Old snapshots are compelling because they are a form of time travel -- a way to bridge the years, to see who you once were and to compare it with who you are now. But how much more useful would it be to have a snapshot of the future? To know what you need to become, so that you could start working to get there now? With that notion in mind, we convened a virtual roundtable of forward-thinking consultants, practitioners and experts to help us develop a picture of what successful accounting practices will look like five years down the road.
What's your vision of the Firm of the Future -- i.e., what do you think the successful firm of five years from now will look like?
Mark Koziel (vice president of firm services and global alliances, American Institute of CPAs):I don't think you can say there will be one ideal Firm of the Future model, especially given the diversity of firm sizes today. ... That said, most of the larger firms will still have some form of bricks and mortar, but will rely on more flexibility and remote staff, and the hoteling concept will be alive and strong, so the amount of bricks and mortar will be a fraction of what's used today. Client work will be dependent on big data and being able to manipulate and report on that big data as a valued service.
For smaller firms, it'll still be about relationships, collaboration with the client, being that trusted business advisor for the clients. Small business relies heavily on their CPA to provide input and guidance, not only on reporting on history, but proper systems and future business planning. This will continue to transform as client needs become more sophisticated and technology allows clients to reach for the cloud and serve customers and markets they never dreamed possible.
Sandra Wiley (chief operating officer and shareholder, Boomer Consulting Inc.): A few characteristics will emerge and exist in all firms:
The thought of any partner or team member working as an individual for individual results will be the exception to the rule -- not the rule, as it is today.
Cloud computing will be old news. ... In five years, firm leaders will be living in the cloud and only those who are truly behind will be even discussing it at that point.
New leadership will be strategically taking on new roles at the firm. The training that will take place in the next five years will pay off for firms that have made the investment.
Allan Koltin (chief executive officer, Koltin Consulting Group Inc.): The successful Firm of the Future will deliver value-added services to clients and will have won the war for talent. More precisely, clients are continuing to demand more and more when it comes to business advisory services and less when it comes to compliance services (reporters of historical financial information).
Additionally, as it relates to the war for top talent, great firms will have a wonderful signature story that will not only attract talent, but will also allow talent to continue to grow and prosper with the firm.
Marc Rosenberg (founder, The Rosenberg Associates): Successful firms will: Make a greater commitment to management, strategic planning, leadership development and partner accountability.
Develop the "critical mass" necessary to afford management, marketing, human resources and IT professionals, thereby keeping partners out of management so they can focus on bringing in business, providing world-class client service and mentoring the staff. Specialize much more than they do now.
Stop complaining about the staff shortage and start adopting alternative models for finding labor.
L. Gary Boomer (CEO, Boomer Consulting Inc.):The successful Firm of the Future will involve teams with skills beyond just the traditional CPA skills of tax and accounting. Leading and managing these diverse talents is the primary challenge. It will require a broader set of skills.
Gale Crosley (principal and founder, Crosley+Co.): The key feature of the Firm of the Future will be effective leaders. The profession is inching, albeit slowly, toward a firm organization structure which includes leadership performance. Why? The partner model is an individual contributor model. Sustainability of the firm becomes an issue when the firm is handed over to future generations. If leadership isn't developed in current partners, and people coming up through the ranks, the firm flounders.
Jennifer Wilson (co-founder and partner, Convergence Coaching):Firms that create a culture that is attractive to young staff will enjoy success. Those that do not "figure it out" will find themselves without qualified people.
Jeff Pawlow (CEO, The Growth Partnership):[There will be] more para-professionals and less bricks and mortar. I look for alternative staffing models. For example, bright, non-accounting people such as those working at banks and other financial institutions can be trained to do the work of lower-level CPAs.
Jeff Mowery (managing partner, Chicago-based Mowery & Schoenfeld): In five years, two things that today are primarily the domains of larger firms will filter down to smaller firms. First, they will be more specialized, even smaller practices. Second, firms will increasingly move away from the book of business model and work better as a team.
What do you like most about the Firm of the Future?
Boomer: What I like most is that the CPA has the opportunity to elevate their value proposition if they focus on their unique abilities and work as a team to meet client needs and wants.
Crosley: The most attractive attribute is efficiency and effectiveness. The firm is growth-oriented, stays competitive and market-relevant, and becomes a model for other firms.
Koltin: The successful Firm of the Future will have great leadership, not just at the managing partner/CEO position, but running through their other internal management positions, as well as the heads of various industry and service line teams.
Koziel: What I like most is that CPAs are at the center of this business transformation if they want to be. This provides great opportunities to young CPAs coming up through the ranks. It appears this next generation of CPA firm owner will break the mold on how things used to be done and allow for a firm environment that includes greater flexibility, more client collaboration, the ability to articulate their value and get paid to do so.
