Why Do Your Customers Pay You for Your Knowledge?

Last week, I focused on how your company gets paid for its knowledge. Today, I’d like to focus on why your customers are willing to pay you.

This question is all the more acute given my post on Friday about the need to give away knowledge. This fact means that focusing exclusively on how you get paid will force you to miss some of the critical knowledge that distinguishes your organization.

In most cases, your customer is “buying” the whole package whether they pay for it or not, just as Google’s advertising are buying access to the users of the free service. So to understand Google’s search business or your own, you have to understand more than just the knowledge for which they get paid.

To identify the full picture of your critical knowledge, it is helpful then to move beyond the concept of products and services and ask three questions. Read more

Lawyers Undervalue Their Services

The New York Times reports today here that economic hard times are putting pressure on high-priced lawyers.  Some ask whether it is time to end the practice of the billable hour. This is a really interesting question.

The “best” lawyers bill hundreds of dollars per hour. In the Times article, one firm is reported to regularly charge $800 per hour for their most senior partners. Even these firms (or especially?) are apparently accepting fixed fee arrangements with some clients.

This trend would actually be a great thing for the legal industry, but maybe not for the reason that you might think. Read more

Gartner on Investor Communication

The McKinsey Quarterly recently ran an interview here with Gartner CFO Christopher Laford. In the interview, he explained that:

When our new CEO, Gene Hall, joined, we established a long-term financial road map as a key element of our investor communications. We told our investors how we were running our businesses and where we thought we could drive performance over the long term-key measures, like revenue growth by business segment and margins.

And when we did that, we also identified the two or three metrics, for each segment, that would help investors understand Read more

Reporting in the FTSE 350

I recommend that you read Joining the Dots, a white paper by David Philips of PWC (you can find the paper and an accompanying video here). The paper summarizes a study of the narrative reporting by the largest 350 public companies in the UK. It puts forth the thesis that narrative reporting Read more

Capital is Consensus

A great follow up to my post on Bananas and Industrialization is in this amazing post from Umair Haque How to Be a 21st Century Capitalist. He explains that:

20th century capitalism, in other words, marginally valued pure financial capital too highly, while marginally valuing human, natural, social, and cultural capital at zero – or, at the limit, negatively.

He goes on to say that “capital is consensus” which Read more

Clay Christensen on Disrupting Class

I just finished Disrupting Class by Clay Christensen, Michael Horn and Curtis Johnson. As a big fan of Christensen’s work on disruptive innovation, I was excited to read this book and was not disappointed. Here are the high points from my perspective:

The current system of education was designed to provide an education to large numbers of people. As our society industrialized, education went from being an individualized activity Read more

Of Bananas and Industrialization

One of the chapters in the book project I am working on about the intangible economy talks about how traditional command and control is giving way to a more bottoms-up approach to organizations and management.

One of the conclusions generally drawn from the collapse of the Soviet Union was that its top-down centralized planning-based economy was a failure. Yet, we in the West should not dismiss this lesson. We are much more top-down than we realize. A great illustration of this came this week Read more

Why Intangible is a Bad Word for Business

Those of us interested in the 21st century enterprise end up talking a lot about intangibles and intellectual capital. Both of these are terms that try to help the listener envision knowledge in its different forms. In the average corporation, knowledge can be found Read more

Mindless Cost Cutting in a Recession

So today, they finally made it official and announced that we have been in a recession for a year. No surprises there. However, I share views of Anand Sanwal and Tom Peters here that this is no time for mindless cost cutting. For one thing, in the knowledge economy, cutting people is like throwing away the machines in your factory. It can be a very short-sighted strategy that costs you dearly in the future.

Not to mention the fact that it makes sense to think beyond the current crisis. I believe that sustainability could be the biggest ecnomic boom in history–if companies have the courage to jump on the band wagon. You’ll need your best people for that. In fact, given the fact that it has been years since we have had real job creation in our economy (see my post on comments by Michael Mandel here), there is a national urgency to this mission.

Greenspan, the Black Swan and the Rest of Us

I had a colleague, Bruce Horwitz contact me about Greenspan’s testimony in front of Congress last Friday, described here. Bruce and I had a good conversation earlier this year about The Black Swan. The author of the book, Nassim Nicholas Taleb, has been appearing a lot on television in the past month.

Bruce thought that this was a great example of a “black swan” event, that is, when people are totally surprised by an event. At first, I disagreed. As a former banker, I have memories of the analysis that used to be done on our portfolios Read more