A consultant or any other knowledge worker will inevitably learn while executing projects: on-the-job experience. He will improve his skills with handling the customer and partners and will do some project-related research he can bill the customer for.
The Increase of Knowledge
However, I’ve recently had the first customer who has actually clearly stated “no learning while earning”. In his opinion, he pays quite a high price for a well known professional service provider because of their knowledge. And understandibly, he won’t pay for us to obtain general knowledge we could then reuse with other projects as well. He wants to pay only for our services not for our intellectual well-being.
If the knowledge he wants does not exist in-house, we can either ask him to look for another service provider (not very likely, I guess) or we’ll actually pay for the acquisition of the required knowledge by our own (let aside that there are ways of billing without his knowing what he payed for – however, this is not what this blog is about and what the author stands for).
The Billing Price Does not Run Parallel to Knowledge Investments
The Price of Knowledge
A problem arises: During the time in which the responsible consultant is being trained or does his research, we can’t bill his hours, plus we might need to invest in off-the-job training. Would we increase the billing price for this consultant by 1$ for each dollar invested in his knowledge acquisition, theoretically we would always receive the same margin (margin = billing price – employee’s cost including investments in his knowledge). However, the actual return at the end of the year would be negative because we can’t bill the days on which the employee has acquired the knowledge.
Thus, we would need to increase the billing price for this consultant by 1.5$ for each dollar invested, right?
Those of us who bill manhours or mandays know the tedious drill at the end of every day (or if you’re lazy like me every week): write down what you did for whom for how many hours. Most of you will probably have a system for that, connected to some ERP system, with projects being identified by numbers etc etc. The system I work with also got a commentary field where I can input further details about what exactly I have done during these hours.
Now I challenge you to think of this commentary field as a microblog. Like Twitter – or better yet Yammer or Co-op (since the information is clearly only intra-company). What would be the benefit? Clearly not following 100+ people – quite dull information. But you could use it like the Twitter search in order to find out who has billed hours on a specific topic before. I often see the case that people research on a topic, a colleague next door had just spent time researching on last week.
The scenario is: I need information on a specific topic. I type keywords for the topic into the search function of the time recording/ microblogging software and I get a list of people who have that topic in their time recording comment; ordered by number of mentions mixed with recency and vicinity of the colleague. I’ll call the displayed phone number and receive (tacit!) knowledge in the area of his expertise.
A last thought on privacy / secrecy and work’s council issues: You probably should be able to mark some posts private. Or at least be able to define groups.
Update: I have found a time recording web application (mite) on the net that have recently announced the support of posting your billable time via a microblogging service (Twitter), via a messenger (Jabber) or Firefox new Ubiquity. Not exactly what I was talking about – but microblogging has been picked up.
I just read in a blogpost on the Progress Blog that the author likes to differentiate between “cost” and “income” activities. Income activities include e.g. any billable work by a consultant. The central knowledge generation, codification and management would be cost activities, I guess.
But what is talking about that you know something (remember my early blog post about communicating your wisdom)? It’s very close to sales (convincing people of your qualities) – which the author clearly contributed to income activities. On the other hand, isn’t that classical PR work? Wouldn’t PR be a cost activity?
What the author also mentioned: “…these activities work together to create value for the end customer”. Does PR create value for the customer? It may, because the customer might receive status through working with a company that has a good reputation. But foremost it’s about impressing the customer – maybe even dazzling him. And PR is directed at more people than only customers – all stakeholders (at least a bit for each).
My solution: don’t call PR a “cost” or “income” activity. Call it a “reputation” activitiy.
Next question: is innovating a reputation activity?
I found out about a doctoral dissertation about “short term profit vs long-term expertise”, via this article. So someone else, to be exact Siw Marita Fosstenløkken, already wrote about what I had dreamed of writing about.
Now I ask myself: is there a cutting edge one could add to her research? How do we need to rethink with her insights, think further…?
1. What I learned
I really liked the idea of classifying consultancies and communication agencies as professional service providers. Nice term – really nails it. What’s their service? Knowledge + workforce.
2. The cutting edge
Could it be “how much influence does expertise have in external communication to customers”? Is the lack of expertise of these professional service providers a real concern to potential customers? What is more important: the references or topic-oriented innovation / knowledge?
Shouldn’t this be more openly communicated:
- a low fluctuation rate= positive
- “Our knowledge is not only project-based – we’re out in the market, in the academic field – but we also don’t lose our sense of reality – we keep our routinely manner and our A level employees”
The open source dilemma
But in order to show that we value expertise – and we do it for real, not like our competitors – we would need to publish quite a lot of knowledge. We need to prove that we invest in this field. But wouldn’t we give away everything? And here we come to the usual open source dilemma: once you open source it, you can’t sell it.
- everyone uses your stuff –> reputation.
- people are too lazy to take your stuff one step further and hire you as a consultant to do that for them.
That’s at least what Don Tapscott and Anthony D. Williams argue in Wikinomics.
BTW: Good question for the next blog post: Is expertise identical to knowledge?
The German word “fakturieren” means billing. I didn’t exactly know that. I always talked about “Mitarbeiter fakturieren” – which corresponds to “billing / selling employees”. In German, it sounded totally ok to me until I looked up the word on an English/German dictionary. When translated, it sounds as if employees were things, slaves.
From now on, I’ll try to rather talk about billing the hours of an employee – not the entire employee. Even though with some projects it totally seems like the latter: Selling an employee’s soul to the beloved but demanding customer. But that would depend on him/her having time (another bad word: resources) for “being sold”, right? It would depend on his/her “billability” ;)