As a lawyer, I always billed by the hour. That was my entire framework. I used to work with somebody, and simply identify, in absolute terms, whether I’d spent 15 minutes, 30 minutes, 45 minutes or an hour, on whatever they were doing. In a very real sense, it was productivity by the hour.
Of course, it had certain assumptions attached to it. It had the assumption that would suggest that there is a relationship between the amount of time you spend on something and the amount of result achieved from it. It’s as if, should you spend more time, you will actually produce a better result for somebody than if you spend less time.
I question the basic assumption, in retrospect, but I certainly didn’t question it at the time.
I remember a birthday party I had when I was 35 or 36. I had started doing feasibility studies for a new consulting company we had started. At the same time, I was also doing plaintiff’s work, as a commercial litigator, for business clients.
One of my friends had a caricature made for me which showed me as a “gunslinger,” hired not by the hour but by the bullet. What a concept. As a commercial litigator, I thought to myself (for the very first time) that when somebody is hiring me, he is not hiring my hours; he is hiring my result. Whatever that result might be. Whether it’s defending him on the one side or producing a judgment in his favor on the other. The bottom line is he wants a result; he doesn’t want my time.
When I switched over from law to 100 percent entrepreneurism, I was no longer on the hour. I didn’t have to account for my time. It was a rough transition. I kept wanting to think of things in terms of the amount of time spent. The more the time, the more the productivity.
But, of course, that turned out not to be true at all, even though it took me some time to discover that. An intuition, in the middle of the night, could result in not just hundreds of thousands of dollars of profit but literally millions. Hours, days, weeks, and months spent doing the same thing not only could end up with no profit at all, but, on the contrary, actually a loss of revenue and a loss of profitability.
In short, time invested and results had no direct correlation whatsoever.
It takes me no longer than eight paragraphs in this discussion to reach that conclusion. Quite honestly, it took me years to discover it. Years, hundreds of hours of experience! But the same conclusion.
I had made considerable amounts of money as a result of one conversation on the phone with a potential strategic partner. And, I have lost fortunes—more money than most people make in a lifetime—spending countless hours churning out action plans with middle income employees in the office. I have awakened in the middle of the night with a simple insight that produced an entire strategic turn to the manner in which I had been conducting business or what was in store for us in the coming years. And yet, I have gone to the office every single day, day after day, week after week, and month after month, with not one significant improvement in our income production capability.
I have had accountants put 10 hours into an amended tax return and have returned back to me six figure tax refunds and, at the same time, I have spent six figures with consulting companies, billing me with detailed statements, and not earned a dime.
The bottom line is simply this: there is no direct correlation between time invested and results. You can take that to the bank.
Original writing date: February 2000