Mike McGuire aims to make Grant Thornton the Tesla of accounting
Grant Thornton CEO Mike McGuire is moving his firm to become a more streamlined organization better able to respond to technological change than the Big Four, similar to the way Tesla has challenged the Big Three automakers.
“We’re focusing on continuing to build our brand,” he told Accounting Today. “We’ve made significant investments in our technology infrastructure over the last three years. We’re investing in innovation and innovative services, continuing to invest in our culture, and continuing to invest in quality. Our goal is really to be the modern firm, in a lot of respects, kind of the Tesla of the accounting industry with innovation. I think that’s a real unique strategy in how we differentiate ourselves.”
However, he doesn’t see his firm as just positioning itself against the Big Four.
“Tesla does not go out and market themselves by saying we’re not a Big Three automaker, but they say we’re Tesla,” said McGuire. “That’s the way we are at Grant Thornton. We’re innovative. We want to lead the industry. We don’t want to be the biggest. We don’t want to be compared to anybody. We just want to be Grant Thornton. That’s it. We don’t consider ourselves anything other than who we are and who we want to be, and as Grant Thornton as the most innovative accounting firm that can help our clients transform through all the disruption that they’re starting to see in the industry. And we’re structured differently to make quick decisions and get on with it, and I think that’s a big difference. We actually think that our size is a big advantage for us.”
He believes the concept of the Big Four, Five or Six firms is starting to become outmoded.
“Frankly I think counting the size of firms or the number of firms is an outdated measure,” said McGuire. “You don’t talk about the Big X number of insurance brokers or advertising agencies or engineering firms or anything. Those are outdated measures from long ago, but for some reason our industry has clung to it. We’re not going to cling to any labels. People ask me that all the time, ‘What do you aspire to be?’ I just say we aspire to be Grant Thornton, and we are Grant Thornton. We’re going to chart our own course, irrespective of any labels or lists. We’re just not going to play that game anymore.”
Earlier this month, Grant Thornton released its fiscal 2017 earnings, indicating the firm achieved revenues of $1.74 billion for the fiscal year ended July 31, 2017, a year-over-year increase of 5.3 percent. GT saw revenue growth across all three of its service lines. The Advisory service line rose 12.6 percent compared to the prior fiscal year, while the Tax service line saw an increase in revenues of 4.3 percent, and Audit revenues grew 1.8 percent.
“For us, we’re actually focusing on growth across all three of our service lines,” said McGuire. “It’s not about how our pie is sliced. It’s really more about continuing to grow the pie. Advisory has been growing rapidly. It was one of our smaller service lines, but certainly the amount of growth we’ve had on advisory as a percentage has increased. All three of our service lines are continuing to grow. Our focus has really been on organic growth. We’ve done very few acquisitions. We like our strategy that we’ve been on for the last three years as the CEO of the firm. For tax, it’s really about growing our tax consulting services. From an audit standpoint, audit is a growth business for us, and advisory continues because the market demand for it is going to continue to outpace our growth in the other two services. We’re not intentionally tilting to focus specifically on advisory, but all three of our service lines have a growth strategy.”
The tax reform talk in Washington is likely to ramp up demand for tax services at the firm next year.
“Anytime there is a change in tax law, or people are thinking about the possibility of it happening, our clients want to consult with us and see what the options are,” said McGuire. “If it happens one way, what do we do? If it happens another way, what do we do? And then what happens if it doesn’t change and we’re in the status quo, what actions do we take? We do a lot of scenario planning and advising to prepare our clients for any of the options. Then if something happens, depending on which path it takes, we’re able to jump right in and help our clients adapt and change to whatever the new tax law is going to be. Anytime there’s tax uncertainty, there’s a lot of opportunity with us to help our clients plan and see through it.”
Grant Thornton has also been positioning itself to take advantage of changes in audit technology such as automation, analytics and artificial intelligence.
