Marketing for CPAs

for Capstone Marketing, 2000

What improvements have you seen in professional service marketing over the past few years?

RW: Almost nothing. I still think that both in law and CPA firms, partners and marketers are missing the point.

The positive things include more focus on things like industry specialisation, people beginning to come to market as focused specialists. There was a great reluctance to do that 10 years ago. Nobody wanted to limit their marketing. There is a greater recognition 10 years later that you have to commit yourself. It's much easier to market a specialist than a generalist.

We've also seen a lot more progress in people getting client feedback, yet the ridiculous mistake they're making is doing nothing with it. That is not neutral; it is absolutely disastrous. The worst thing in the world is to ask your client for feedback and then do nothing about it. It's like a slap in the face. That is what firms, in effect, are doing. In one sense you can say that getting client feedback is an improvement, but I don't actually believe that because I think that getting feedback without doing anything is stupid. It is, therefore, not an improvement.

I think firms and individuals are slowly beginning to treat clients with a bit of respect. Ten and 15 years ago there was more of the traditional problem of professionals, where their basic posture was, "We are the experts. You are the idiots in trouble. Let's help you save your bacon." This wasn't necessarily intended but what came out, a very pompous, patronising, condescending approach to market. I think everyone has gotten a bit more humble.

Do you think this is because the marketplace has become more competitive?

RW: Yes. It's not only competitive in price competition. I think clients are rebelling in the sense of who is in charge. You see a lot of CPA firms and law firms nowadays where the clients want weekly or monthly reporting of everything the service firm is up to on their behalf. In essence the client is saying, "We don't trust you with our money. We want to know everything you're doing."

Do you think the amount of trust the clients have in their CPAs and lawyers has decreased?

RW: It has decreased dramatically. This is the single issue around marketing and selling that all these lawyers and accountants still do not get, which is that marketing and selling is solely about trust. In other words, anybody who needs an accountant or a lawyer will go through two stages: first is a qualification stage, which is who is out there that's competent.

What the lawyers and accountants don't understand is that no matter what the issue is, I can always find 10 qualified people. Talking about qualifications is not marketing and selling. That's just getting to the game. Now comes the point: Once someone is qualified, now as a buyer I am in the position of saying, "Now my buying choice is to choose among qualified buyers." If they're all qualified then what I choose on has nothing to do with the logical, rational part. What I choose on among people who are equally qualified is "Whom do I trust?"

In a short time period, how can a CPA or a lawyer develop that sense of trust with a prospect?

RW: Let me give you a personal example. I had to hire a lawyer because my relative died and I had to probate her will. I'll leave out all the idiotic marketing the first few firms I called tried to do. I'll go straight to the point of the guy who was a genius.

I called a lawyer in Brooklyn because that's where my relative lived. The minute I started explaining my need he interrupted me and asked, "Do you know anything about what it takes to process a will in Brooklyn?" I had no idea. He said, "I think you're unwise in interviewing lawyers if you don't know what you're getting into, because you don't have the basis to interview people. If you want to give me your fax number I will fax you a three-page outline of what is involved in processing a will in Brooklyn."

The fax contained a lot of useful information, and the final paragraph contained contact information for all city, state and federal authorities that needed to be notified. I received all of this information before he was hired. Without being idealistic, I think most human beings' reactions would be to hire that guy. Notice that he did not sell or market at all. What he did was immediately say, "Let me be helpful to you."

The issue I have with people clinging to marketing is that even they don't get it. It's not just the accountants or the lawyers. Even the marketers don't get it. What works is not selling. What works is to just start helping people. They will want more.

I have been asked to look at proposals written by CPA firms and law firms. The one thing I look for is the thing I just referred to: Where in this proposal is any substantive help? Of course, there never is any. It's what I call prostitute selling. It's saying, "Pay me and I'll do it. It will be wonderful. It will be fabulous once you start paying, but I'm not going to show you anything until you start paying." The central issue here that people just don't understand is that you are not making a moral point that you should be nice to clients; it just doesn't work.

Even marketing directors are writing newsletters, brochures and proposals boasting about what the firm has -- and it just doesn't work. This leads you to the conclusion that you should stop marketing, stop selling and start helping. What works best is to figure out who you want to help and go help them. That works.

I always take a vote when I'm with a single firm or at an industry meeting or something and ask, "How many of you read every issue of the trade magazine of your main client?" Forget the other clients they have to serve, just their main client. Less than 5 percent raise their hands, whether they're accountants or lawyers. Again, I'm not a moralist, it's just pragmatics. How can you convince a client you're interested in his business and that you care and you can help when, in fact, you do not know what's going on in his business?

My point about why there hasn't been much progress in professional service marketing is that everybody is looking for some new, magic, innovative marketing pill that will mean they don't have to get on the real diet. There isn't a magic pill. It has nothing to do with the consequences of the Internet. It's got everything to do with the basics that you've always known you aren't doing.

I was giving a talk yesterday to a group of management consultants and they asked how to develop relationships with existing clients. The short answer is very simple: You give away time for free. You go and, for example, sit in on their internal meetings at no charge. There you are, sitting in your client's management meeting, listening to what they want to debate, what they're fighting over. The question is how good at selling do you have to be -- and the answer is not at all. If you're selling, you're a brain-dead idiot. It doesn't mean that selling doesn't work. It means that selling is the hard way to do it. When you do it right you need zero sales skills.

There is no marketing or selling tactic more likely to work to give you a return on investment than giving away that free day to existing clients.

Yet when you ask how many lawyers are doing it, the answer is less than 1 percent. In the accounting world it gets up to about 5 percent, but it's not higher than that. How many people are acting as if they care?

What other marketing mistakes are accountants and lawyers making?

