Shortly after discovering Covey’s work I found the evolutionary next step to his theory and the answer to this question. Acknowledging the benefits of proactivity, it progresses his theory even further and gives us that gold standard state I discussed earlier. The model is commonly used within risk & project management, and discusses three ‘alerting states’.
- Reactive – Alerts that occur at failure. Reacting to a situation or circumstance after it has happened or as it happens. I.e. Losing key clients – trying to stop them from leaving after they have already made their mind up.
- Proactive – Alerts that happen before failure. Identifying individual factors that could lead to failure. I.e. Sensing tension from clients – late payment of invoices, unresponsive to communication or hostile behaviour.
- Predictive – Alerts that trend on possible failure. Predicting trends, threats or opportunities before they happen and preparing for them to stop failure before it begins. I.e. Predicting possible change or development in market that makes you less competitive, preparing for it and actively embracing it to negate the risk of losing clients
If you are forever reactive to situations, you will always be on the back foot and focusing on your circle of concern. Someone else controls your time and mood, and you are forever spending your valuable time responding to external threats after they have already happened. If you lose a sizeable chunk of your clients due to changes in the market or technological developments that you hadn’t predicted and prepared for, then you’re fighting a losing battle against people who have already had their heads turned and minds made up.
If you’re proactive in detecting these potential losses of clients, you may be able to save some before their minds are made up. Convincing them of the benefits but ultimately just working towards keeping them on board until you can adapt and overcome the external influences and factors. It is an extremely draining, time-intensive and demoralising approach to running your business. Reducing the time you can spend on core business activities, as well as the profit earning, client-winning activities that stimulate your businesses growth and longevity. You’re essentially trading the time you should be spending winning new clients, on trying to keep existing clients for a little longer.
By being predictive to changes and circumstance, you have already incorporated changes to the market within your strategy and offering. When the changes do come, your clients have already acknowledged that your business has preemptively adapted to the circumstance, and your value proposition reaffirmed in their mind. There is no time spent trying to save clients and convincing them to stay. Instead, your business runs as normal and your time is spent on the profit winning activities that allow your business to grow from strength to strength.
Give me an example I can relate to though…
The Internet provides you and your clients alike with a continuous stream of useful information and services that make our jobs and lives easier. More than ever, people have the ability to research solutions and providers, and even conduct tasks that were once in the firm remit of trained professionals themselves.
Recent years have seen a proliferation of cloud-based bookkeeping and accounting tools that allow small to medium-sized businesses an extremely cost-effective way of managing their finances and preparing their accounts. Whilst I think most can agree that there is no substitute for a quality accountant, this trend shows no sign of decline, with more advanced features being added and more intuitive interfaces making ‘DIY accounting’ for £10 per month an attractive offer for the startup or small business.
My accountant, a fellow personal development enthusiast, predicted this trend years ago and effectively responded to it before it became a problem. His business shifted their offering; embracing the online bookkeeping software as part of their ‘package’ and adding additional value to their offering by leveraging their knowledge of business, and including strategic business phone calls that helped business owners make the right decisions to help their business grow. Now he is not just an accountant, he is someone who helps that business owner achieve success. His offering and benefits to the client increased his value in the eyes of his clients (and the amount he could charge them!) in a time when competitors were losing clients to ‘the cloud’. People are not just paying more for his services; they are happy to do so as they are receiving perceived increased value from a service that they just couldn’t get from a computer or automated algorithm. He was predictive and remains to continuously analyse market trends so that his business can be responsive to future threats.
He also continuously ‘on-boards’ new high-quality clients when business capacity doesn’t allow. By regularly evaluating the clients he works with, he can ‘clear out’ those who become less valuable or take up too many resources and take on new high-value clients to create a continuous churn of his ideal clients… Those who he enjoys working with, that pay the most, that he has most positive effect on (and therefore has a positive impact upon his reputation) and that provides him with the minimum workload or hassle.
Less workload & hassle + higher fee + best client results = higher profit margin & improved reputation
Without giving away his corporate secrets, he is now predicting trends for the next 5 years that will see more of his processes on automation and product & service diversity that secures his businesses longevity far into the future.
- Proactive is good, predictive is better
- Identifying and responding to trends and potential situations before they happen reduces your circle of concern
- Prediction & Planning gives you more time to spend on profit-earning activities
- Predictive behaviours = Business longevity
Some of you may already be tuned in to this way of thinking and I may be preaching to the converted. Having marketed within the financial sector for the last 5 years I’ve found accountants to be some of the most forward-thinking and open-minded clients that I have worked with, with many sharing my love for personal development. Whether you have found this article breaking news or it has simply reaffirmed existing behaviours, I hope it has proved useful and interesting. Please don’t hesitate to get in touch if you have any questions or you just want to discuss it further!