[IMGCAP(1)]While it is inevitable that a firm or company will eventually age and die, it is the responsibility of the managing partner or CEO to ensure that the firm or company remains viable.
They can only do this by changing the firm’s driving force so that new products and services will emanate from a maturing quadrant to emerging and growth quadrants. That is the only factor that can sustain the firm or company’s life for a longer period of time, much as proper diet and exercise can do for a person’s body.
In recent articles I wrote about the four quadrants in the life cycle of a firm or company, its markets, and its products and services. In essence, a firm or company is much like a person as it emerges (Quadrant 1), experiences growth in large chunks (Quadrant 2), matures in the marketplace (Quadrant 3), and then ages and dies (Quadrant 4).
When I discuss this inevitability with a managing partner or CEO they typically respond, “Greg, that just won’t happen in the accounting business, because companies will always need audit, tax, and other services that CPAs provide.”
Right now, yes, but explain that theory to Time magazine, Newsweek, the Chicago Sun-Times, Eastman Kodak, Circuit City, and a host of others.
What does accountability mean? It means that the managing partner or CEO has the responsibility, the work or task, along with the authority that has been handed down from the board of directors or the executive partner group, and the managing partner or CEO has agreed to take that responsibility and authority to keep the firm or company from moving into the aging or dying quadrant.
Linked with that accountability to keep the firm from aging or dying comes the need to analyze what is really driving the growth of the firm’s products and services. That also is part of the accountability of the managing partner, figuring out what is the firm or company’s “driving force.” It is elementary to sustaining the firm or company in the maturing (Quadrant 3) position and not allowing it to slide into the aging or dying quadrant. Once a firm or company slides into Quadrant 4, there are very few alternatives other than to close up shop or sell out to a competitor.
Unless or until a managing partner or CEO actually analyzes what the firm or company’s “driving force” really is, there is little hope for him (or her) to determine what the future driving force should be, and this is the basic tenet of what the accountability to keep the firm or company out of the aging or dying quadrant is all about.
It is also the basis for effective strategic planning. Chief executives can either address the issue of the driving force or strategize on what they want their vision of the future to be, and how they want to get there. This is usually a fatal flaw as the firm or company slides into the aging bracket.
But where is the managing partner or CEO going without knowing what is currently driving their organization’s products and services and what should be driving it in the next three to five years? What can they do as they come to the fork in the road of either keeping the current driving force or changing to a new driver?
I always tell my leadership management students that management work is much harder work than the specialist work that we learn from a skill set, and this is true in this instance as well.
Rather than having the partners and key executives of a firm or company spend their time trying to determine this key element of strategic planning, it is much, much easier to disregard the hard management work and keep their current driving force of “growth” as is.
This leads to what is happening in most CPA firms today: They keep the driving force of growth, but their products and services are stale, aging and dying. The only alternative is to grow by buying up the other stale, aging and dying services of another CPA firm, hoping that the additional clients will remain with the purchasing entity and that their rapport will make a difference.
This is why CPA firms gobble each other to grow, but with this strategy they eventually will run out of devourees and be devoured themselves.
In other articles in this series we will explore alternatives to maintain the firm or company within the maturing quadrant, and not allowing it to slide into the aging or dying quadrant. Don’t be surprised if the smartphone is a catalyst.
Greg Weismantel is president of Epic Group, a management consulting firm and advisor on strategy for small and large firms and companies. It partners with clients to identify their primary driving force while recognizing strategic opportunities of their markets, products and services that will deliver the highest value for ongoing growth and sustainability.