The Firm of the Future by Baker Ronald J. Dunn Paul & Ronald J. Baker

The Firm of the Future by Baker Ronald J. Dunn Paul & Ronald J. Baker

Author:Baker, Ronald J., Dunn, Paul & Ronald J. Baker
Language: eng
Format: epub
Publisher: John Wiley & Sons
Published: 2012-05-20T16:00:00+00:00


These are all good criteria to judge potential new customers; and certainly Paul’s discussion of David Maister’s personality criteria (see Chapter 3) should be foremost on the list as well. There is no point in working for and with people whom you do not like or are indifferent about. Bob Gaida, dean of the BDO Sales College, uses this two-prong criteria when qualifying potential customers: “Does the client have the ability to pay a premium fee and do they have a thirst for knowledge?” (quoted in Waugh, 2001: 114).

As good as these criteria are, I want to add one more. I have come to believe that character is more important than personality in judging new customers. The ancient Greek philosophers held the view that “character is destiny”; and being an inveterate student of human behavior, I find this reasoning compelling. The Greeks also spoke of good habits and bad habits. The good habits they called virtues, the bad habits vices. A person’s character does provide a basis on which to predict behavior, which is why we say certain behavior is in character or out of it. In light of the accounting scandals in 2001 and 2002, the firm’s reputation and the partner’s peace of mind should be more important than profitability.

When a professional service firm accepts a new customer, it is not merely closing a sale; it is beginning a lifelong relationship. We select our spouses, friends, and other important relationships very carefully, why would we not perform a proper amount of due diligence before selecting a customer? If the customer is worth having, he or she is worth investing some time and resources in determining if he or she is a good fit for your firm.

It is no longer wise to accept new customers simply because they have a checkbook and are alive. Let us reiterate: The most successful firms in the world all have very rigorous prequalifying standards, and they do not accept all comers (in fact, they report they turn away more business than they accept). This is not out of arrogance, but from the recognition that the firm cannot be all things to all people. Saying no to a new customer is not necessarily easy, but it is vital if you want to accept only those customers who are pleasant to work with, have interesting work, and enhance your firm’s intellectual capital. Complexity kills a business, and by accepting any customer—especially those who don’t fit your value proposition—you are adding a layer of bureaucracy that will starve your best customers and put them at risk of going elsewhere. For instance, we see far too many firms take on low-price tax returns during busy season on the assumption that the marginal revenue contributes to profits (the old Practice Equation paradigm again). This may be true, in the short run, but the complexity it adds to the firm will distract it from offering higher-value services to its best customers. The Pareto Principle is always in effect—that is, 20



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