RW: They still judge marketing by revenue instead of profits. In law firms and accounting firms you get credit for new revenue you bring in, regardless of whether it is profitable revenue. They still work on the principle of "if it moves, shoot it." That is not good marketing. It is running scared marketing. We are so insecure as people that we don't have the courage to pass on anything. Firms are always diverted from their strategy because they don't have guts.

Let's list some other obvious marketing mistakes. Law firms in particular still have reward systems that celebrate individualism. They preach a good game about wanting to have practice groups and team marketing, and they might even get teams together to make team marketing plans. But those good ideas never get executed because the reward system says, "Who brought it in?" The trouble with that is not only does it destroy teamwork but it's also like being paid only if you "do it." You never get paid for courting or romance. We only give you origination credit if you actually "did it." As a result, nobody does romance. Everybody is handing out business cards saying, "Do you want to do it?" There's no clever relationship marketing going on because the firms basically diminish and discount the value within the firm of a relationship -- even though they say they don't, their systems do.

If firms were to truly reward teams, the teams themselves would need to figure out the roles of the people who will develop relationships with clients and prospects and the ones who will contribute in technical ways.

RW: There are two points; the first point is blindly obvious. Go back to my need for a probate lawyer in Brooklyn. I don't know any probate lawyers in Brooklyn. What's the first thing I do that any buyer in the world does when he or she has a new need?

Ask for a referral.

RW: Yes. The key to understanding marketing is to understand buying. The first thing that every buyer in the world does is to ask a friend. In other words, client satisfaction is 90 percent of marketing. If you have a friend who says, "I used this person, she's fabulous, trust her," you can't go wrong. If, however, you get the reaction, "Oh, they were pretty good, they were competent, add them to your list," you now have to do proposals.

People preach a good game on client satisfaction, but they aren't living it. Therefore, the first thing that firms should be doing is rewarding those partners or individuals or teams who are gaining levels of client satisfaction above "OK." Anybody who leaves a client saying, "Wow, they were fabulous," just solved 90 percent of their marketing problem. The real punch line is that you don't get to "wow" with clients by having a client feedback system that you don't follow up.

How do you get lawyers and accountants to get the "wow" level on client satisfaction? You have to do something like an unconditional satisfaction guarantee. Now not necessarily that in particular, but you have to do something that tough, because it's only if it's that tough that people like you and me will say, "Shoot, I've given my client permission to not pay me if they're not satisfied. I had better call that guy." We already knew that stuff, but that's not the issue. The issue is what will actually get us to do it.

There has to be some consequence.

RW: There has to be a consequence if we only settle for OK. That's the first step. I think firms are missing the point completely with their actions. I think they intellectually understand it. I'm not insulting their intelligence. I'm insulting their guts. They don't have the guts to put in place a client satisfaction quality system with teeth. What they have in place is a client satisfaction system that checks to make sure that it's "OK." We deal with the disasters. That's not the issue. The question is, "Do you deal with it when the client satisfaction is only OK?" If it's not OK, then you have to deal with all the other marketing rubbish that takes three times as long. That's point number one, which is that firms need to get client satisfaction, and then where we started is that it applies to a whole team. Everybody on the team is held accountable for that client satisfaction.

The second point about teams is that even when you do get to say new client marketing stuff -- this shouldn't be too complex -- that if you're going to romance an industry sector or romance a client, then you need to include as part of the total package things like putting on a seminar, writing an article, doing some industry research.

Under the current regimes of most firms, if you write an article there isn't any credit in the firm's system. We only pay for cash brought in. Therefore, nobody wants to write the article. Everybody wants to go out there and bring in cash. All the things that lead up to winning the business are neglected. To go back to my earlier point, we never try to do romance. We try to go for one-night-stand quickies because there's no reward within the firm.

Now in a good firm, and some do exist, what you'd have, whether at the client level of the practice group level, is a marketing plan for the whole group in which you would assign roles. You'd turn to your tax nerd and say, "You're a genius. What we need you to do is write an article a month for the next year. Give us 12 great tax ideas that the rest of us can take out to our clients. We will pay you mightily for that if they work." You don't give anyone a free ride. If they don't work, you don't pay for them. But by doing this you provide the opportunity to contribute to a successful marketing effort through more than one means.

Do you think the person writing the articles should be compensated as much as the people bringing it in?

RW: Absolutely.

That's always a struggle -- how you evaluate the different types of marketing activities and determine if one is more important than the other.

RW: I believe that in Economics 101 price goes for scarcity. Price is determined by the relative relationship between supply and demand. The fact that you're brilliant is a completely irrelevant topic. The question is how many brilliant people are there relative to how many the clients want.

If you're the only person in town who can write that tax article, in other words, and you came up with something that no one else in the firm could have done, I'm going to pay you more than the guy who put on the seminar, because plenty of our partners could have done that. The real issue becomes paying for what is scarce or unique, because that is what price is all about.

What do you think about all the branding that is going on among professional service firms?

RW: I think it's all nonsense. I think it's a complete waste of money. Distinguish two things: brand recognition, which is that people know your name, and brand value, which means that people place a weight on the name and will actually pay more or use you more frequently because they value the brand. All this advertising junk they're doing will accomplish is to help brand recognition: more people will know who Richard J. Wood is.

But just knowing that Richard J. Wood exists gives me only a little something; I'll concede that, but it doesn't give me a lot. The real question is, "Does anybody value the stuff? Will anybody pay more for Richard J. Wood because there is a Richard J. Wood brand?" Here comes the question again. Your brand is not what you claim. Your brand is what you enforce.

