Ric Payne's Blog: The Consulting Accountant – Better Business. Better Life

Rethinking The Innovator’s Dilemma: Should It Be Called The Incumbent’s Dilemma?

6 Minute audio

Clayton Christensen’s The Innovator’s Dilemma is a modern classic in business literature, shedding light on why successful companies often fail in the face of disruptive innovations. The book’s central insight is as paradoxical as it is profound: the very practices that make companies great can also lead to their downfall when the rules of the game change.

The Rapture of the Nerds

3 Minute Audio

In 2017 I was anxious to better understand how artificial intelligence was likely to impact the way we work so I bought and read Jerry Kaplan’s (a Stanford Professor) book “Artificial Intelligence: What Everyone needs to know.” The following paragraph in the final chapter jumped out at me when I re-read the second sentence today.

The challenge when advising early stage business founders in mature markets

Audio 4 minutes

There is a reason why SMEs stay SMEs or disappear completely often leaving shareholders with little or nothing, creditors with unrecoverable losses, employees looking for jobs, and families struggling to weather the storm of failure and bankruptcy.

Your strategic goal may meet the SMART criteria but is it the SMARTEST framework for developing a strategy?

The popular acronym for goal setting is SMART which typically stands for:

Unlocking the Power of Communication

In an increasingly interconnected world, effective communication is more important than ever. Yet, despite the many ways we can communicate, for many people—including myself—a significant gap remains between merely hearing what someone says and truly understanding them.

Some thoughts on Consolidation and Private Equity Investment

In the late 1990’s and early 2000’s there was a lot of activity in the accounting services sector as the rules relating to ownership of firms were being relaxed to allow non-accountants to own equity in firms. The accounting services sector was then (and now!) highly fragmented which presented an opportunity for consolidation, owners of firms were ageing and many were thinking about retirement at a time when the next generation of prospective owners were not showing much interest in partnership, and the competitive landscape was becoming more intense dues in large part to a somewhat disruptive impact of technology and other things.

You’ll be a better leader if you subscribe to these tenets of intellectual honesty

I once read, and copied, a statement about intellectual honesty I thought was excellent and worth sharing. It was issued by a university (I think Harvard) as a condition when registering for a course I did that. I have lost the original source so if you recognize the wording please let me know. This is the document, slightly edited by me to put it into the context of organizational leadership.

A Goal is Not a Strategy

It is quite common to see statements like:

“Our strategy is to become the preeminent firm in our community.”

“Our strategy is to disrupt our industry.”

“Our strategy is to disintermediate the industry’s supply chain.”

A sole business owner, might say “my strategy is to make a living doing the best I can.”

Accounting Practices Have the Character of Natural Monopolies Which is a Potential Source of their Demise

One of the most important contemporary scholars in the strategy domain is Canadian-American Roger Martin. He has published extensively over many years and is, in my view, one of the very few, very important, writers on the process of strategy creation and execution. He, correctly in my view, presents strategy as an ongoing process of directing a business towards its the aspirational objective(s) of management. His book, co-authored by AG Lafley (ex-CEO of Procter & Gamble), Playing to Winn: How Strategy Really Works is a must read for anyone serious about building a winning business (or any other entity.)

Martin recently responded to a Twitter post in which the poster (Richard Hulse) expressed disappointment that there was not more reaction to his question on how strategy applies to natural monopolies as much as it does for “normal” businesses in competitive markets.

The question is a very important one and was brilliantly answered by Roger. His response gave me pause to realize that many businesses that have a loyal customer base due, in the main, to convenience and/or high switching costs enjoy a kind of natural monopoly.

As a consultant working in the public accounting domain, and I see many firms seeking to grow by acquisition and marketing rather than by innovating in ways to improve the value they deliver to their clients. They get away with this because their clients have high perceived switching costs not because they are delighted with the value received from the relationship.

These firms intuitively, or intentionally, ignore their existing clients (as Martin says, “get horribly out of shape and bloated” while seeking to win more business through price & promise marketing (or worse, through acquisition of an equally bad firm) which inevitably attracts poor quality clients and stretches their capacity utilization beyond its effective operating limit; which incidentally, is why they are so enamored with “tools” to improve efficiency. Interestingly, the disastrous effect of the pursuit of efficiency is yet another of Martin’s brilliant insights. This in turn lowers the value they deliver to all their clients including their good ones. Ultimately they stagger in mediocrity, are acquired, or disintegrate simply because they never played to win.

What Sam Walton can teach you about creating and growing a successful business

After a presentation I did on business strategy at Lake Tahoe’s Resort at Squaw Creek (now called Everline Resort & Spa) in the early ’90s, one of the delegates asked me if I had read Sam Walton’s autobiography titled *Made in America: My Story*. He said, “It’s a remarkable story. You should read it. You’ll notice Sam intuitively understood what strategic thinking is all about. I think you’ll enjoy it.”