Humanity creates technology, while technology changes humanity. Think about that statement, especially based upon your experiences over the past year. Technology has both disrupted and empowered all professions, while the pandemic has accelerated the impact. As firm leaders develop their vision and future IT roadmaps, they must think differently to sustain success and remain future-ready and relevant.
In 2018, George Gilder wrote “Life after Google: The Fall of Big Data and the Rise of the Blockchain.” Recently, in “The Gilder Report,” he published “The Missing Chapter.” George is 80 and one of the most accurate visionaries and predictors of future technology. Many respected peers in the accounting profession agreed with his predictions in 2018, but few felt the predictions would happen as rapidly as they have. George brings global and historical perspectives as well as vision. As Steve Jobs said, “innovation requires hindsight, insight and foresight.” George has all three.
This past year we have heard different political perspectives and watched the bureaucrats and regulators in Washington struggle with emerging technology, especially cryptocurrency and the blockchain. Gilder points out that Chinese bureaucrats are mostly engineers and scientists while Washington bureaucrats are lawyers.
Dan Burrus calls these “hard trends” and encourages leaders to leverage these trends in developing their vision and strategy. I agree and will discuss these trends and how the U.S. and China differ in their strategies. My intent is to inform and not debate what we can learn from different perspectives. We can’t cover all of the trends, but will focus on the business model, bandwidth, e-sports, and the abundance mindset.
Finally, we will review actions that accounting firms can take today to sustain success and remain future-ready.
The business model
Gilder points out that the big tech companies in the U.S. have used the free model to capture user data and built their revenue on advertising, while the Chinese have used a subscription model. Which is more sustainable and secure? I am confident this is highly debatable, yet the free model has cost Google the search market. Now, Amazon is the dominant player in the West.
China is rapidly moving from “search-based” to “recommendation-based” shopping. In the U.S., mobile apps are not as integrated and as efficient. A good example is the Kindle phone app, where you can get a book recommendation but must go to a desktop or laptop to purchase an e-book and then download to any device.
The subscription model requires packaging and pricing of services in advance instead of the historical cost-plus model of hours times dollars after-the-fact. Historically, pricing in accounting firms has been done by partners, and differences naturally occur. The subscription model involves multiple internal and external perspectives, especially the customer or client’s perspective. This is where messaging is important.
Many accounting firms still focus their messaging on transactional and compliance services. Perhaps a better approach focuses on advisory and consulting services that include compliance and transactional services as part of the subscription package.
Referrals are still important, but the marketing platform has changed and will continue to change dramatically into the future. This is why sales and marketing professionals are important to the accounting profession. If we get this right as a profession, we can sustain growth and remain relevant.
Bandwidth
Much is being written about bandwidth and specifically the impact of 5G. This increased capacity will benefit both firms and their clients. How you manage bandwidth in the future will differentiate your firm.
Historically, bandwidth has been managed as a scarce resource, and U.S. politicians have never recovered from the legacy of broadcast TV and radio. Gilder points out that in China, bandwidth is managed as infinite and even wasted. WeChat consumes 46 terabytes of data per minute during a typical morning rush hour. 5G in the U.S. is a marketing bonanza, and most users have not experienced the potential of the marketing hype to date. The important point (and a hard trend) is that bandwidth is rapidly becoming faster, cheaper and better. How are you going to manage it as a firm?
Some firms realize that bandwidth is an important component of their IT roadmap and think about it differently in a remote or hybrid workplace. Security at home is a big issue, as is managing home connections. Have you considered a monthly internet stipend for all employees and the related equipment to ensure security and privacy?
E-sports and gaming
CPAs continually ask, “What are the growing virtual markets?” We often hear answers like small businesses, cannabis and health care. All of these markets have potential depending upon your skills and interest in learning and growing. According to a recent e-sports marketing report by Grand View Marketing, the market size was $1.48 billion in 2020, with an expected compound annual growth rate of $24.4 billion from 2021 to 2027.
The e-sports industry’s professionalization has created lucrative opportunities for game developers, gamers, influencers and event organizers. Ohio State University, the University of California Irvine and Virginia’s Shenandoah University all have e-sports programs and scholarships available.
The overused Wayne Gretsky quote, “Skate to where the puck is going, not where it has been,” is appropriate in this case. The opportunities are changing, causing the need for new mindsets, skill sets and toolsets.
Mindset
The most critical factor will be your mindset. CPAs tend to think of technical skills immediately. Scarcity promotes a different set of behaviors than does abundance, with bandwidth being just one example.
The leadership and culture of your firm will determine your path. What made your firm successful and relevant in the past probably won’t ensure future success and relevance. That is why vision and change management are so important in today’s environment.
The firms that can learn and change faster than the competition will succeed, while those that don’t will continue to experience commoditization. This is all part of Joseph Schumpeter’s creative destruction, where innovation replaces outdated products, services and mindsets, including people with obsolete skills.
This information is valuable if you act. Procrastination is the worst enemy of most CPA firms. They typically know what to do but don’t do it for a variety of reasons.
Here are five steps you can take today to ensure that your firm captures the opportunity and gets buy-in from your partners and team members:
1. Review and update your firm’s vision. What do you want to be, do, have, create and experience over the next three to five years?
2. Develop a strategic plan to support that vision. Focus on allocating resources to priorities. The process is more important than a plan that will build consensus and ensure you invest resources wisely. Is your strategic plan current?
3. Develop a technology roadmap to support the strategic plan. Do you have a technology roadmap? Who is accountable?
4. Focus on who, not how. The “who’s” know how or will quickly learn. They need authority, along with responsibility. Have you identified your “who”s?
5. Hold people accountable. Accountability starts at the top. Ninety-day gameplans and reviews sound time-consuming but are the first step toward a self-managed firm. Have you recently updated your system of accountability?
Think — plan — grow!