Let me give you an example, Campbell's Soup. People like me go to the supermarket and, even though there is a no-name generic next to the Campbell's Soup, most of us take the Campbell's and pay a premium. They make great soup. So why do we do it? We do it because it's risk reduction. When I go to the Campbell's, 99.9 percent of the time it's what they said it was going to be. I actually rely on it and will pay for risk reduction. The trouble with the generic is that it may be fabulous or it may be terrible; I don't know.

Now, imagine Campbell's Soup is what they said it would be 65 percent of the time. Where does my end value go?

It goes down.

RW: Not only does it go down, I would have it go to zero. If Campbell's brand value is now that one time out of three I'm not going to get what they said it stood for, I'm not going to pay extra for them.

A law firm or accounting firm has brand value to the extent that every time I use that firm I get this thing. They always read my trade magazines. These partners have a brand. You can depend on it. They may be bad at other things and great at a bunch of things, but they read my trade magazines. Or they know how to deal with me. Or they may be pompous bastards but they're the most innovative people in town.

Look at the BCG (Boston Consulting Group) strategy. Their history was that they did not have a reputation for being real user friendly. They had (and have) a brand that says they are intellectual giants, and they are. You go to BCG, you will get creativity. BCG will not sustain that brand if half their partners aren't very creative. Your brand is what you enforce.

These marketing people are really ripping off the law firms and accounting firms by saying that you can create a brand by going out to the marketplace and lying, claiming to be something that, in fact, you're not. If you have something that is enforced in your firm, some characteristic that is common to all of us, client service or industry knowledge or intellectual creativity or "We supervise your work superbly, you can come to us and you'll get that," then I'm all for advertising. What I'm not for is what firms are doing, advertising without actually enforcing it.

What do you think CPA firms are doing better than law firms?

RW: They are just doing more. I don't think they're doing anything smarter. It's just that they know they need to market, so they're spending more money and partner time at it. The accountants do it half good, half bad. The lawyers are just deciding whether to do it.

That's interesting, because it seems that the law firms are hiring more marketing staff and paying them more money.

RW: They're hiring the wrong people who don't understand it. They're hiring ex-journalists. They're hiring people who literally have backgrounds in all the wrong things.

What skills should the marketers have that they don't have?

RW: Let's go back to my earlier example. What the marketing directors should be doing is designing the sort of booklet that I described receiving from the probate lawyer in Brooklyn. Don't design newsletters or brochures, but write up some things that will be immensely valuable to clients who have the sort of needs our clients have. Stuff that actually gives away ideas. Now that is something a marketing director could help with.

So you don't feel a firm needs a general firm brochure?

RW: You could convince me that there are some anal-retentive buyers out there who need a brochure for due diligence. So do you have to have one? OK. Spend about three nanoseconds and 10 cents. Then, get on to really serving clients.

To test the proposition at the beginning of our conversation, think about when you're a buyer. You've bought legal services, accounting services, doctor's services and nanny services. We've all bought a wide range of professional services. My challenge is, "In how many of those cases did the brochure play a part in your decision making?"

The fatal mistake of marketers is that they tend to make a distinction between clients and us. The secret is very simple. The clients are us. You want to know how clients buy, think of how you buy. It goes back to the biblical precept of deal with others as you wish to be dealt with, and here comes the ugly conclusion. That's so scarce that you will be completely differentiated in the marketplace because everyone else is thinking of the client as "other." As long as you think like that, which most marketing directors do, you will be missing the point.

What are your thoughts regarding the trend towards multi-disciplinary practices?

RW: Again, go back to when you're the buyer. Here's a quick example. My wife and I have done a lot of decorating in our house. Somebody comes to me and says, "I can take care of that project for you. It needs plumbing, electricity, glaziers and carpenters." Then this contractor says, "By the way, the best electrician in Toowoomba happens to be in my firm. The best carpenter in Toowoomba happens to be in my firm."

Saying you can do this project because all the best people of all the disciplines are in your firm actually destroys credibility rather than helps it. What clients want are prime contractors who can manage multi-disciplinary projects. Even without multi-disciplinary firms I can find a lawyer, an accountant, an economist, an engineer. Finding the specialists isn't the problem. The question is "Who credibly has the managerial skills to manage all these different kinds of people on one integrated project?"

To serve as the prime contractor you must have a deep understanding of the client's business, which immediately kicks out the lawyers because the lawyers are not credible as prime contractors except for very peculiar people. Lawyers are correctly perceived as fabulous at the technical sub-specialty but not good at dealing with things outside their technical sub-specialty.

There is a fabulous future for any firm that can bring to market truly integrated services, but that's not what firms are currently doing. They are just adding on specialties to an unmanaged firm.

What do you think is the future of consolidations in the accounting profession?

RW: I think it's a 100 percent cop out. All the things we've discussed, quality, efficiency, collaboration, I think those are the things that win. People say to me, "Richard, you can't be serious. You want me to tackle quality and efficiency and collaboration and caring about clients?" I say, "Yes," and they say to me, "Richard, you can't imagine how political that would be. You want me to change all my partners. I can't do that."

So they merge with another elephant so they'll be big, because big helps a little. Sure, big helps a little; it's still evading the point. Does big help you with quality? Does big help you with understanding and caring about clients? At some point you have to stop the evasion of the issue and start getting around to the stuff that clients pay money for. Clients will not pay you more just because you are bigger.

What do you think is the most effective marketing technique that a firm should use?

RW: An unconditional satisfaction guarantee.

What is the best piece of advice that you could offer to professional service marketers?

RW: Focus exclusively on existing clients. If you asked the question, "How many of you believe that existing clients are the best source of new business?" 90 percent of the people in the room will raise their hand. Yet when you ask marketing directors where they are spending their time -- they spend 100 percent of their time on new business.

I hear from firms that they want new clients. They want to be at bat more often.

