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Communicate if you want to make money

16th Oct 2012
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It is fair to say that when I began writing this new series I did not expect to spend so much time writing about, well, writing, which is what I've done. And yet, I'm not surprised that I have because so much of what I've done in business is actually about communication.

It always amazes me that accountants don't communicate. Too often I feel that accountants spend most of their time trying to put barriers in the way of people understanding exactly what is going on in their companies, in a set of accounts, in a ledger, in a statement, or anything else come to that. I've often wondered what the reason for this is. After 30 years of so doing so, I now think that a great many of those who hide behind the gobbledygook of the profession use it to hide their own uncertainty.

That uncertainty can be about just what the information they're reporting really does mean, because they haven't really thought about it (I suspect, based upon experience, that this is commonplace). But I also suspect that in some cases the failure to communicate is because accountants have learned how to take all the necessary boxes, but never learned how to join them together. I’m sorry if that appears contentious, but too often it seems true.  

But what that, I think, reveals is something deeper, and more significant than that. You see, in my opinion you can't really communicate well unless you know what you're trying to say. And you can't know what you going to say unless you really understand the purpose for saying it. And the simple fact is that far too often, far too many people in business have no idea what the purpose of what they're doing is.

I suspect that this will be a theme I will return to, but let me explain the issue. In accounting jargon it's a bit like the difference between substance and form. I guess most of us can recognise that. A finance lease has the form of being a rental contract, but for accounting purposes the substances is that it's an asset acquisition which we treat as if we bought the item in question, even though legally we haven't.  Translate this to communication, and it's all too easy for people to explain the form of what they’re reporting without ever understanding the substance of it. So, they can say we sold 100 widgets this month without difficulty, but they have no clue why they sold 100 widgets, and what could turn a sale of 100 widgets into a more successful sale of 120 widgets.

Now of course, an accountant can say it's not their job to understand this, it's merely their job to report it, but I don't buy that logic. If you want to stay in the accounts department forever, producing monthly reports and year-end returns which, frankly, won't make your heart sing from now until the day you retire, that's an okay objective, I suppose. If you want to be promoted, or want to play a role in management, and enjoy the benefits that come from that, then reporting numbers without seeking to understand the context is, in my opinion, a pretty meaningless exercise.

So, let me come back to purpose. This is, in the case of communication, seeking to understand what the user need from what you're trying to communicate. It's about being able to put yourself in the other side's shoes.

Let me give just two examples now, but I may come back to this. The first is about understanding the incomprehension of your listener. For an accountant this does, for example, mean understanding that the term depreciation is utterly meaningless to anybody but us. If you go on a finance for non-financial managers course (and we run them regularly in our company, and for people who have done them before, and not just for new entrants, as these things bear repetition) then you'll know that one of the most difficult parts of any such course is dealing with what a non-accounting audience will call the D word. Explaining  to them that we just make depreciation up, it has no cash consequence, and yet the accounts are apparently meaningful all the same, tests their credibility to the limit, and maybe rightly so. The accountant who does not understand that can't communicate. We have to be aware of the myths we create others can’t believe if we are to communicate in ways they can really find useful.

Let me give another example. This time though it's about sales. You are never going to understand why the sale of 100 widgets this month can be turned into the sale of 120 widgets next month unless you understand the motivation of your customer for buying your product. This, I think, is the biggest, and most fundamental stumbling block in the whole business community.

Many years ago I worked for a wise tax partner when I was still in an accounting practice. He told me, and he was absolutely right, that not a single client of his firm wanted to buy a tax return and yet the vast majority of them did. In that case, thinking that the product that we sold to them was a tax return was completely wrong. His logic was completely different. He realised that what we sold them was reassurance. His job was to tell the clients they did not need to worry about tax, he would do it for them. So, when they got a form he told them to send it to us and we’d deal with it. And when they got a letter from the Revenue he told them that we would always deal with it and tell them what to do about it. When the tax return had to be done, he would tell them what we needed, and then send it to them, complete, based upon their information, for signing. And so on. The message was simple and clear. The client only had to put stuff in an envelope and send it to us: we would do it all at all and take all their worries away.

The result was that he transformed the way in which his firm sold tax services. If someone asked a question, any question, he made sure that people answered it, because that was what the client was worried about. If somebody asked a question about what to do on tax, he did not give them a technical answer (or if he did, he stuck in an appendix so they could read it if they wished, which he knew they would not, and he was only doing so to cover his risk). Instead he set out in simple, plain terms what choices there were and was unambiguous about which one he thought was best for them because that took their worry away.

In other words, he realised he never sold tax services. He sold worry relief. And for that people would pay well. But they really won’t pay well for a tax return they don’t want. He made a lot more money. And it all came down to communication.

Which is why we do it. 

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By jpcentral
17th Oct 2012 08:20

Wise words

This is a fundamental lesson which many fail to learn. Very well presented.

 

John Perry

www.centralbusiness.co.uk

 

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By dl
17th Nov 2012 00:09

Hat tip
I tip my hat to you, this is a very insightful post.

In particular

"You are never going to understand why the sale of 100 widgets this month can be turned into the sale of 120 widgets next month unless you understand the motivation of your customer for buying your product. This, I think, is the biggest, and most fundamental stumbling block in the whole business community."

And

"In other words, he realised he never sold tax services. He sold worry relief. And for that people would pay well. But they really won’t pay well for a tax return they don’t want. He made a lot more money. And it all came down to communication."

I trained as an accountant after uni, but I had summer jobs selling (door to door and on the phone) as it paid well. I learnt a great deal in those sales roles, and your post really rings true with that experience.

So my tip to accountants (or anyone in business) is go see the customer, observe them, listen to them. What do they want? (It's harder than it sounds as the customer might not have thought it through themselves, so you have to read between the lines)

Dominic
AccountancyStar

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