I was not only very busy (“highly chargeable”), hut, because I was being hired to do things that I already had a reputation for, I had relatively few problems with fee levels (I had a “high realization percentage). I made a lot of money, more than I had hoped for. All seemed to be going very well.

But for my business (and for my career) was it truly healthy? I remembered my business-school training, which taught me that to judge the health of a business you had to look at the balance sheet as well as the income statement. What made up my balance sheet? I could think of two groups of assets for a professional. (We’ll ignore for the moment my liabilities, particularly the personal ones)

The first group of assets on which my career was based was my repository of knowledge and skills. Professionals get paid for their time, but that’s not what we sell. We sell knowledge and skill. The second (potential) asset was my client relationships. Much to my surprise, I discovered that both had deteriorated badly.

The problem with my knowledge and skill was that I hadn’t learned anything new. By definition, the unsolicited phone calls requesting my services had been for things that I was already known for. Even though each client project was customized (to a degree), I found myself doing basically very similar work for a variety of clients. I had not added to liabilities. What was even more shocking (and depressing) was the realization that not only had I not grown my asset, but its value on the market was going down-rapidly. Left untended, knowledge and skill, like all assets, depreciate in value – surprisingly quickly.

Excerpted from ‘Managing the Professional Service Firm’ by David Maister, pages 143 to 144