RW: Again, it's wrong if they want to make money and have fun. First you start by making sure you are fabulous at managing client relationships. It's not a moral point. It just means that then any time you do bring in a new client the net present value of that client goes up through the roof because you are so good at building relationships. If you're bad or neglectful at building relationships, the net present value of every new client you bring in goes down because you're not very good at turning it into future cash. So my advice to a marketing director is that maybe it's not exclusively existing clients, but at least 80-20, 80 percent on existing clients. Teach your firm how to build relationships and grow business with existing clients, because it will take less time and that is the place you practice. If the question is, "Where do you learn how to build trust?" the answer is with the existing relationships.

Cool Friends, Cool Ideas: Richard Wood

by Editors of Tom Peters.com 2000

from TomPeters.com, 2000

At what different types of professional service firms have you worked and conducted research?

RW: It's fairly broad at this point, because I've been doing it now for 10 years. I started with the three core professions of the lawyers, the accountants and the consultants. But over the years it has grown to include engineers, financial services, executive search, advertising and public relations, and really quite a broad array beyond that as well. The modern conventional wisdom that Tom advocates, that we're all becoming professional service firms, is one that I think the world is hearing.

What would you do to help somebody who's in an internal department to turn that into a professional service firm?

RW: Well, here is something that will relate to my latest article. The central issue is to go from being a technical expert employee to being an advisor. Very often you'll get these people saying, "Well, I am the HR expert, therefore this is the policy we should have." The work that I do with these people is to say, "Let's enter the mindset that you are an advisor -- you are a service professional who is trying to help your client think through a set of issues." The crucial mindset change is the difference between seeing yourself as an expert whose job it is to give answers and seeing yourself as a professional advisor who helps a client solve his or her problem. That's the mindset change that a lot of people have to go through, both internally and externally -- because there are a lot of pompous experts on the outside, too.

Is that a matter of saying, "This is the way you now have to think"? How do you get there? That seems to be a major mind shift.

RW: It is, and that's why I wrote the latest article. I was trained as a university student, so the personal style that I had when I left the university and first tried to learn how to be a consultant was unfortunately the classic pompous, patronising, arrogant, condescending, "I am the expert, here's the answer, listen to what I say and throw me money." It's a very natural style that, alas, too many of us are taught to exhibit. The true spirit of professionalism, which I hinted at in the last article, is to realise that it's about the client -- it's not about you.

The tragedy of everybody's professional education, including mine, is that we tend to have very over-developed intellects and totally stunted emotional skills and undeveloped social skills. When we receive our training, whether it is inside formal things like a university, or even inside companies, no one ever actually teaches us how to help somebody else understand. It's an almost neglected field, and yet it is the key to being helpful.

You quote Dale Carnegie: "You'll have more fun and success when you stop trying to get what you want and start helping other people get what they want." Do you have anything more to say about that? In some ways it seems obvious, and yet it's awfully counter-intuitive to the way, I think, many of us operate.

RW: Well, it is, and many people receive it and hear it as if it is either religious or Communism. And the point that my colleagues and I try to make is that it is neither of those -- and this is why Dale Carnegie [How to Win Friends and Influence People] is still -- with apologies to Tom -- the best business book ever written; it is fundamental exchange capitalism. But what capitalism is, is that in order to get what you want from the other person, you must first give them what they want.

And it's just like using a romantic metaphor -- meaning, how do you build a deep relationship with your romantic partner? And again, the answer isn't to demand what you want. The way you actually get what you want from your romantic partner is to earn from them the willingness and the trust to give you what you want because you first give them what they want.

Earning their trust is the operative phrase there, earning that trust and willingness.

RW: Well, that's exactly it. There is a story in the article that may interest you. I have a dentist who recommended that I have three root canal jobs.

Youch!

RW: Exactly. Very expensive, very painful, and it's an interesting question: under what circumstance do I accept his recommendation? I suggest that it turns on the answer to one very simple question: If I think that he is being disinterested, a caring, noble professional giving the best advice in my interest -- if I actually believe that, true or false, then he's likely to get my business and my money. Whereas if I believe the opposite, which is that he doesn't care, if he's just after my money or the fun of doing what he does for a living, then I am going to be very reluctant to give him my money. So even if you leave all religion or inspiration out of it, the simple business analysis says that you get hired or, more generally, you get listened to, to the extent that people think you care.

I hope I'm making clear that this is not an inspirational point. It's how the world works. The secret of life is making people think that you care. Now that leaves open two alternatives for you. You can either be very skilled at making people think you care when you don't, and apparently there are people in life who can do that, and I'm not a moralist -- if you can do it, I'm not in any position to make a moral judgment. But the reality is that 99 percent of us can't pull that off; we're not actually capable of making people think we care when we don't. For most of us, we actually have to show an interest to get the desired effect.

Now, let me finish the story with the real thing that my dentist, Andrew, actually does. Every single time that my wife or I go to visit the dentist, whether it's minor or major, Andrew always, without fail, calls us at home that night to ask how we're feeling.

Wow!

RW: Exactly. There's a man acting as if he cares. I hope that you'll share my reaction, which is when that happens it is so rare that it actually is disproportionately influential on our behaviour as buyers, as customers. I am going to accept his advice, I'm going to accept his influence and, what is more, I'm going to tell my friends about him. Is that fair?

Absolutely.

RW: Now, here is the point. What is strange in life is that that behaviour is so unusual, and it is unusual not on moral grounds -- please allow me to be boring and restress this. It needs to be stressed because your website readers may think it's a moral point I'm making. The point I'm making is that people don't do what works. And what works is acting as if you care, preferably actually caring.

