[IMGCAP(1)]"Remember, you're a Ryan."

My partner Marti and I say this to each other frequently before we head out the door. The message? Ryans have a code of conduct, and when we go out in the world, we need to remember who we are.

For several years, I have served as a consultant to some of North America's best CPA firms and listened to countless presentations at conferences around the world. My observation? As our profession is transformed by internationalized standards and new regulations, CPA firms are forgetting who they are. They talk about "lines of business" and call their people "resources." They start thinking like product businesses, instead of focusing on the service that's their differentiator.

This is a big mistake. Smart, innovative leaders have taken note, and many are already innovating out of it. You should, too - but first, some context. How did we get to this confusing place where we can't decide what business we're in? Three culprits:

I blame some of the "Am-I-a-product-or-a-service-business?" confusion on the business press. You're not old enough to remember this, but the Dow Jones Industrial Average was founded in 1896 by the same guy who started The Wall Street Journal. Both manufacturing (the making of goods) and business media (the making of news about the making of goods) practically started life as conjoined twins. Still today, the business press over-focuses on goods-based companies. So, if you're a partner at a firm and most of what you read is about product-based businesses, it's easy to understand how some of that thinking could creep into your service-based soul.

I blame some of our "product-or-service?" confusion on scaling. Consistently great service takes "person power." And "person power" doesn't scale well. Take Hurricane Sandy as an example. Repairing electrical lines to the 8 million customers who were without power requires personnel. Especially linesmen. And linesmen require sleep. And breaks. And food. Humans who deliver services are much harder to scale than robotic assembly lines that produce goods. You know this: It's the bane of busy season. You never have enough people during busy season, and you have too many every other time of year.

But I blame most of firms' "product-or-service?" schizophrenia on the evolving nature of our industry. Increasing regulations put tighter restrictions on our core services: tax and audit. As a result, those services are becoming commoditized. In a panel at the October Winning Clients Is Everything conference, Allan Koltin, Gary Boomer and Gary Shamis all agreed (!): Tax and audit growth is flat. The only firms that are growing are those with viable consulting services.

My assessment? Commoditized products like tax and audit will remain flat for the foreseeable future. The only growth paths are one or a combination of the following: developing new niches, adding consulting services, expanding your footprint (especially internationally), and mergers and acquisitions.

These options point to a new truth: Most firms will become product-service hybrids. Some traditional services like tax and audit will become more like products, while consulting and other niches will rely on innovation. But regardless of where you sit, service will always be the differentiator.

 

A GLIMPSE OF THE FUTURE

To give you an example of how this can look, consider online footwear retailer Zappos.com. Zappos is not a shoe company. It considers itself a service business, and differentiates itself with friendly representatives, easy ordering and returns, and lightning-fast delivery. In other words, it differentiates with great service. Its brilliance is that it's in a timeless business; everyone for the rest of time will need shoes. But rather than focus on building a better shoe, Zappos focuses on wrapping the customer in a terrific experience.

Can you see how the Zappos model could apply to your traditional tax and audit services? Companies and individuals will be required to use your services until the end of time. So how do you wrap your tax and audit deliverables in a service experience that is second to none?

Here are three trends and one timeless nugget that will create new opportunities for firms that put "service" at their core:

1. Big data. Ninety percent of the world's data has been generated in the past two years. IBM is staking its future on big data, and CPA firms need to figure out how to harness it, and use it to drive new innovation and opportunities. Big data can fundamentally improve the services we offer.

2. Product + Service + Experience. It wasn't long ago that computer companies decided that they needed to add Software-as-a-Service, to increase their value. And it wasn't long after that that each company added a user conference. This magical trifecta is one way to avoid commoditization pressure and continue to innovate.

3. DIY and "Is there an app for that?" Your clients are used to elegant interfaces and apps, and your younger clients are the Do It Yourself generation. Does your firm look like it's in touch or out of touch with these trends? Do you do client presentations on paper, or from an iPad? Does your Web site offer interactive tools, so companies and individuals can easily estimate useful data?

4. Delight. Even the most plate-faced curmudgeon will light up when a little something extra is included with his service. Lube stations that wash or vacuum your car, banks that serve hot cookies, CPA firms that provide a few different scenarios for next year, based on your last few years of earnings. These are not "hip," they are timeless. And in our ever-busier society, they are small gestures that remind clients that you care.

And that's the soul of CPA firms.

Now, go out there, and grow. And remember who you are.

Rebecca Ryan is an economist and futurist whose new book, ReGeneration, is coming out later this year. Reach her at rr@nextgenerationconsulting.com.

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