy.

      Airlines employ many strategies to attract, retain, and reward customers. The most prominent of course is their frequent flyer program. Airline customers (me included) will select routings that are reminiscent of a Cirque’ de Soleil acrobatic routine as they twist their way to their destination – all because of additional miles, perks, better seats, free baggage allotments, and a whole host of reasons). Yet, these incentives are both Ying and Yang and encourage both positive and negative behaviors.

      The positive behaviors are easy for an airline to measure – frequency of travel, class of purchased service, share of theoretical wallet, etc. are all readily available for any spreadsheet addicted financial analytics department. Yet what about the costs associated with those negative customers? Where are those measurements and indicators? Airlines are missing a golden opportunity to enhance their overall customer flying experience by seeking ways to identify toxic customers and either incentivise better behaviors or, better yet, boot them off their planes and thereby freeing up capacity to service better customers that are willing and able to pay for an enhanced experience.

      I have some ideas on how airlines could in fact do this.

      First there should be some physical attributes to deal with. And here, like in all important measures, judgements matter more than strict measurements – airlines should trust the instincts, skills, and capabilities of their overall team and allow them input into this process.

      Airlines could add or subtract points/mileage/etc on a host of criteria that they believe are important.

      Let start with overall impression of attitude. Is the customer friendly, outgoing, smiling, pleasant, polite, observant, attentive to both team members and fellow passengers? I have witnessed more than my fair share of jerks, jackasses, snobs, snots, crybabies, complainers, whiners, dirt bags, and piss ants to fill the Fed-Ex fleet standing up. These people ruin a perfectly bumpy E-Ticket ride and drag everyone else around them down in their menticidal spiral. So, lets say that one of these flyers, full of toxicity, happen to be flying – then one or more of the crew members could easily document that the passenger in seat 13F failed to fly nice and therefore should lose some (if not all) of their frequent flyer points. Their file could be flagged as painful and the airline could adjust their pricing, seat selection, and/or other criteria to extract more from this customer on their next flight with a series of warnings, reminders, etc. of expected behaviors, attitudes, etc. to allow them an opportunity to improve their behaviors before the airline permanently releases them to ruin a competitor.

      Next, airlines could evaluate their (elective) physical attributes. Here I am thinking about matters like, cleanliness, odors, smells, etc.. I don’t know about you, but I think that a recent shower before flying is simply polite and other customers have no desire to smell DNA evaporating into the communal air system (this goes for overnight connecting flights as well – deodorant is eligible as a carry-on (or at least a quick wash down would also work), add to bad BO – is the abuser of colognes, tobacco, and flavorful foods that produce alterations to more than one of our senses. In essence, smell like a marathon runner without a shower, denied boarding.

      Also – what about abuse to the airplane? Here we could consider items like do they craft their initials into the seat in front of them? Do they leave their trash behind when offered the opportunity to toss into a garbage bag? Do they abuse the overhead with too big of a bag? Do they ignore other customers that need some help? Do they clean up after themselves when using the facilities?

      And then there is how adaptable is the person? Meaning, how mature are they when dealing with crying babies (this is different then being a crybaby), request for slight seat adjustments to handle families, loved ones, etc.? How about listening to and following directions? We are suppose to be adult. We may realize that cell phones have nothing to do with airplane navigation systems but the procedures are clear – nobody gets to leave until that last phone call is closed. And when caught trying to cheat – I have witnessed complete arrogance by mostly men, in suits, that probably attended an Ivy League (or equivalent) school complete with ego that goes with that honor. They fold their phones down on their lap as the flight attendants perform their duties – as if they are the smartest people on board. Personally, if I ran the airline, I would haul them off, not refund their money, outsource them to my competitor, flag their file, and serve wine and beer to all that want it as a celebration. But, then again, I have been accused of being slightly irrational in my thinking (a compliment IMHO).

      If airlines can provide negative incentives, they certainly can provide positive ones. Airlines can reward excellent behaviors with additional credits, mileage, perks. They can reward behaviors they like and shun the ones they don’t. Names could be shared amongst the airlines – like credit scores – thereby customizing the risk/reward of admitting a certain passenger onto their plane.

      Actions have consequences and adults should be prepared to suffer the costs of poor behavior and receive the benefits of good behaviors. Airlines don’t have to service all. Passenger’s have choices on who to fly, why shouldn’t airlines have the same type of choices.

      Freedom is an exercise in civility. In order to progress forward we need to learn to coordinate our activities, behave well in public, and produce more then we take (government could learn something here too – why does birth provide a grant to lifetime presentation in a country?).

      I look forward to the day when airlines start grading their customers (beyond the simple mileage process) and in their process move my fellow air travelers forward (along with our civilization) in their never ending journey of humanity.

      What if?