With AltAccountant, all the traditional tenants of the profession stay intact: such as honesty, transparency, independence, etc. However, the business model itself needs to be modernized and focus on value creation for their customers. A value-driven business model would require a change in strategy that would require you to be able to make these statements:
- We are uniquely qualified to be positioned to help our target customers
- We are known as experts in our specialty
- We strive to understand WHY and what are the customer’s desired outcomes
- Our price is a fraction of the value we provide
- We always give our customers choices on how they can work with us
- We will be effective even at the risk of being inefficient
- We can automate workflows, but always humanize relationships
These statements can only be made when you (as a professional) and your firm have adopted a modern pricing model such as value-based pricing or a productized service such as the subscription model; which in turn means that you must ditch the hourly billing or any output based billing such as charging “by transaction” or “by completed form” which essentially are hourly rates in disguise. In a value-based business model or subscription model (which Ron Baker calls “Value Pricing 2.0”) you focus is on delivering customer value, building strong customer relationships, and aligning your efforts to tie with what your customer’s desired outcomes are (which is the definition of “effectiveness”).
One of my mentors is Peter Drucker, and he has a famous quote:
I think a value-based business model is the ultimate manifestation of executing the wisdom of that quote. Peter is also credited with this quote: “Efficiency is doing things right. Effectiveness is doing the right thing”
You can do “things right” all they long, but if they are aimed at the wrong outcome, then what’s the point. It is like following all the directions of the GPS when you put the wrong address. When we focus too much on effort, it’s easy to lose sight on the end goal. Billing by the hour (or any effort-based way to charge for your work) is internally looking and at the end our customers do not really care about that; customers care about the value the can extract from your work, wether it takes 15 minutes or 15 hours. Customers are willing to pay a premium for a guaranteed outcome. And that “premium” which is the tenet of Value Pricing, is what gives us the ability to invest back in marketing and innovation. And at the end of the day, hourly billing is just a crappy customer experience.
Innovation means we always loo for better ways to deliver more value to our customers. It could mean developing new services or it could also mean freeing up capacity to spend more time listening to them… and it could even mean that we put our feet up on the desk and think hard and deeply about our customers until we come up with new ideas and advise we can give them. When we bill by the hour, it’s very hard to add a line in an invoice that says “4 Hours – Thinking time…” because our customers are going to say something. Innovation
Marketing is also an extremely important component of this; because our customers need to understand 3 fundamental things:
- That your brand (personal or firm) represents something to your customer, you specialize on THEIR needs
- You pricing model is aligned to your customer outcomes
- You have the experience and reputation for doing good work – thus reducing risk for the customer
The practice of constantly communicating these 3 elements to your customers, is called Positioning.
So what exactly AltAccountant?
The AltAccountant philosophy is an amalgamation of learnings from Hector Garcia’s personal experiences combined from the teachings of whom considers to be his mentors:
- Ron Baker: Implementing Value Pricing & Time’s Up
- Blair Enns: Win Without Pitching Manifesto
- Tim Williams: Positioning for Professionals
- Mahan Khalsa: Let’s Get Real or Let’s not Play
- Alan Weiss: Value-Based Fees
- Peter Block: Flawless Consulting
- Peter Drucker: The Effective Executive
- Clayton Christensen: Innovator’s Dilema
- Peter Thiel: Zero to One
- Ed Kless: The Soul of Enterprise
- Steven Covey: 7 Habits of Highly Effective People