“I’ve been in the industry now for over 35 years, and as I look back the first real technological revolution was the advent of the personal computer back in the early ’80s when everybody started getting them,” McGuire recalled. “We went from a pencil and paper and calculator operating style to using computers. People thought about what’s going to happen to the accounting industry when computers take everything over. Certainly, we adapted to that technology. This is really the second technological evolution, as I see it, and that’s the advent of robotics, process automation, analytics, digital platforms, machine learning and artificial intelligence. Certainly blockchain is out there as well. For us what we always do is we’re out in the forefront of all of these technologies from an innovation standpoint, building our capabilities, our technology platform, so we’re not catching up to our clients. We want to be able to lead our clients with some of these new technologies. I see it as an opportunity to really transform our industry. It’s an exciting time. We at Grant Thornton embrace technology, and we’re very excited about it and making those investments. Our strategy is solely focused on making sure that we bring the latest technologies and solutions to our clients.”
The firm launched a new branding campaign in June, called Status Go, with an emphasis on moving clients forward, as opposed to the status quo.
“It’s very aligned to our culture, and we’ve aligned our culture with our brand, and that is around bringing speed in decision-making, and speed with solutions that we’re bringing to our clients,” said McGuire. “Over many years, the accounting industry has been generally slow to change. We are building what we call a modern firm and the firm of the future, using technology. Status Go means that we are moving from the status quo to being the modern firm, adding speed and pace to decision-making and solutions we bring to our clients and the way we operate our firm internally as well. That’s the go part of Status Go.”
Grant Thornton also recently opened more modern offices in the Washington, D.C., area with a focus on new technology and collaboration, with enough space for up to 1,500 people. GT, based in Chicago, has also been modernizing many of its other offices in recent years as well.
“I’m just starting my fourth year as CEO, but three years ago as we embarked on a new strategy, one of the things we wanted was to be very intentional about our strategy and actions to take our firm to the future,” said McGuire. “We went down a three-year path of significantly upgrading and modernizing all of our offices to a new platform that is aligned with our people first strategy. Our people love it. They were involved with the design of the offices, with collaboration spaces and significant investments in our technology capabilities within our offices. The D.C. office was one of those. Over a three-year period, we invested millions of dollars in upgrading our entire office platform to align with our new brand. That has been essentially completed. Washington, D.C., was one of the latest ones we did. We’ve got a few more offices that we’re modernizing, but that’s really part of our strategy. We think that the environment that we create for our people, the technologies and the collaboration spaces, are totally in alignment with our strategy.”
Grant Thornton has not been doing many acquisitions lately and has even consolidated in some markets. “We have been very focused on growing in our core markets, Washington, D.C., being one of them,” said McGuire. “We’ve looked at some other areas where we’ve continued to expand into new markets. Pittsburgh and Jacksonville are two good examples. We feel like there are some markets where we have a lot of opportunity for the kinds of clients that we want to serve. Frankly, our culture and ability to bring the best talent irrespective of where they live is really important. What we do as part of our people first growth strategy is you can live anywhere. Live where you like and you’re available to serve clients in various markets. We feel that we can open offices in some other markets, and we’ve been very successful. In fact, when we opened markets in places like Jacksonville, we actually had people in the firm who would have liked to live in Jacksonville. Maybe they were from Jacksonville or had family in Jacksonville. When we opened the office, they asked for a transfer and we accommodated that. It’s been a positive.”
McGuire is taking a cautious approach to acquisitions and recruitment, and he hasn’t set the kinds of aggressive hiring goals that some of the other large firms have. “With respect to acquisition strategy, our focus on acquisition is going to be on select acquisitions for capabilities in advisory,” he said. “We’ve made a couple of smaller acquisitions that are very strategic for us. We’ve got some great people that we’ve brought in, but we’re looking at building capabilities very selectively because we feel that with the way we recruit and develop our people and the culture we have established, we can fill our needs through our normal organic growth and development.”