Service line and practice offering leaders stand at the point where a firm's overall strategy meets the delivery of its actual services, and they have a unique role and set of responsibilities, says Sarah Dobek of Inovautus Consulting.
Transcription below:
Daniel Hood (00:04):
Welcome to On the Air With Accounting. Today, I'm editor-in-chief Dan Hood. In theory, everyone in an accounting firm has a role to play in its growth, but there's some roles that are a little more important than others. One of those is the practice leader, the head of tax or auditor services or what have you. Here to talk about the role of the practice line leader in growth is Sarah Dobek. She's the vice president and founder of Inovautus Consulting and a well-known consultant to accounting firms. Sarah, thanks for joining us.
Sarah Dobek (00:25):
Thanks Dan for having me. I'm happy to be back.
Daniel Hood (00:28):
Yeah, no, we were talking earlier about how often you've been on before and we always love having you back. You can talk smartly about a lot of important things that are going on in the field, and I want to dive right into this one right now, which is the role of practice leaders. And we're talking about growth, but I want to start by talking about setting a growth strategy, right? That's got to be the first step in the pursuit of growth, is figuring out how you're going to do it. What role should a service line leader or practice line leader play there?
Sarah Dobek (00:53):
Yeah, that's a great question, Dan. And that's something that's been evolving a lot over the last year. Firms are really looking at how they align their growth, and for a long time, the practice leader's role has been really undervalued in alignment with growth. And so there's a few key areas that I think are really important that they have and need to be involved in. One is market analysis and there's a lot of firms that are probably sitting in there go, what do you mean by market analysis? Right? But for a long time, marketing will pull market research, we'll get information on competitors, we'll look at what's happening, we'll look at economic data, but there's also this sort of pulse of what's going on in the market and where we really rely on practice leaders and others in a practice group area. Some firms call them niches, sometimes it's an actual service line that we're looking to grow, but what we really look at them is what is that pulse?
(01:47):
What do they know going on? What do they hear going on in the market? Because part of the people that are participating in the external marketing and growth inside of the firm is that they're out in the market. They're with the clients, and there's only so much that marketing can do to bring that information to bear. And there's a lot, mind you that we can do. But there's a dual effort for the practice leader to understand and have that pulse and help be able to translate what are we seeing in the data and what does that mean for us? Because that's a lot of times where we create opportunities, we see gaps in the market, and oftentimes we can create services out of things that we might be seeing or hearing or coming out of that pulse. The second place we see them needing to be really involved is on client engagement and client service.
(02:36):
We fail in the accounting profession miserably at paying attention to this, and as marketers, you'll sit back and agree with me. For years we've asked for this, but we have a lot of accounting firms that are afraid to assess themselves on client service. We talk about how important it is, but we don't actually measure it as part of our growth. And if there's something that hasn't become abundantly, it's our client base is a critical part of our success, whether we're building a new practice line, we're looking to grow this move and pattern towards getting more out of our existing clients, not just bringing in new clients. As we look at. Growth has been important, but we aren't measuring what our relationships look like. We aren't measuring how satisfied our clients are or how loyal they are or what we can be doing better. We aren't looking that as far as average spend and measuring that.
(03:30):
And so again, that practice leader's going to have a little bit more of a pulse because they're working with the clients, but they're also going to be in the meetings and they're the ones that need to be setting the tone around how important this is. The other is that sales and buyer insights, and that kind of overlaps just a little bit with the client engagement piece because your buyer group is your client base, but there's also the external market of the people that you're presenting to, the referral sources in the market, the prospects that you're talking to. And again, marketing can only go so far. We can only work with the information that we're being given around this, and unless we're in sales meetings with you, we're not going to be able to hear that. So the ability to listen, the ability to synthesize that information and translate, it doesn't need to be perfectly articulated, but tell us what you're hearing, be able to listen beyond whatever the immediate technical need is and bring those insights to us because that's when this combination between the practice leader's role and growth inside of the firm, marketing and sales support will really, really flourish for that.
