Welcome to 2016.
The opportunity in 2016 is the year of value.
Firstly there is a little piece from the latest Sherlock production where Sherlock is challenged that he know everything when he replies by stating that, that would be a waste but rather he specialises. In this episode I talk about the Complexity tax that Tim Williams mentions. This is where companies that diversify end ups being worth less than those businesses who narrow their focus to a few key offerings.
Also talk about the fact that though we need to narrow the focus of what we do it does not mean that we are unaware of what is going on in a more broader context. A really example of this is Continental Airlines of the 90’s. When Gordon Bethune took over he changed the focus from a cost metric to a measure that mattered to the customer – On time arrivals. In the process they utilised the services of a Formula 1 racing team to work how to turn around a flight quicker. It is about having a narrow focus but a wide vision.
Clients of today are increasingly more sophisticated. I believe this is the case because :-
- Increased desired for education by business owners
- Spirit of entrepreneurship
- Technology – we have information at fingertip.
Because of this increasing sophistication it makes 2016 the year of Value. Yes there is a choice of being the most cost efficient low price provider of compliance services. But the real value sits with providing insight. This means that if you narrow the focus of the firm and demonstrate your value that you bring then you will able to capture that value in your price.
Sometimes though people believe you are not able to scale advisory work. There are many examples of firms that turn over millions, if not 100’s of millions so it disproves that argument. The key though to scaling advisory is scope management. Too often though firms not manage scope properly. Often they just do it on an ad-hoc basis. Scope management requires a system.
So 2016 is the year of value. Create and demonstrate value to a narrow focused set of customers.