Firms of the future

We often discuss the fact that profits originate from risk, which is a supply-side viewpoint.

But what about the demand side--that is, what about the customer's risk? If a firm lowers a customer's risk, or uncertainty, it should be able to command a price premium over the competition.

In tough economic times, everyone likes to bemoan how their offering is becoming more and more commoditize. We hear this across all sectors, and it's truly disheartening, since there's no such thing as a commodity.

Normally, we expect society to progress, amassing deeper scientific understanding and basic facts every year.

Knowledge only increases, right?

Proctor points out that when is comes to many contentious subjects, our usual relationship to information is reversed: Ignorance increases.

Even ardent supporters of hourly billing will admit that there exists, right from the start, a conflict between the professional's interest and the customer's. When you make hours important, then the customer is bound to focus on hours, rather than value. Those professionals caught "padding" their timesheets because they believe the value of what they created exceeded the price measured in hours will lose the respect of their customers.

The schism between management theory and economics is profound, and one of the reasons is the study of management theory is relatively young compared to its older sibling economics, which dates back hundreds of years.

Those who know me know I listen religiously to Rabbi Daniel Lapin on KSFO 560AM every Sunday from 1-4 pm.
He's one of the most astute observers of human behavior, and even though I'm not Jewish, as he says, no matter what your faith "Everyone needs a rabbi, and for those who have no faith, you definitely need a rabbi."