Boomer’s Blue­print: What’s your game?

Accounting Today - - Contents - BY L. GARY BOOMER

Cur­rent growth in larger ac­count­ing firms is pri­mar­ily driven by merg­ers and ac­qui­si­tions plus con­sult­ing ser­vices. The M&A por­tion of the growth is also chang­ing. Firms are not just ac­quir­ing more ac­count­ing and tax prac­tices, but look­ing for tech­nol­ogy and con­sult­ing ca­pa­bil­i­ties needed by their best clients. What is your firm’s plan to stay rel­e­vant and grow in or­der to at­tract and re­tain qual­ity clients and tal­ent?

Tax and au­dit are still core ser­vices in most firms, but dis­rup­tion from the con­ver­gence of tech­nol­ogy, chang­ing laws and reg­u­la­tions, and com­pe­ti­tion for tal­ent are com­modi­tiz­ing ex­ist­ing ser­vices while clients ask for new ad­vi­sory and con­sult­ing ser­vices. Firms that con­tinue to fo­cus on com­modi­tized ser­vices will be limited by ca­pac­ity as mar­gins are re­duced. Firms that fo­cus on ad­vi­sory and con­sult­ing ser­vices will be limited by ca­pa­bil­i­ties. Ca­pa­bil­i­ties are more im­por­tant than ca­pac­ity with re­gard to higher-value ser­vices.

Given these facts, how should your firm plan for the fu­ture to sus­tain suc­cess and re­main rel­e­vant? The an­swer isn’t easy and dif­fers from firm to firm based upon sev­eral fac­tors: The firm vi­sion; Age of the part­ners; Age of clients and niche mar­kets; and, Di­ver­sity of skills and ser­vice op­por­tu­ni­ties. Let’s re­view the dif­fer­ence be­tween ca­pac­ity and ca­pa­bil­ity. Ca­pac­ity is nor­mally as­so­ci­ated with ser­vices at the lower level on the con­tin­uum of value and is gen­er­ally trans­ac­tional and com­pli­ance-re­lated. These ser­vices are be­ing dis­rupted and changed by the con­ver­gence of mul­ti­ple tech­nolo­gies such as ar­ti­fi­cial in­tel­li­gence, ro­bot­ics, ma­chine learn­ing, net­works and sen­sors, and blockchain.

The good news from this dis­rup­tion is the fact that CPAS can now fo­cus on mov­ing up the con­tin­uum of value to ad­vi­sory and con­sult­ing ser­vices. The ac­cu­racy and tim­ing of the data are much im­proved, while clients want ser­vices that are more fo­cused on per­for­mance and strat­egy. The bad news is that this re­quires change, and the pro­fes­sion­als must give up some ser­vices to fo­cus on more rel­e­vant and higher-value ser­vices. Au­to­ma­tion is cre­at­ing ca­pac­ity, but not nec­es­sar­ily ca­pa­bil­i­ties in some firms. While this sounds log­i­cal and rel­a­tively easy, it is dif­fi­cult for most ac­coun­tants and firms to make the nec­es­sary changes on a timely ba­sis. The lack of eco­nomic pain often causes pro­cras­ti­na­tion.

More reg­u­la­tions and changes in the tax laws are not the an­swer to the de­mands of the mar­ket. These reg­u­la­tions and law changes may pro­vide more ad­vi­sory op­por­tu­ni­ties, but they won’t in­crease the value of com­pli­ance ser­vices. The good news is that firms can and should pack­age and price ser­vices along the con­tin­uum of value to meet clients’ needs and wants. Tak­ing this ap­proach will im­prove the client ex­pe­ri­ence, in­crease the num­ber of ser­vices pro­vided to the best clients, and im­prove cash flow and mar­gins. This strat­egy re­quires a col­lab­o­ra­tive ap­proach and more com­mu­ni­ca­tion up­front with clients for as­sess­ing, scop­ing and pric­ing ser­vices. It will also re­quire new skills and ca­pa­bil­i­ties in most firms.