What do you like least about it?
Mowery: I believe that in five years, firms will be more leveraged than they are today. This scares me because, as the lead partner for clients, it could make it harder for me to build the kind of relationships I'm used to.
Crosley: The least attractive attribute is a loss of individualism. Since many CPAs are drawn to public accounting because it afforded individual autonomy, the leadership challenge is to motivate team-play and not kill individuality.
Koziel: What I like the least is that it's taking us a while to get there and the old model is starting to get in the way. Succession is a huge issue for many firms today, and for the firms who have recognized the need to transform toward being that Firm of the Future, they will succeed with succession. It's just not as mainstream or happening as quickly as we'd like to see. That puts firm continuation at risk. That said, there are great opportunities for young CPAs to take on great practices and begin that transformation.
In becoming a Firm of the Future, will brand-new firms have a significant advantage over already-established firms?
Rosenberg: Unquestionably. One of the biggest differences between Baby Boomers and Millennials is their attitude toward the status quo. Baby Boomers were taught that when the boss said, "Jump," the correct response was to ask, "How high?" If you tell a Millennial to jump, she will ask, "Why?" and may even say, "No, I've got a better way." The latter approach gives today's young people a huge advantage.
Wiley: The only reason a new firm might have an advantage over an established firm is that they can start with new initiatives, rather than having to change existing habits. Established firms must make a conscious choice to change and they must get everyone invested in the change.
Koziel: Brand-new firms will have an advantage, no doubt. Legacy firms have tried to serve multiple-generation clients, making it more difficult to fully transform. New firms can hit the ground running with a laser focus on the type of client they want to serve and the type of firm they want to be.
Crosley: New firms are usually started by younger people, and they have an advantage in being more open to new ideas. Pair this with their bias toward technology and you see an exciting future for these firms. Established firms are typically filled with older partners who are often unmotivated to incorporate new ideas.
Wilson: New firms won't be carrying the "baggage" of the past that causes partners to harbor resentments, old complaints and attachments that cause resistance to change.
What hurdles will already-established firms need to overcome? What obstacles should they be particularly aware of?
Wiley: The most critical thing for a firm to be aware of and to guard against is complacency. The inability to look for new ideas, act on those ideas and then inspire others in the firm to embrace and bring the idea to fruition is imperative to the health of any firm's future.
Koziel: Legacy firms need to overcome the personal interests of the partner group for the betterment of the firm. It's the succession issue that is currently pulling legacy firms in different directions. Both the younger partners and the senior partners will need to come together and make hard decisions on future development for the firm. Younger partners need to understand why a more senior partner doesn't want to invest in new technologies within three years of their retirement. Senior partners need to understand that the investment will ensure firm continuation and better guarantee their post-retirement payments.
Koltin: I believe that great firms will continue to re-invest profits today for a better tomorrow - and this will present a challenge, as partners will want to continue to grow earnings in the short term.
What is the single most important thing that accounting firms can do now to make sure that they become a Firm of the Future?
Koltin: This is a simple one. It all starts with great leadership and the partners' willingness to be led and managed along the way. Having said that, firms need to continue to recruit and grow talent that can produce new business, manage client relationships and deliver high-level services by industry and service line.
Crosley: Assign leaders to various aspects of firm-wide activities. Not only the traditional roles, such as leaders of the tax or audit department, but growth-related roles such as industry and service line leaders, opportunity development and pipeline management, and large client programs. ... Once a partner is assigned a firm-wide role, they are on the road to a leadership position in the firm beyond their personal book of business.
Rosenberg: No question about the answer to this one: Adopt more effective management. It's amazing when you think about this: Most CPA firms, especially those under $15 million, are able to enjoy success and make good money without paying much attention to management. This will change as time moves on. It may not be a game-altering proposition in five years, but it will change.
Pawlow: Literally scheduling time to work "on" your business. The chargeable hour metric is easy to define and measure. How a firm spends non-charge time is where the battle will ultimately be won or lost. Having the discipline to manage and account for the non-billable time is really key.
Wilson: Create a unified vision for the future and begin making the strategic investments and critical changes needed to achieve it.
Wiley: Get the next generation of leaders involved now, and ensure that they understand that you do not want to turn them into clones of the current leaders, that you expect them to define, develop and create a new firm that they will be able to be proud of in the future. That creation will become a possibility when we give them the ability to collaboratively develop that future firm together -- current leaders, future leaders, profession visionaries and vendors -- and is the way to create a "rocking" firm in the future.
Koziel: Go on a listening tour with your clients. Find out what they are looking for and struggling with. Then take a listening tour with staff asking what they see as the Firm of the Future.
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