#011: Unlock The Human Action Model to Drive More Action
August 12, 2022
Read time: 5 minutes
Today I'm going to share a simple 3-part mental model that will help you get your clients to take action.
As fractional CFOs, you have to convince your clients to take action:
• Make smarter spending decisions
• Make a tough call on a CapEx situation
• Negotiate with vendors to drive down COGS
Despite all the financial logic in the world, sometimes they just won't move forward!
Learning how to get your clients to take action is an essential skill in the fractional CFO toolbox. Because without action there is no growth. And, after all, our clients are paying us to help them grow.
Unfortunately, most people in our industry don't know what to do when inaction sets in. The CFO gets frustrated. Growth stagnates. Resentment builds.
"Why am I even here???"
(ring any bells?)
That's because 3 conditions MUST exist before someone will take action.
As an employee at Georgia-Pacific, I learned about The Human Action Model. It was a game changer for me.
The Human Action Model states that any time you want to get someone to take action, you must meet 3 conditions.
And the cool part about it is, once you unlock the model, it's applicable in just about any situation!
To show you how you might apply the model, I'll use 2 examples:
The first is me trying to convince myself to workout.
The second is me trying to convince a client to spent more on growth and less on distributions.
Condition 1: Discomfort with the status quo
Before someone will take action, they have to uncomfortable with the current situation.
Example 1 -
👎 Working out sucks. I'd rather watch Bridgerton.
👍 Annnnd these pants officially don't fit anymore. I need to start working out and getting healthier.
Example 2 -
👎 My client needs to take less distributions and invest more in growth opportunities. "No thanks, we like our distributions."
👍 Overspending on distributions is stagnating revenue, profit, and cash flow growth. Not investing in growth is costing you about $52,000 a year in additional cash flow. "Oh snap."
Condition 2: A vision of a better state
Before someone will take action, they have to see what "good" looks like.
In other words, what's in it for them? Why should they do this thing that they clearly aren't super interested in?
Example 1 -
👎 Working out kinda sucks.
👍 But having pants that don't constrict me is good. Living a longer, healthier life so I can energetically enjoy my family and see more of the world is amazing!
Example 2 -
👎 Taking reduced distributions for the next 12 months sucks.
👍 But a wise redirection of cash could result in a 20% growth in revenue and 15% growth in net profit and cash. Which means you could pay off your home in 2 years instead of 5.
Condition 3: A clear path from A to B
Before someone will take action, they have to understand what it will take to make the transition.
Example 1 -
👎 Yeah, I know I need to workout to lose weight. But what does "working out" even mean? Do I have to hit the gym for 2 hours every day for the next 5 years to drop 10 pounds? Meh. Bridgerton it is.
👍 OK. I need to work our 5 times a week for 60 minutes. 3 of those should be HIIT and 2 should be straight cardio. If I keep my diet in check, I should start seeing results in about 4 weeks. I should be back in my short shorts in 3 months. I can watch Bridgerton on the treadmill.
Example 2 -
👎 Your client really likes their lifestyle. And reducing their distributions means fewer trips to Tulum.
👍 I've worked up some conservative projections. We'll just have to cut back on distributions for 6 months before we see payoff. After 12 months you will be able to really bump distributions back up. By this time next year, you can visit Tulum AND double your mortgage payments. "Let's goooooo!"
Next time you're frustrated that someone isn't taking action - ask yourself which condition hasn't been met.
Focus on that.
Make them uncomfortable.
Show them what good looks like.
Show them what it takes to complete the journey.
That's all for this Friday. 1 mental model to help drive action.
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