CPAs, don't ditch the post-mortem

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I was listening to a podcast the other day about Sequoia Capital, one of the most successful venture capital firms of all time. One of the things that struck me about Sequoia is that it decided to do away with post-mortem meetings — reviewing what went wrong and why — after something didn't go well. Sequoia believed that the post-mortems discouraged their team from taking risks. 

The business media and social influencers love to champion this approach: 

• "The Wisdom of Deliberate Mistakes" (Harvard Business Review)
• "Why Your Employees Need to Make More Mistakes" (Entrepreneur)
• "A Work Blunder Teaches So Much More than a Triumph" (The Financial Times)
• "If Things Are Not Failing, You Are Not Innovating Enough" (Elon Musk)

But this struck me as odd. Mistakes are going to happen, no matter how well you plan and no matter what you do. When mistakes happen, you have one of three options:
1. You can ignore a mistake like the VCs and tech companies do.
2. You can acknowledge the mistake, but not discuss it further.
3. You can acknowledge the mistake and understand why it happened, so it won't be repeated.

Option 3 above is what a post-mortem is all about, and there's still a lot of merit to this approach for professional services firms.

What is a post-mortem?

As discussed in my article Autopsies without blame, high-performing firms can look at something that went wrong and ask themselves objectively (without assigning blame): "What are the systems, processes and training that need to be fixed, and how do we fix them?" After fixing the issue, they circle back with the client and thank them for the feedback. Feedback is critical. Using a post-mortem, which includes closing the loop with the client and informing them about the changes made as a result of their feedback, can be incredibly useful. 

Again, Sequoia is a venture capital firm. It's run by calculated risk-takers. Essentially that's what clients pay it to do. The firm only needs one or two successes out of the dozens and dozens of early-stage companies it invests in to make its money. In the VC world, you don't need a .900 batting average to be successful. It's OK to have lots of failures because the outsize successes — the home runs — more than make up for the duds. 

But eliminating the post-mortem meeting is not a good idea for accounting firms. Clients aren't paying CPAs to take risks. They're paying you to get the numbers right, to understand their issues, and to provide reasonable and practical solutions. So, a post-mortem is very important when things don't go as planned. As with doctors, air traffic controllers and pilots, you don't want to repeat your mistakes because the consequences can be dire. 

A post-mortem should not be about finger-pointing and assigning blame. When something doesn't go well, we need to understand why it didn't go well, what we can fix and where we can improve.

As an accounting firm, your job is to ensure you have accurate data for your clients. Your clients may be big risk-takers in their businesses, but they need excellent, buttoned-up numbers to make the best decisions possible with confidence.  

That's where you come in.

Not all mistakes are created equal

Tax return mistakes, client service mistakes, process mistakes or breakdowns in the client portal are mistakes you don't want to repeat. That's because if one team member messed up in these areas, it's highly likely that other team members also made the same mistake (and didn't talk about it) or just chose not to discuss it. None of those outcomes is good.

A post-mortem is an excellent approach for creating a learning culture around your firm's mistakes so you can become better, smarter and more efficient after discussing them. If you're a leader at an accounting firm, carve out 20 minutes in your regular Monday meeting to say: "What happened last week that didn't go as well as we thought it would?" That's different from saying: "What mistakes were made, and who's responsible for them?" No one is going to raise their hand in that situation. 

But when you say, "What happened last week that didn't go as well as we thought it would, so we can talk about improvement," you'll get much better feedback and participation. To get the ball rolling, your firm's leadership should go first and bring a challenge they're having to the table. Put mistakes on the open agenda and review them constructively rather than critically. That will go a long way to making continuous improvement part of your firm's culture. The Japanese call that "kaizen" — getting 1% better every day.

A culture of people wanting to improve rather than cover up their mistakes makes all the difference in the world. That shows up not only in your efficiency and client satisfaction but also in your recruitment and retention.

As the old saying goes: "Make a mistake once and it becomes a lesson. Make the same mistake twice and it becomes a choice."

How does your firm deal with breakdowns and challenges? I'd love to hear from you.