(04:39):
And the last is right, leadership and vision. The practice leader's role is to align with the firm's leadership and vision and bring that in through how the practice area is growing. And that can look like a lot of different things, but having clarity in that vision, having clarity in that alignment, the practice leader needs to have that vision. There's a lot that marketing can bring to the table, but we shouldn't be owning the vision for that practice area that should be owned by them. We can help enhance it. We can support in research, we can come up with really great creative ideas. That's what we're really good at. In a lot of cases, we can help execute on things, but leaders need to come to the table with a vision and they need to understand how that aligns with the firm, and that's where the magic really tends to happen.
Daniel Hood (05:27):
I want to stay on this a little bit because there's a lot of nuance going on in this area. You talk about one of the things the practice line leaders can bring to bear is their understanding of the market. And market in this case can mean two things to sort of broader economic circumstances out in the world, but it's also can also be very specific to their practice line, the need for audits in this industry or the need for tax services in this particular slice of whatever. So a lot of times really what they really bring the best at is that super granular picture and then we sort of blow it out and say, but you need to be aligned with the broader vision of the firm. And I'm sort of curious about, maybe we start by saying, how closely do practice slide Elite nine leaders need to be coordinating their growth plans amongst themselves? Obviously there'll be an overarching function helping them with that, but do they you need to have the same growth plan for tax as you have for audit or can it be different? And then also maybe we can talk a little bit more about how you're making sure you're aligning your individualized hyper specialized practice line growth plan, how you make sure that that can align with the broader firm wide one. That's a lot of questions. I realize
Sarah Dobek (06:35):
It's a lot of question six
Daniel Hood (06:36):
Questions, a lot question. You talk for half an hour. I'm going to go get a cup of coffee and we'll,
Sarah Dobek (06:40):
Perfect. That sounds great. So let's dive into it. And I totally get where you're going with some of the questions. So let's address the sameness first. Does it need to be the same across the firm? The answer is no. It does need to be aligned. What works for tax and audit is going to be different than works for cas is going to be different than works for a consulting line of business. The way that people buy those services is different. The education that has to happen around those services is different. When you have tax and audit and even cas, people are familiar with that. They know what is needed. There's a governing body on tax and audit that's telling you that you have to have whatever it is you're doing, you have to file your tax return, you have to have an audit. The marketplace is generally educated, but when we go talk about, I don't know, rolling out exit planning services or cybersecurity services, those are things that the market is less educated on.
(07:36):
They don't know what the defined deliverable is. There is nobody telling them those things. And so when we talk about what does our growth plan look like or what does our marketing plan look like, marketing's one sliver of our growth. It doesn't need to be the same, but it does need to be aligned. And by that I mean if the client, and if the firm is saying, we need to be moving upstream, and let's just say we know audit's going to continue to be important, but let's say our firm has this philosophy of we don't expect our growth to start with audit. We want clients that are more well-rounded and want to use multiple services. And we know that at some point there might be a different solution for audit. Well, part of that alignment might be in how we align with us, or it might be in how we reframe what we're doing inside of our organization around the delivery of those services.
(08:28):
It could look like innovation, operational innovation to open up capacity and bandwidth and do a bunch of different things. If we're a CAS department and we know that we're cross collaborating, what could that look like to take our CAS practice and we know we've got this high net worth practice and evolve that into a family office practice and aligning and knowing that we want to grow and our business wants to come from a particular area. And that can be uncomfortable when you talk about the granularity that you mentioned because it's oftentimes outside of our comfort zone and part of a practice leader's role is to have that bigger picture vision and to say, I know this is what we're comfortable with, this is where we've seen our success, but in order for us to accomplish what we need to as a firm going forward, that leadership responsibility is to say, we need to make an investment here. We have a lot of firms that have made investment in das and some of the other resources and literally changing the way that they do an audit, changing the software that they're comfortable with. Those are great examples of how are we looking forward to the future and how are we evolving our practices? And they're uncomfortable things. They're not always easy decisions to make and scary,
Daniel Hood (09:43):
Right? Well, and everybody hates change because change is terrible, but it's also, it's that weird. They're in this weird position of being between the frontline service providers and the backroom strategy builders. As you say, those are sometimes you have to say to one or the other, what worked before isn't going to work or what you're proposing now won't work, or you're sort of in this weird position of being between the hi and the blade kind of thing. So it's a complicated position. I don't envy them. And then they also, like I said, they have to make people change and no one likes that.