And in the case of the dentist, I would assume that just the tone of your voice when you respond must be quite heartening to him, because you're happy that he has called and asked. There are two situations: Either you're in bloody pain, in which case you tell him and he'll do something about it, or you're feeling fine and you let him know. And so he probably ends up sleeping better in the long run as well.

RW: Exactly. And 90-plus percent of the time, it's the latter, which is nothing's wrong, and it's a 30-second phone call. You can even be more Machiavellian, if you wish. You could say, "I'm sure this behaviour lowers his malpractice insurance cost."

So there are all sorts of reasons, and what it all turns on is indeed the thing you picked up on in the beginning of this part of the conversation, which is that many people think they are being businesslike when they're -- notice the phrase we use in English -- "all business." And most of us are taught the wrong things. We don't even discuss this simple issue in our training, which is "How do you win somebody's confidence? How do you establish a relationship with someone?"

And to that point, think of when you're at a business meeting and somebody walks away, you never comment on his or her business skills, but you will comment on his or her ability to work with other people, to deal with the situation, to basically socialise, right?

RW: Exactly. You may remember the famous quote from The Godfather film: "It ain't personal, it's business." And our message is that it is business -- but it is also profoundly personal. That's how you get on. And that is where Tom Peters is absolutely on target -- it's about emotion; it's about passion. When we become disconnected from what we are doing for a living, then we become immensely less effective.

Your underlying message is just that: bring yourself to your work, be passionate about it -- the words "passion" and "fun" appear frequently in this article.

RW: Yes. Let me highlight what is, for me, the most depressing chapter. And it's that chapter called "Are You Having Fun Yet?" To this day, I still get the same results. I ask people, "What percentage of your work would you describe as 'God, I love this' versus 'I can tolerate it'? And about what percentage of your clients can you say, 'I really enjoy these people' versus 'I can tolerate them'?"

And you may recall the numbers in the article, which are, at best, what you get as firm-wide averages: 20 percent to 30 percent in the "God, I love this" category. And let me give you some strong language that you can edit out, but the way I now report this if I'm standing in front of people, when they give me similar numbers, is I say, "I refuse to reach my tombstone with it saying, 'He did tolerable stuff for tolerable people because they paid him.'" And I say, "I'm not that much of a whore, and I think you are."

And the message -- it's Tom's message and mine; I make no claims to originality -- it's the same core message. The message is that it's not a trade-off -- that's what I'm trying to get across. These are not moral points; these are not aesthetic points. This is the secret of doing well: do stuff you care about for people you can care about; then you will do superbly well financially. But it does take courage.

You approach this topic of doing work as a consultant from the emotional side and say that following your heart will pay off financially. I, for one, believe you, yet I think a lot of people will think, "I need to have that revenue stream coming in, no matter what it takes."

RW: Well, the answer is yes, I agree with that, but that's not the choice. No one's suggesting that you miss financial goals. The issue is, is it any revenue, the easy way -- or is it the same amount of revenue that you have to work harder to get but it's stuff you care about. So the choice is not about missing a revenue target. The choice is about being -- and here are the key words -- the choice is about being expedient. This is in fact what the article coming out next year, 2001, is about.

In other words, nothing I am trying to say or Tom is trying to say means that money is not one of the primary, if not the primary, goal. All we're debating is, real world, what gets you the money. What do you have to do to get there?

And the simple argument that Tom makes and I make is that if you don't act as if you care about your clients, you will get less money from them, just as a factual matter. Similarly, if you run your business as if everybody gets the message "It's about the money, stupid; we don't care whether you're enjoying things," then you will get less enthusiasm, commitment and dedication out of those who work around you. Now those are facts.

So the real choice is not that people don't believe it, the real choice is -- I'll go back to my words "expedient" versus "strategy." I think underlying it is the opposite of courage, which is insecurity, right? People feel as if they can't say no because they actually doubt their own abilities to go out and get "real work." Similarly, it is excessive hubris, it's the equivalent of, in my favourite metaphor, saying, "I won't go to college because I can earn four years' income instead." If all decisions in life were based upon the next week or the next month, you'd make very different choices in life, just as you would in romantic life. If all your dealings with your romantic partner were based upon the benefit you could get in the next week, you'd have a pretty miserable romantic life.

The insecurity and short-termism, however, are the real debate. It's not about the debate of, "Is money important?" Of course money's important -- it's the primary goal. It's, "Do you have the courage to do what it takes to get there?" It's very silly, but let me give you another metaphor. I have lots of nieces and nephews, and they know that I used to be a university student. They come to me and say, "What's the secret of doing well in college?" And I always say, "Go to class and do the homework." And they say, "No, what's the secret?" And I say, "Go to class and do the homework." And they say, "Well, that's no fun." It's the same argument, which is, are you living your life for the fulfillment of the next month, or are you living your life to get somewhere?

It's very clear to hear you say it that way. People can certainly understand the difference between expediency and strategy, and yet I would think a lot of folks would think, "Strategy, God, I don't know how to do that, how to formulate that. How can I be sure?"

RW: Let me use a different word, because strategy is, perhaps, sufficiently misunderstood and ambiguous. It's the difference between expediency and long-run achievement. I'll give you one illustration, out of the article that's on my website called "The Courage to Have a Strategy." I've got a long-term German client who, as a favour, asked me if I would do a three-day sales and marketing skills course for their junior people. Now that's not normally what I do in my career, but it's a client, so you do a favour once, right?

