In 2002 I published a lengthy White Paper on the competitive landscape of the accounting profession. Ten years have now elapsed so I thought it would be an interesting exercise to review and update it. I’m pleased to say that for the most part my thoughts relating to the changes, challenges and opportunities faced by the profession have been close to what’s actually happened. I intend to release a revised White Paper in due course but I thought it would be timely to invite you to re-visit one part of the White Paper that I think is very important in the current economic climate.
I made the point that …
(1) Change is what provides both threats and opportunities and unless an organization is changing at least at the same rate as its environment it has a bleak future, and
(2) The difference between great organizations and mediocre ones can be tracked back to the quality of leadership and management.
The leaders of today’s accounting firms should take particular note of this. Leadership is essentially about vision and vision is about the future. When we are talking about the firm of the future we must therefore be talking about leadership. David Maister, I believe, said somewhere that “most firms are over-managed and under-led.” I agree with him.
One of the reasons for this is a natural tendency for those leading a business to orientate their energy and attention towards improving efficiency as the means of improving short term profitability. This is totally understandable but to the extent that it diverts attention away from thinking about, and preparing for, the future it results in a loss of perspective that usually results in lost opportunities and stagnant growth.
Stephen Covey describes this natural characteristic of most businesses with the analogy of a team hacking it’s way through a jungle when the team leader decides to climb a tree to take a look at the environment. On reaching the top he yells out to the people below “stop hacking, we’re heading in the wrong direction” to which the team below yell back in response “shut up we’re making great progress.”
Leadership is about getting up into the canopy of the jungle you’re in and taking a look at the environment. From that vantage point you need to make choices as to where you actually want to be heading. The vantage point takes the form of asking yourself questions that relate to the future of your business. The big question is: What is the vision I have for our firm 10 years from now? In framing that vision you need to be thinking about the following issues.
- In what ways are our clients’ businesses changing and what does that mean for the services we should be offering now and in the future?
- What do our clients value i.e. what is “value” to them?
- What are our strengths? Are they the right strengths to create and deliver value to our clients? Are we adequately endowed with these strengths? Are they currently deployed where they produce results?
- Who are our future competitors from within and outside the industry going to be? What are we doing today that will help us really stand out from these competitors?
- What technologies should we be using now to better service our clients, in particular how well appraised are we of what firms in adjacent industries are doing?
- What process, product or business model innovations have we introduced in the past three years to better service clients and offer a more valuable business value proposition? Do we lead or follow the pack when it comes to introducing new ideas?
- To what extent are we really adding value to our clients, by that I mean, is their business performing better as a direct result of our firm’s involvement or are we simply providing a service that any accounting firm could do for them?
- Do we know the profit contribution made to our firm by each of our clients? What % of our clients are at break-even or below?
- To what extent are we being held captive by some of our clients who, for their own reasons, do not see any need to change their service requirements but who we allow to consume our valuable resources for fear of losing some short term revenue that has little or no growth potential?
- In what ways are we attempting to change the culture of our organization to better accommodate the work preferences and environment needed to attract and retain talented people?
- What are we doing now to implement re-training of our people to equip them with the skills that are going to be needed in the future?
- What are our plans to align with a network that will be able to provide back office research and development support, global reach and a source of colleagues we can collaborate with to quickly and effectively offer affordable solutions to our clients without risking them being lured away from our firm?
- How adaptive is our firm to change? Specifically, based on our past behavior, have we been willing to cast aside legacy mindsets and systems so that we are better equipped to accommodate new opportunities?
- And the final but critical question: what resources in the form of time and money are we willing to invest to ensure that our firm not only transitions successfully to a new service model but takes rank with the top performers in the industry?
As you think about the above questions it might be useful to reflect on what Charles Darwin concluded in relation to species generally: “It’s not the strongest nor most intelligent of the species that survive; it is the one most adaptable to change.”
One thought on “Are you thinking about the future of your firm?”
Will do Chris. I’m glad you like to read my stuff and hope that it occasionally makes sense.