(10:19):
Obviously it made sense when you described some service lines, some areas may require the growth strategies, got to require more of an educational phase, right? Educating the market on what's needed and that sort of thing. Have you just practically, as you look at your clients, how much variation do you see between the growth strategies in different practice areas within firms? Does it tend to vary pretty wildly depending on what the service area is or they tend to be more? Do they tend to sort of coalesce around, this is kind of roughly how we do growth?
Sarah Dobek (10:49):
Wildly might be a little bit of a stretch. I wouldn't say that they vary so much that they're drastically different, but I do think there's different tactics that come into play depending on what you're selling and who your target market is. The strategy of where we want to be is all based on our target market. So if I'm selling to real estate developers, I want to spend more time on Instagram, they're going to be there. If I am working with contractors, I'm not spending a ton of time on social media. I'm going through different channels to reach those people. If I'm trying to reach bonding agents as part of contractors, sure, I'll go put some stuff out on LinkedIn. Those insurance folks are usually all over LinkedIn. So I think part of this is, it's not so much widely different. It's about tailoring the approach based on your target audience and where they sit.
(11:39):
That's a marketing fundamental and a sales fundamental, which is where is that audience spending time? And that's where we tailor our approaches. And then where are the entry points? So the other piece that changes a lot, and it ties into our inbound growth strategy, is knowing what people are searching for. People aren't usually going to go search at the same level for tax services as they are for some of the specialty services. If I'm selling international tax, I want to be all over the web. I want SEO optimization. There is a lot of search that happens and a lot of web leads that happen, whereas I'm dealing with small businesses that local network matters. Our lead generation looks a little bit different with that buyer group. And so tailoring our approaches to the target audience, the buyer group, and how they buy and the service itself, that's where we tend to see the variation.
Daniel Hood (12:36):
Gotcha. Alright. Very cool. I want to dive a little bit more into, I want to keep talking. I think this weird position of the practice line leader between, like I said, the people who are setting the strategy and the people who are delivering the services is a weird and interesting position and may come with a lot of responsibilities that they may not even realize they had. But if they're listening to this, they now know more about it. And I want to dive a little bit more into that, but we're going to take a quick break first.
(13:02):
Alright. And we're back with Sarah Dobek of Inovautus Consulting and we're talking about the role of the practice line leader, the service line leader in growth. And we've talked about the fact that they are, like we said, they're sitting that weird position, the sort of pivot point between the leaders of the firm, the executive committee of the firm, or whoever's setting the strategic growth priorities of the firm and the people who are actually delivering the services. And that often may require them to do some things that they may not be comfortable with or act in ways that they might not have thought were going to be their responsibilities when they took that role on in the first place. And one of the things I want to talk about is how as a practice line leader, you've got to balance your need to deliver current services.
(13:43):
You've got a roster of clients already who are signed up, they're engaged, they're signed up for engagements, you need to deliver certain services to them. But then there's the responsibilities of growing the future practice, bringing in the next set of clients. And part of that for a lot of firms these days involves changing who those clients are involves getting rid of older clients. So all the guys you're currently doing work for, you may be looking to get rid of those over time as you build up your ideal client practice, but also just a whole different set of clients entirely. Any thoughts on how you can balance that or how practice line leaders can balance that sort of need to service the current clients and the need to look to the next set of clients who may look very different?