Be­fore we iden­tify these skills, think of the skills in your firm and where you may have gaps. Where is your firm with re­gard to the fol­low­ing skills? Data an­a­lyt­ics; Tech­nol­ogy vi­sion and strat­egy; Project man­age­ment; Lean pro­cesses; Mar­ket­ing; Sales; and, Tal­ent de­vel­op­ment. An hon­est self-as­sess­ment will gen­er­ally dis­close that the firm has ad­e­quate ac­count­ing and com­pli­ance skills but lacks in many of the above ar­eas. In other words, is your firm too busy do­ing com­pli­ance work to fo­cus on ad­vi­sory and con­sult­ing ser­vices? Often the firm’s strat­egy has been to utilize ac­coun­tants rather than pro­fes­sion­als with unique abil­i­ties on their col­lab­o­ra­tive teams. This is to be ex­pected due to the fact that ac­count­ing firms are ex­pe­ri­enced at hir­ing ac­coun­tants, but not so much those with other skills. The change in strat­egy re­quires a change in mind­sets, skill sets and toolsets.

Some of the pri­mary changes in mind­set re­volve around: Be­ing a life-long learner; Will­ing­ness to change; Be­ing a col­lab­o­ra­tive team mem­ber; The de­sire to grow and pro­vide op­por­tu­ni­ties for oth­ers; Im­prov­ing pro­cesses to in­crease value; and, Lever­ag­ing tech­nol­ogy. Con­ven­tional suc­cess doesn’t nec­es­sar­ily re­quire these mind­sets, so don’t be sur­prised if you have mem­bers of your firm who re­sist and don’t de­sire to be game-chang­ers. Lead­er­ship is es­sen­tial and will de­ter­mine your firm’s abil­ity to sus­tain suc­cess and re­main rel­e­vant. It re­quires balanc­ing the rev­enues of the cur­rent firm with the in­vest­ments in fu­ture op­por­tu­ni­ties. The most suc­cess­ful firms are those where the part­ners and mem­bers have made the de­ci­sion and com­mit­ment to be led and man­aged. They are will­ing to hold them­selves and oth­ers ac­count­able. Ac­count­abil­ity is the quick­est way to move from cur­rent re­sults to im­proved re­sults.

Now, let’s ad­dress the game. The game is be­com­ing more com­plex and di­ver­si­fied. I pre­vi­ously men­tioned the con­tin­uum of value start­ing with trans­ac­tional, com­pli­ance, per­for­mance, strate­gic and con­sult­ing ser­vices. To break the ceil­ing of com­plex­ity, it is often nec­es­sary to sim­plify and think ex­po­nen­tially rather than in­cre­men­tally. Don’t think 10 per­cent — think 10X and the strat­egy will ap­pear. There are many op­por­tu­ni­ties avail­able to firms, but it re­quires vi­sion, dis­ci­pline and a plan to suc­ceed. Some of the more im­por­tant op­tions are: Sourc­ing; Pack­ag­ing mul­ti­ple ser­vices; Fil­ter­ing clients who do not meet tar­get cri­te­ria; Hir­ing or de­vel­op­ing tal­ent with new skills; Im­prov­ing pro­cesses; and, In­vest­ing in new tech­nol­ogy that pos­i­tively im­pacts the client’s ex­pe­ri­ence.

As you go through this process, you will also find it nat­u­rally in­creases your ca­pac­ity as well as your ca­pa­bil­i­ties. Change is dif­fi­cult for most peo­ple. It re­quires courage, com­mit­ment, ca­pa­bil­i­ties and con­fi­dence. Most ac­coun­tants want to start with con­fi­dence and avoid risk. Con­fi­dence will come, but it comes af­ter hav­ing the courage to change, mak­ing the com­mit­ment, and de­vel­op­ing the ca­pa­bil­ity. Re­mem­ber, “who” is more im­por­tant than “how.” This is not a do-it-your­self strat­egy. Don’t be afraid to in­vest in non-ac­count­ing tal­ent and tech­nol­ogy. AT

L. Gary Boomer, CPA, CITP, CGMA, is the vi­sion­ary and strate­gist at Boomer Con­sult­ing Inc.

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