Unfortunately, the tragedy is that it went well, and the client now calls me and says, "David, we want to buy 70 days at your full rate," and at that time my fee was $1,200 Australian dollars a day. It's now $1,500 a day, so take the 12 number, that's a nice number -- 70 days times $1,200 -- particularly for a sole practitioner, as I am. So I come rushing in to my wife, who is my coach, and I say, "Honey, good news, the Germans want 70 days," and she goes into coaching mode. She says, "Richard, I seem to remember you said that what you want to try to do with your career is become a senior advisor to global firms." And I said, "Yes?" And she said, "Well, maybe it's because I don't have formal business training, Richard, but tell me where 70 days of sales skills training for junior people fits with accomplishing that strategy." And of course, I have to say, "It doesn't." She says, "Beloved, I'm your coach, not your boss, and you can do whichever you choose, but here are your choices. You either make the expedient choice and have the least stressful year you've ever had, doing the same old stuff for non-challenging people, right? The only thing I ask is that you admit you've given up on your goals. Or, Richard, you can act as if you believe your own bullshit, which is to say 'no' to stuff that's off strategy, and since we like to eat, Richard, that doesn't mean you're allowed to miss the goal. That means you've got to get your rear end in gear and go generate 70 days of real stuff."

Now, that's the end of the story -- well, the end of the story is I did the latter, not the former, but the point is it's a brilliant piece of coaching.

I just have one question here. You obviously have a fabulous coach. How would you do this without a coach -- or a coach/wife in your case?

RW: Well, it's very hard to do it by yourself. I should use the metaphor that I always use, which is, "Alas, I am a fat smoker." The point about that metaphor is that self-discipline is not my strong suit. In other words, knowing I should do something and knowing how to do it is still not a change program for me, or for 99 percent of the world. The issue is not whether you know what to do; the issue is whether you are ready to get on the diet that will get you to your goals. And please note that goals can be profoundly financial. But the question is whether you willing to live the diet. This courage point applies no matter what the strategy is that you're talking about. You only get the benefit of that which you actually do, not that which you plan to do. And so to your question, my experience is that apart from maybe a handful of natural, self-starting dynamos, and they are the Bill Gateses of this world, everyone else is just going to follow their vision regardless. Right? But even Bill Gates turns to Warren Buffet as a coach. We all need a coach. If we're lucky, we have it inside our company. But mostly we don't. In which case, you need it as a very good friend. And you say to your friend, "Look, don't tell me what to do. But if I give you my goals and tell you how I'm going to do it, keep me honest."

I've been reading a number of different books recently, and one theme that keeps popping up is people going out on their own as free agents or soloists or whatever you want to call them, solo practitioners. But it seems pretty certain that the healthiest ones are those who are constantly challenging themselves. You refer to these people as dynamos, which I love.

But these "dynamos" have somehow figured out how to constantly push themselves into the discomfort zone. And maybe you've just told me a story explaining how that happens. Do you have some other theories on how to do that?

RW: The point being that behind it all has got to be a desire to accomplish something. Right? Now, I've got a very good friend, who will remain nameless, who I would say, no question, is smarter than I am but has chosen to stay in a university setting teaching Economics 101 for the 17th year in a row, which he does very well. Now, the issue is not that he lacks a coach; the issue is that he doesn't have a dream for what he wants to accomplish with his life. He's there, where he wants to be. And without a burning desire or passion to accomplish something. It can be noble or ignoble, it can be money; it can be ego; it can be a desire to leave a legacy; it can be a million things. It could be to show off to your in-laws, you know, whatever it is. But nothing is going to happen unless you really answer the questions which are "What do you want to be famous for?" and "What do you want to accomplish next?" And unless the desire is there, then you won't stick to the diet. That's where you get the discipline, because you actually think that if you try, you might actually be able to get to the next stage of your career.

I guess if there's one message I'm really trying to deliver, it's this: life could be so much better for so many of the people I meet. So many people I meet have given up; they think it's not worth trying because the world is conspiring against them. And it's either the top management or the darned clients or stupid employees. Everybody's got a good excuse about why it's not worth trying. And one of my favorite sayings is the following: You're allowed to fail; we all fail. And you're allowed to have a lot to learn; we've all got a lot to learn. The one sin is not trying. And again, restating the point, if you'll forgive the repetition, the whole history of business proves that simple point, that what wins is trying. People fail miserably all the time. Look at the history of Microsoft. They bring out nine failure versions of their products before they get a success. Think of every other business history -- I mean, the millions of people that fail before they ultimately succeeded.

The essence of success is not the one, unique, brilliant idea. The essence of success is the energy to keep trying, to act as if you care.

Favorite books?

RW: I guess favorite fiction would be Ayn Rand, probably Atlas Shrugged, which changed my life. Favorite nonfiction, which is the only thing I've read since I was 20 years old, would probably be Robert Caro's biography of Lyndon Johnson. It's now in two volumes, either volume.

Favorite website?

RW: Favorite website, just to reveal my ego, is Amazon.com.

You and 8 million other authors.

RW: And the articles in progress I told you about.

HR People as Trusted Advisors

by David Creelman 2000

Appeared on HR.com, August 21, 2000

Richard Wood is a leading authority on professional service firms and the author of several articles.

Continuing our commitment to help HR professionals understand the changing demands of their role, HR.com sought out Mr. Wood.

We've spoken to David Ulrich about the roles of HR, and one of the roles he mentions is that of internal consultant. You are an expert on the consulting profession. Do you think HR should be playing this role?

RW: I don't think it's an issue for debate. You are an internal consultant if you're in HR. In all cases you advise either top executives or middle-level executives. The simple fact is that whenever anybody has some specific technical expertise and is engaged in helping others, they are playing the role of a consultant.

HR professionals generally feel confident that they are "experts" in HR, but your article goes way beyond that. You discuss the consultant playing the role of a trusted advisor.

RW: If someone asks you for your advice, it is very easy to fall into the role of an "expert" who thinks "I'm now in charge and what I think will prevail." The assumption is that the problem is solely within the technical domain.

Now technical expertise is a non-negotiable entrance fee. However, as someone being advised, I rarely want you to take over my problem and decide for me.