Sarah Dobek (14:22):
Oh my gosh, that's an age old question. Dan, I'll see if I can do this question
Daniel Hood (14:26):
Justice. Take three, four hours as much
Sarah Dobek (14:28):
Time you need. Yeah, we'll be back with you tomorrow. So I think that part of this is understanding that as a practice leader, you don't have to do everything. And so when we start talking about balance and we start talking about what our responsibilities are as a practice leader, how we leverage our team becomes really important. Each practice leader has a different set of gifts and skills, and we're not always trying to change that individual, but we need to fold around that individual, the support and resources they're going to need to be successful. And so when we work with practice leaders, part of the conversation is not that they just have a vision, but then they need to figure out what are those resources. And sometimes operational efficiency might come in the form of they have a really strong manager or director or somebody that they can help look at that.
(15:25):
They need to have some vision, they need to provide some support, but they can leverage to somebody else on their team that maybe they're not as stronger. Maybe they're better gifted at being in the market and being the face. One of the primary thought leaders in that space and out doing business development and sales and teaching and coaching on some of those things. Sometimes we have the opposite. Sometimes we have a really strong operationally efficient person and they do a really good job of managing the practice and they've got good insights, but they're not going to be that external facing person and vice versa. There's lots of different versions in between. And so what we tend to see as firms grow their practice areas and their practice leaders is sort of this evolution. The smaller you are, the more you're expected to wear that big general hat that we all put on and do all of these things and we balance the bits and pieces of it.
(16:18):
And then if you watch, as firms get larger, the practice leaders role changes and they almost, they spend a little bit of time in client work, but they do more stepping out of client work and more managing and supporting and leading. And that's a natural evolution. But a big component of this is how they leverage their teams, their finance teams, their reporting, the information that's needed. And so I think there's no magic answer to the balance other than to say, what are you really good at? What are your gifts? How do you enhance being able to use those and where do you plug in resources around you to support the other pieces that you can't be failing at that you need to be able to do, but maybe aren't your gifts? Or quite honestly, maybe you have to make choices with your bandwidth around where you spend your time.
Daniel Hood (17:07):
Right? Yeah, it's fascinating. You describe that as a natural evolution and it is this natural evolution of leadership and management is that you start by being very good at something and then the better you are at the more likely they are to move you further and further away from it, right? You stop doing the client work, you stop doing the work that got you the job in the first place and you start learning the other things about how you're supporting eventually a much further away team in doing that work. I am constantly fascinated by it in this area, but also in a million other ways in the way accounting firms are run. I think that management and leadership firms don't quite realize or aren't really trained for that, for the understanding of, listen, the more important you are to our service line, the less involved in the actual work of the service line you're going to be.
(17:49):
And the more you're going to be doing things like leadership and enablement and training and mentoring and marketing and growing and being the face of the service line. It really is, as you say, it's a natural evolution, but I don't think it's one that people are ever prepared for or think enough about just constantly. You constantly run across it at accounting first. Anyway, sorry, that's a hobby horse of mine that I'm constantly fascinated by. But it leads to this sort of angle of, like I said, if you've grown up in the practice line, you've learned it, learned it enough, and become good at it enough and been involved in it enough to become the leader of it. And in some cases you may have actually created it yourself, right? There's plenty of practice line leaders who are, I'm the person who set up our cash practice, or I'm the person who set up our cannabis practice or our SOC two reporting, et cetera, et cetera. And often they can feel very sort of proprietary about it and think like, I'm doing my bit running this. This is what I do. I run this. And it can be hard in some cases to get those people to, I don't want to say fall in line, but to make sure that they're aligning themselves with the overall growth strategy. Any thoughts on how firms can make sure that they're making that happen and that the leaders really get the importance of being aligned with the strategy as well?
Sarah Dobek (19:03):
Yeah, I think there's a few fundamentals that we always come back to. One is clear communication. You cannot undervalue clarity and communication enough. So ensuring that the firm's visions and goals and strategic priorities are clearly communicated to all practice leaders is so important. And depending on our firm governance structure, sometimes those practice leaders are at the table, sometimes they're not. I mean, I recommend that they always be at the table as part of our strategy. They need to also have regular updates and sort of these transparent discussions about where the firm's direction is heading and then where the practice group falls within all of that. The other piece of this is that they need to be incentivized to support those firm objectives. A lot of times we see challenges because there's misalignment. We're asking them to do one thing, but we're paying them differently or incentivizing them differently.
