Adrian G. Simmons

You’ve seen those car commercials: the sleek, sporty car expertly threading through rural roads as it speeds its way towards bliss. And along the bottom of your screen in small print: “Do not attempt – Professional driver on a closed course.”

Man, what a let down. 😉

I’m here to tell you that value pricing is like that – if you’re not an entrepreneur, do not attempt. Value pricing is not in the professional mainstream yet (though one day will be), and you could wait for the rest of the herd to move before re-examining your business model (though realize that strategy comes with its own risk too).

But if you’ve decided to become a ‘professional driver on a closed course’ (a.k.a. an “entrepreneur”), I’d like to provide a little lay of the economic landscape to help inspire you on your journey.

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I wonder if you’ll allow me a few moments for some experimental thinking — to explore with you an idea: what is the price of profit? (it may not be in the way you’re thinking.)

In a previous post, I ruminated on a different way to view what CPA firms do: we sell access to emotional, intellectual, and creative capacity. What this means to me is that we have care, smarts, and the ability to imagine, and that’s truly what our customers want from us. This is how we help them. These are not unlimited resources, however. We have only so much emotional capacity. You know what I mean if you’ve ever had that morning customer situation that completely zaps your energy for the rest of the day. We have only so much intellectual capacity. Has anyone out there been able to keep up with changes in all the dimensions of accounting, much less the other things we have to know to run a business? And we have only so much creativity capacity. The juice it takes to rollout new products, or help customers imagine solutions to their situations, can only run so long before it needs to be replenished.

From a business model standpoint, our goal is to optimize the long-term yield on this emotional, intellectual, and creative capacity.

But we generally don’t have this type of “yield” mindset. And we usually don’t have a way to judge yield or keep it in the forefront of our minds.

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“The pathway to your greatest potential is through your greatest fear.” -Craig Gristle

This is where it gets real. The blog posts are one thing. The conferences. An inspiring TED talk or coffee exchange with a peer. But eventually it all comes down to you, and the action. And the fear that’s present in that moment.

I’m convinced that facing fear is perhaps the biggest skill we can develop as business owners. Heck, as human persons. To me, here’s an example of human business, and how developing this skill in business, can actually feed back into our life outside of business. And vice versa. I know it has for me.

Herewith, five steps for facing fear, from facing my own fears:

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Commerce. Hubbub. The noisy marketplace. The tens, hundreds, and thousands of small exchanges. In the store, online, over the phone, from an airplane. It’s like an ecology, the ecology of the economy. The creation and shifting of resources from one area of the ecology to another. All voluntarily. All based on what we value, on what we think is worth the expending and spending of resources. The values, where do they come from?

As entrepreneurs, we design “the value exchanges:” those interactions that bring together buyers, workers, suppliers, owners, and indirectly, their surrounding environments. If we’ve done our job well, each party leaves the exchange with greater value than they brought to it. In a very real sense, they are affirmed in that value through their interactions with the others. The whole process is a way of cooperating to make the imaginary real, the potential actual, the unseen seen. It also transcends the laws of matter: while the physical matter doesn’t increase, paradoxically the whole enchilada just grew, because it grew in a non-material dimension: in the minds and souls of the participating parties.

“The value exchanges” are preceded by a decision, and the savvy entrepreneur is really a decision architect. She’s created the exchange, but the decision is what gets the movement of the exchange activated. Architecting that decision is really a matter of leadership, of presenting the decider with their freedom. The frame of the decision proposes a truth about reality, what makes reality better, and how the exchange brings about that reality.

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The world is a wild and wooly place. Grappling order out of chaos, or introducing chaos into order, is a messy business. Which is why neatness is not the aim of business, even though we may sometimes consider it the aim of accounting.

In our efforts to come to terms with our reality, mental models can be very helpful. The concept of business as a ship, navigating uncharted waters, in search of undiscovered lands. Or that of climbing a mountain, catching glimpses of the peak, pressing on, but enjoying the journey. Or as we like talk about in Thriveal, cliff-jumping, blowing stuff up, and lab experiments on our way to making a new firm. These can help give us the clarity and impetus to act because we have a way to understand our movements in the broader story.

Conversely, mental models can also be very harmful. The idea of time as money. That monetary profits are the sole purpose of business. That perfection of the system is the goal (thus people become cogs in the machine). That leaders are all-knowing and inerrant. These are among the models that can increase our friction as they under-equip us to deal with the realities we face.

Our ability to evolve and change is usually the result of adopting a new mental model and/or letting go of an old mental model. They’re the brain pathways that sit just underneath the surface, often out of view to us. They’re the pattern molds we’re subconsciously using to make sense of and interpret the experiences we have each day. You can see how powerful they are to our life. It’s why I take issue with the phrase “perception is reality” and prefer to replace it with “perception shapes our experience of reality.”