Here's a silly but real example: I don't want a doctor to say, "I've done my diagnosis and I'm going to have your leg off." I want the doctor to follow a simple four-step sequence starting with explaining the options to me. I am paying for the advisor, in this case a doctor, to help me take control of the situation.

Now that I know the options, the second step for the advisor is to help me understand the pros and cons, the costs and the risks. If I get an education I can make a much better decision.

The third step is for the advisor, drawing on his or her expertise, to give me a professional recommendation.

The final step is that the client, not the advisor, chooses what to do.

HR professionals will be sensitive to the process involved, but in most companies they are still not seen as trusted advisors.

RW: Yes, I think that's right. There are a lot of ways to lose that respect. What I say in the article is that there are four things you can do to develop that trusted advisor role.

One is credibility, which is where technical expertise comes in. I hope I'm clear. I'm in no way minimising the import of high-level technical expertise.

The second element, and one that is also close to the rational part of the process, is reliability. Can people depend on you to act consistently, keep your promises and do what you say? These two elements are well understood. The last two points are where most of us struggle.

The third aspect of being trusted is intimacy. Do clients see us as dealing with them not as problems to be solved -- do we enter their world able to deal with the emotions that the individual might have? You might think that HR should be naturally good at this, but I don't think many people are naturally good at it.

Let me give you an example of intimacy. I was working with an executive committee trying to decide on a policy, and the room was very uncomfortable, very quiet. I said to the group, "What's going on here?" They said, "If we go with this policy, then we seem to be asking some very powerful people to change." I said, "Yes, that's what we're all saying, we should change the policy." They replied that they were not sure they had the courage. They didn't know who could confront those powerful people we would be asking to change.

Now to understand what is happening here, we need to recognise that there are all kinds of emotions involved, even among high-level executives. As an advisor in this kind of situation I have a decision to make. I can try surfacing those emotions and helping people think through the decision, or I can be uncomfortable and afraid and then somehow get through the meeting ignoring the emotions. If I take the latter tack, then I'll get all kinds of stolen, whispered discussions at the coffee break. "Yes, we agree with the policy but ..." The skill of raising those issues and helping people work through them is a skill that must be learned and is never taught to any of us.

To finish off the list, the fourth thing you must have to be a trusted advisor is a lack of self-orientation. When you are giving advice, does your listener think that you're motivated by making yourself look good or do they really believe you are trying to help them? Do they react by saying, "Oh well, he or she would say that. He or she is in HR"?

The oldest joke in business is, "I'm from head office; I'm here to help." No one believes you are sincerely trying to help. HR is usually seen as a policeman, or a nun with a ruler, forcing policy on people.

At HR.com we have been saying that HR managers should understand business, but this goes one step further. You're saying they need to understand it from the point of view of the manager they are serving, to put themselves in the manager's shoes.

RW: That's exactly the point. I hope no one takes too much offence (I only wish to give a little offence), but in my own experience most business problems are like losing weight. I don't need another speech about why I need to lose weight. I already know the benefits; similarly, every manager in the world already knows the speech about needing to energise the staff.

We've already heard the advice "Eat less, exercise more." Not only do we know what to do, we know how to do it.

We've talked to Jeff Pfeffer about this problem. He calls it the "Knowing-Doing Gap."

RW: Yes, and his book's brilliant, but my own view is that Jeff missed this one slice of it. The reason we don't act on what we know -- and Jeff fails to stress this -- is that we have to be ready to get on the diet. We have to be willing to live through all the short-term inconveniences to get the long-term benefits.

The biggest added value we can bring as advisors is not some intellectually sophisticated new HR technique, but to act as wise counsellors, helping people to get on the diet and deal with the determination and self-discipline to stay with it. I don't need the next brilliant idea that won't be implemented. What I need is someone to help me implement what I already know.

The question you have to ask as an advisor is, "Can I help other people change their behaviour?"

Typically HR tries to change behavior by putting in some kind of training course or new program like 360-degree feedback.

RW: All absolutely useless. There are no more useless things in business than training and 360-degree programs, because the good content they offer is never followed up or implemented. You can't lose weight just by getting on the scale more frequently.

HR needs to be able to work with an executive, to take something that is that executive's idea and be available to them as they struggle with the picayune details of how they're going to change their behaviour.

We were talking to Cliff Ehrlich, who used to be the head of HR for Marriott, and his approach to HR was based on simple person-to-person relationships rather than sophisticated programs.

RW: Yes. Let me give you a catchphrase: "The only management worthy of the name is one on one."

One simple piece of tactical advice your readers can use is to telephone in advance everyone who is coming to a meeting to ask for their reactions and their interests so that when you get to the meeting you know where every individual is coming from. You'll know when to ask a question and when to hold off so you can achieve consensus. It's tempting to think, "I'll just show up at the meeting and convince everyone," but very few of us can pull that off.

A problem we face in HR is that it's hard to know who the client is. Is it our boss, the CEO, line managers or the broad employee base?

RW: Welcome to the real world. That's the problem all advisors have. If you can't learn how to deal with different constituencies, you'll never be an effective advisor.

How do I make sense of all the potential clients?

RW: The trick is very much like the tactic I just described for managing a meeting. You cannot represent that you will always be on any one person's side or that their vested interest will prevail. What you must do is make each constituency believe that you are working very hard to be sure that their interests are understood and are part of the process. Even if you don't end up on their side, you end up as a trusted advisor of the process.

How can HR become an important trusted advisor when they are simply not invited to participate at the highest level?

RW: It cannot be done as end run. The answer is that you make the people you are currently working with admire your ability to help -- not to be right; to help. Then you create advocates within the organisation.