(19:58):
And there's a lack of alignment. There's lack of clarity of goals to the practice leader about what's being expected, or in some cases a lack of empowerment. That's the other thing. You need to go lead this, but we're not really going to give you a budget or we're not going to give you the support that you need. We're not going to give you the autonomy to make decisions. That still has to come through the larger partner group, and we need to vote on that. And so this idea of empowering our practice leaders, if we are going to ask them to take on leadership responsibility at this level, not just, Hey, what are we going to do to market the practice? Or I am kind of like it's a superfluous title that we're being given to somebody. We need to actually empower them to do it.
(20:45):
The other is part of that empowerment means we're fostering a collaborative culture with them around that they need to feel valued in that. And part of that comes from that empowerment that we just talked about. And then we've got to give them feedback. We still have this perception that when we become partner, that we've hit our pinnacle. Nobody's going to tell us what to do. We don't need somebody to manage us. We don't need goals and accountability and good leaders crave that. We want to be held accountable as much as we are required to hold others accountable because it means that somebody cares and sees exactly what we're doing. So I think that feedback mechanism is really important and we've got to get everybody in our firm comfortable with that and not just making it to partner and saying, okay, hands off. We are at a level where we don't warrant that anymore. Just never going to be the case.
Daniel Hood (21:42):
And I suppose mean we started by talking about the valuable information that the practice line leader can bring sort of from the front lines. They're out in the market, they're out talking to the market. Just the fact of consulting them on that has got to draw them in a little bit, get them feel involved, assuming that you listened to what they told you and build that into your growth plans, then that's got to be right. That's got to help get them at least some buy-in to what the plan is.
Sarah Dobek (22:07):
Absolutely. And what I usually find too is that a lot of times when we start to grow a practice area, we do so very reactively how we're trained in this profession is to be reactive. It's like, well, here's the client base. We've sort of accidentally stumbled along this niche or specialty. We have a certain number of clients. We've decided this is going to be a market that we should probably grow in. There's opportunity. There's a little bit of interest, but there's no real defined plan. And one of the places that we start people is like, let's put that plan and that vision together and ask for what we need. And sometimes it takes us years to get to that sort of clarity for the practice line where you can go to your partners and say, here's what the business plan is. I'd like this to be a 10 million practice by 2030, and here's what we need to do that.
(22:55):
Here's the staffing we need. Here's the expertise we need. Here's what the market needs. Here's where our pricing is, and here's where it needs to be. And that's where we start to see that strategic alignment. And I think it breeds a lot more trust and the ability to say, okay, now we can empower you. You're empowered to go do this. Here's the budget you've asked here. Go forth and proceed with that. And that's part of that evolution that we talked about, Dan. But I think that that's being asked of practice leaders much earlier in that evolution cycle. The smaller firms are dealing with that now more than they ever used to before. It used to be you got to a certain size and the governance model changed, and that's just not the case anymore.
Daniel Hood (23:40):
Or the governance model now seems to be needing to change earlier, right? Smaller. Oh
Sarah Dobek (23:43):
Yeah, that's, that's whole nother topic of
Daniel Hood (23:46):
Three or four hours on a different day. Yeah. As you say, we never have enough time to talk about all the things we need to talk about on these podcasts, but at least we give people a taste and some sense of what's going on. And I appreciate it. Sara Dobek of Inovautus Consulting, thank you so much for joining us today.
Sarah Dobek (23:59):
Thanks for having me, Dan.
Daniel Hood (24:00):
Alright. Thank you all for listening. This podcast was produced by Accounting Today with audio production by Wen-Wyst Jeanmary, rate and review us on your favorite podcast platform and see the rest of our content on accountingtoday.com. Thanks again to our guest and thank you for listening.