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This post is adapted from a presentation I gave at Xerocon Denver 2015. In it, I talked about the progression our economy has made from agrarian, to industrial, to service, to knowledge, to what I believe is here in some industries, and now surfacing in the accounting industry — the creative economy. See this link if you’d like to read the full text.

If you look at our nation’s history, you’ll notice the progression from survival (agrarian economy), to possessions (industrial economy), to freed up time (services economy), to intellectual pursuits (knowledge economy). Some of you may recognize the parallel to Maslow’s hierarchy of needs. I suggest we as a society, and as an economy, are moving our way up that hierarchy.

So what comes next? I believe there’s a new age brewing — it’s been around for a little in the broader market actually. But I believe our field, accounting, is now entering the creative economy. In this landscape, it’s not acres, it’s not physical capital, it’s not hours, and it’s not even intellectual property that governs the economic paradigm: it’s our ability to tap into the human capacity to imagine and create. That’s what the market will reward the greatest. And that’s why the largest taxi company doesn’t own a single vehicle (Uber), one of the largest lodging companies doesn’t own a single building (Airbnb), and the largest content company doesn’t have any journalists (Facebook).

The next ten years or so, I believe, will be a drama between the characters of Knowledge (we’ll call him Kevin), and Creativity (we’ll call her Cora) — something I call, “The Tale of Two Economies.”

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I’ve suggested before that accounting is not the language of business, but that I do think CPAs bring unique abilities to the conversation of business. In a world of information, perspective is king, and if we can see our finances in their broader context, I think we go a long way to growing stronger.

To that end, I’d like to propose that your (and any other business’) two most important numbers don’t appear on your income statement: (1) customer profit, and (2) opportunity loss. This graphic helps illustrate:

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Systems are so important as enabling mechanisms. Sometimes I like to call them “structures of freedom.” I’m reminded of a quote from Tim Williams at Thriveal’s Deeper Weekend last fall, “Process is the architecture for getting things done.” Even creative processes, like transforming your firm, require some level of scaffolding to help you see it through from concept to realization.

Systems can compete with each other too. The system you know and use now will almost always beat out the one that’s fledgling or undefined. This is why it’s almost always easier to spend hours replying to e-mails than to change your firm. There’s a system for e-mail, but not for transformation.

So our goal is to develop a creative system for our firm, shield it during its fledgling stage, and then let it grow to become part of our way of doing things, that stands its ground and evidences its value as part of our firm’s operations.

Cracking this nut is not easy. But I feel like I took another step earlier this year in my own personal system.

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Over the years, I’ve developed a skepticism of brands, a healthy one I hope. And I would venture to say you have too. One ad after another, all making claims to be the best thing ever. Common sense tells us it can’t actually be — we all want to believe that particular cologne/perfume is going to make us instantly magnetic, but we know better. And then there’s one purchase after another; many don’t live up to the hype, some do, some do to begin with, but don’t last. Each of these experiences eats away at our ability to believe, to trust.

Brands can be so impersonal — marketing messages connect us to the brand, and humans become merely the means to get to the brand. Ads create a desire for Cheerios, and supermarkets and checkout registers are just a delivery mechanism to acquire Cheerios for ourselves. The quicker and easier, the better. Products, not humans, are the end. (Or perhaps more accurately, the emotional state promised by the products.)

But brands are real, right? I mean, after all, there’s Coca-Cola, Apple, Southwest, and Rolls Royce. They must truly exist. Or do they? Maybe they’re just made up. Maybe they only exist simply because we all agree they exist. Sorta like language — we all agree this scrawled shape on a piece of paper constitutes a letter, “d” we’ll call it. And we agree that it makes a particular, recognizable sound formed by our mouths and tongues. And when combined with the two other scrawled shapes “o” and “g,” signifies those panting, four-legged furry creatures in our homes.

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It’s right before tax season, and I’m sitting here at a table in my office’s front room, typing away on my laptop. This moment has significance.

We moved into this office space in February 2012, right as tax season started that year. It came after an unexpected offer to change suites at our office park to a ground floor spot. It’s not a big space, 1100 square feet +/­. But I got to design the floor plan and had been working with the contractors on build­out, colors, flooring, network placement, etc. There was a concept then for how we wanted to decorate the front room, but we had to settle for the basics at the time so we could go full swing into tax season.

And now it’s three years later. And we’ve decorated the front room to welcome our customers into a relaxing coffee shop style feel that was its original plan. And I’m sitting at a pub­-style table here.

The future takes time.

This quote from Reid Hoffman I think is critical for those of us out there trying to do something new:

“Innovation comes from long term thinking and iterative execution.”

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