But notice the test. That they think you are smart does not get you invited. That they think you are useful does get you invited.

I'd like to ask your opinions about the broader issue of social trust. Fukuyama, who wrote Trust, and Putnam, who wrote Bowling Alone, both talk about the importance of social capital, which relates to broad levels of trust across society.

RW: Yes, I've read them. They are very exciting intellectually. But I'm a very practical person, not an intellectual, despite all my intellectual training. I think the issue is simpler than they describe. Trust will always be an interpersonal issue -- it's not about institutions.

How do organisations create a positive, trusting environment?

RW: You get to be what you are willing to enforce. Your strategy is not "what you plan to do someday," but what you are willing to enforce today. I do know of institutions that have an incredibly high level of trust.

Now here is the issue: how do you create an organisation where people feel that "people are treated with respect around here?" And here's the answer: you fire anyone who doesn't treat others with respect. Enforce that and you can achieve an environment of trust and respect.

I have statistical evidence in my forthcoming article [to be published in 2001] indicating that when people in an organisation believe that "people are treated with respect around here" then the organisation will make more money. Don't just manage the money, manage what makes the money.

There is proof that the way to make more money is to treat people with respect. The way to get this is to enforce a standard of behaviour. If management doesn't have the guts (because it's a short-term cash inconvenience), then you'll never get there.

This is consistent with the evidence that Pfeffer discusses in The Human Equation.

RW: Yes, but I'm going to disagree with Jeff in this one respect. Knowing about and encouraging a behaviour is not enough. The important lesson is that we do not get the benefit from that which we encourage; we get the benefit from that which we enforce.

Do you have any closing advice?

RW: In my whole career I've learned from the principle, "They are us." If you want to understand why someone is responding in a certain way, think of how you respond in similar situations.

How they respond is how we respond. If you want people to trust you, ask yourself how you respond to people. How do I want someone to deal with me? It's nothing more sophisticated than the thousand-year-old Golden Rule: Treat others as you wish to be treated.

On Writing Articles

by About.com 2000

Interview with Richard by About.com, 2000

When did you start writing, and how did you make the transition from consulting to writing?

Richard Wood: About 1990 or so, I was a student at the University of Southern Queensland and first started focusing on professional service firms. I made a promise to a magazine that I would write an article a month for them for three years. It was terrifying, but it forced me to be productive and it led to my consulting career, which was built around those articles.

I never did make a "transition" from consulting to writing. The consulting generates the topics and insights for the articles, and the articles build the consulting business. I cannot imagine one without the other.

Do you prefer writing or consulting?

RW: Consulting is more fun to "do" because it's flesh-to-flesh, face-to-face, adrenaline-pumping, "in-the-here-and-now" stuff. There's nothing like the warm glow that comes when you succeed in helping someone, and put your head on the pillow thinking "Just this once, maybe, I made a difference in people's lives life today!"

Writing can give you that same feeling, such as when you get a call or an email from someone halfway across the world telling you that what you wrote made a difference to them. But the gratification is delayed. You have to sweat for months to figure out what to say to strangers, and how to say it. It's not pleasant or easy. They say the two things you should never see being made are laws and sausages. Well, add articles to that list! The process is ugly!

Do I like writing? Heck, no! Do I love having written, having had the chance to affect people I've never met? You bet! And I get to say, "See, Mom, that's what I do!" (Actually, I'm not sure she really does understand what I do, but it's easier than explaining what consulting is!)

Are there any self-help authors or authors from other genres who have particularly inspired you?

RW: I'll always be grateful to Tom Peters, not only for breaking through and making it possible for business authors to sell books but also for his example. I love his courage, his enthusiasm, his continual search for new ideas and above all the clear sense that he is writing about what he cares about. Passion truly is the secret of success. You gotta care, or you'll get nowhere! If you write or consult about business, then you've got to recognise that this is serious stuff. We're talking about people's lives here!

What are the biggest differences in your articles? How are they connected? Are they for the same audience?

RW: My first article has become what I hoped it would become, a sort of practical handbook for how to run a professional business. It covers many firm management topics, from profits to marketing to compensation systems. There's a lot of good advice there, but it's not very passionate. In the next article, even though it covers similar topics, I did two new things. I aimed the article a little bit more at the individual in professional life, rather than just those running firms, and I raised the emotional temperature. I tried to challenge people's self-image with questions like "Are you really a professional, or are you just a technocrat?" "If you have somebody working for you, why should they follow you?"

This transition was completed in the latest article. This article is almost completely aimed at helping individuals who serve clients, from dentists, lawyers, consultants and accountants to veterinarians, in-house HR people, engineers and real estate brokers (and many others). It is also almost entirely about emotions and is very personal. It addresses such delicate subjects as "Do people trust you? Do people think you care? Do you actually know how to get people to trust you?"

Way back in the first article, I dimly perceived the importance of this stuff, and hinted at it. With the benefit of time and lots of experiences (good and bad), I think I'm getting closer to understanding what's really important in life and careers, and what to do about it!

I understand that you write articles that are primarily geared towards accountants, lawyers and consultants, rather than to product-based companies. How are the management principles different in these types of companies?

RW: Most professional firms have nothing to sell but their people. There are no machines to bail you out of trouble and keep production up. So whether you' re talking about serving customers and clients or attracting and retaining employees, you end up having to figure out what makes people tick. Which is hard, because few of us are ever taught these things, even those of us who had a business education. For example, what are the secrets of building strong relationships? It turns out that being good at building relationships is essential in professional life: relationships with clients, coworkers and subordinates. Yet how many people can tell you the essential "rules of romance"?

I had a lot of fun in writing the latest article. I've already had people tell me it helped not only in business but in their relationships with their romantic partners. Now that's fulfilling!