Change is difficult, especially for those whose income continues to increase. Is this trend sustainable without investing more in talent and technology? Most will agree an increased investment in talent and technology are needed to sustain success and be future-ready. However, sometimes change is not enough and transformation is required.
Let me explain the difference between optimization and transformation, as the accounting profession has been deeply engaged in optimization for the past 20-plus years. Optimization occurs in four ways, and most firms have made relatively small investments compared to what will be required in the future:
- Increased revenues from existing services;
- Reduced costs;
- Improved productivity without an increase in headcount; and,
- Enhanced client experiences.
To date, the market and technology have allowed firms to optimize at a relatively slow pace. The convergence of multiple technologies and digitization of all processes are speeding the process up for both firms and their clients. Optimization is no longer enough to remain competitive and relevant. This is business transformation, and it involves:
- New services and revenue lines;
- Digitized services and products;
- New technology platforms and ecosystems;
- The ability to manage digital assets; and,
- A new business model based upon value.
Value increases with a digital business strategy, but becoming clear on your objectives can immediately improve productivity, the client experience, and existing revenues. This is optimization, while transformation is associated with new revenue, new services and new business models. Optimization and transformation are both important, but leading firms and clients are positioning themselves for transformation with changes to their governance (leadership), talent, processes and technology. The result is sustainable growth.
There are degrees of digital transformation for any business, and most CPA firms are not organized and capitalized to manage high risk in the hope of moonshot rewards. Firms do not operate like Steve Jobs, Elon Musk or Bill Gates. This fact should not, however, reduce the need and want to transform services lines, digitize processes, and continue to meet the wants and needs of clients. Many firms may start with the question, how do we transform? The more relevant question is, who can help us transform? Typically, the who is someone from outside your current organization. Kurt Gödel, an Austrian/American mathematician and process expert, said one must get outside of their system to prove the consistency of the system. Someone from within your organization may become the who for clients in their transformation. The most difficult organization to transform is your own.
Let me further explain with a quote I often use from Daniel Burrus: “Clients today don’t know what they want, because the things they most want are things they don’t yet know are possible. Give your clients the ability to do what they can’t currently do, but would want to if they only knew it was possible.”
CPA firms are no different than their best clients when it comes to business transformation. The strategy is how to put your firm in the best position to experience business transformation internally and provide value to your clients as they transform. Unfortunately, no single strategy guarantees the ability to sustain success in today’s rapidly changing world, but here are a few key strategies used by leading firms and companies.
1. Start with a vision. This should come from firm leadership and address the next two to five years. What does the firm want to be, do, have, create and experience?
2. Develop a one-page game plan for the next one to three years and update the plan annually as the market is changing rapidly. Hold people, especially partners, accountable and set expectations in advance. This can be accomplished with personal 90-day game plans and accountability reviews.
3. Define and engage the whos that can assist you. These may be clients, consultants or even new talent to your firm. You don’t have the time, experience or emotional capital to do it yourself. You have access to resources well beyond your current firm.
4. Build unique-ability teams that have diverse skills and perspectives. Exponential rather than incremental gains will occur with broader experiences and strengthened skill sets.
5. Join and participate in a peer community. This is a powerful way to positively influence mindsets, skill sets and toolsets.
Transforming your visioning and planning process will save time while increasing new opportunities, allowing your firm to become more innovative. Innovation will shape your future and your culture. Culture will transform results and accelerate success.
Think — plan — grow!
