Unlocking the New C-Suite
As accounting firms employ new strategies and service offerings to differentiate themselves in competitive markets, they are creating new roles to lead these functions.
More responsibilities are earning C-suite status, most notably the increasingly vital marketing and technology efforts.
While Crowe Horwath's new product development team has existed for more than a dozen years, the November 2013 appointment of Derek Bang to head it as the Top 10 firm's first chief innovation officer formalized their commitment to technology.
The establishment of a CIO served to "up our game in that area even further, and double down on innovation, so to speak, launching a broader initiative around innovation," Bang, already a nine-year partner with the firm, explained.
"The by-product of that, beyond just funding new solutions, was a pervasive culture of innovation across Crowe, which is where the concept of having a chief innovation officer came from." It did not come, however, with too many precedents within the profession. "We couldn't find a lot [of firms] out there delineating it," Bang explained, noting that the CIO title is far more common in manufacturing, telecommunications and technology companies. Some of his peers in those industries recently contacted him about attending an inaugural CIO summit.
"We were doing all those things for quite some time, but hadn't formalized it," Bang continued. "We knew what we needed the role to do, and we put together an innovation task force, representing all of our business units, that helped formalize our innovation."
Assembled six months ahead of Bang's announcement and now in its second year, the task force includes one member from each of Crowe Horwath's five client-facing business units, one applied technology leader, and one design leader.
The innovation function previously "fell within the firm-wide group -- we didn't have a stand-alone, or its own distinction to the extent we thought it should. We created the chief innovation officer as a member of the firm's management committee, making key management decisions for the firm, from marketing to messaging, and many different things." While Bang lacks a wealth of counterparts in the accounting profession, he found some in Deloitte's innovation executives, as well as the Big Four firm's overall structure and strategy around it, he explained.
For Deloitte, PwC -- which also recently named its first chief innovation officer -- and the other large firms with burgeoning innovation departments, size is paramount to creating these dedicated roles in the C-suite.
A SIGNAL OF COMMITMENT
Rike Harrison acknowledged this in explaining her appointment as Top 25 firm Wipfli's inaugural chief growth officer six years ago. "As a firm, [the formalized title] makes a statement -- it's an internal statement as well as external. Having a dedicated marketing team, it's a significant investment and you really need to see the ROI."
While Bang's title itself made enough of a statement to internally legitimize the firm's innovation focus, he would agree that numbers spoke even louder. Before his appointment, Crowe conducted a study of all its solutions and services, categorized by single-, double- and triple-threat, with the latter encompassing all three goals of functional knowledge, industry focus and applied technology.
"For the single- and double-threat revenue, the profitability was the same, which was expected," Bang shared.
"With the industry specialization, table stakes, we were not getting a different yield. When we looked at the triple-threat solutions, profitability was 10 percent better, the projects were larger, as was the win rate, proposing rate, and how often-almost everything. We shared the data with all the partners and the impact of what that would mean to them, transitioning revenue from single- to double-threat." Despite Crowe's history in new product development, it was this real-time data, collected since inception, in solution investment and revenue, that "laid the groundwork" for Bang's new role, including the impressive number of nine times return on funds invested.
In the announcement of Bang's title change last fall, Crowe outlined a five-year plan of deriving 20 percent of firm revenue growth from new products. While Bang was appointed to head a burgeoning firm niche he helped grow, Harrison was brought aboard Wiplfi at an earlier point in the firm's strategy.
As chief growth officer, she was to oversee business developers on the regulation side, already a successful function in their consulting practice. About a year ago, however, Harrison's title was changed to chief marketing officer to better reflect her role. "Chief growth officer was originally created thinking we will have a good number of business developers," she explained. "Right now, we only have business developers on the consulting side, which was the major reason" for the title change.
Despite the shift, Harrison explained that her responsibilities have not changed, but are more adequately described. With this title, she also joins a growing pool of accounting firm CMOs.
Like Bang and Harrison, Jack Kolmansberger was the first to claim his particular seat, also of CMO, of Herbein+Co. when the Pennsylvania CPA firm recruited him five and-a-half years ago.
Kolmansberger succeeded the firm's previous marketing director when the firm, after seeking outside marketing analysis, realized the need for a more experienced marketing professional, with title to match. Coming from a larger firm and city (Philadelphia), also made Kolmansberger an attractive hire for the new position.
"The other thing is that accounting firms are very title-driven," Kolmansberger explained. "Everyone knows the partner, manager, senior manager -- they're very attuned to the levels."
Kolmansberger, himself transitioning from his previous role as marketing director with Philadelphia firm Asher & Co., described taking over and elevating Herbein's marketing function as a move from the tactical to the strategic. "The significant thing in going from a firm where there was a marketing director to chief marketing officer, is you're always thinking about strategy," he shared.
"The detail stuff - I have a three-person team of a marketing manager and regional marketing director, so much of what I can delegate to them is tactical stuff ... I'm focused on the message, as opposed to the logistics of it," he explained.
Kolmansberger observes a similar focus in his marketing peers, with whom he shares best practices as a board member of the Association for Accounting Marketing.
"On average, a chief marketing officer will think differently about a merger or key hire than another person in the firm," he explained, noting that a recent exchange of M&A advice with other CMOs has been especially helpful as Herbein gears up to make some acquisitions of its own. Other people in the firm "are focused on, if we do this, what it means to us. We think: How do we make it mean something? How do we maximize it?"
Kolmansberger describes his job as, among other things, exciting, interesting, frustrating, more open to risk -- and vital. "If we're not the ones pushing stuff, it's not going to be the CPAs who say, 'Let's try to do something crazy!' It almost always has to be us."
While benefiting from shiny new titles, most of these C-level executives lead long-essential functions in today's accounting firm.
Bang cited Booz & Co.'s annual global innovation study as proving the need for corporate innovation, while acknowledging its success requires more than a simple status hire. "Let's see in three to four years, how meaningful [CIO] is," he said, quoting legendary football coach Lou Holtz: "'Titles come from above, leaders come from below.' We practice that philosophy."