In 2015, Richard and David Susskind authored "
Richard Susskind's background and experience is primarily in the legal profession and technology, while David Susskind is a fellow in economics at Oxford University and a research professor at King's College. Both are international authors and speakers. The book focuses on multiple professions, including legal, accounting, medicine, engineering, consulting, architecture and even the clergy.
As you might expect, it received mixed reviews. Some professions pushed back harder than others. Change isn't easy, and transformation requires new mindsets, skillsets and toolsets.
The reason for the introduction is twofold. First, I had the pleasure of being on a panel with David shortly after the book was published. The second reason is to confirm some of their recent observations about innovation and the accounting profession almost seven years after their initial version was published.
While accounting professionals can and should learn from other disciplines, the observations discussed in this article focus on accounting. To date, most innovation has focused on efficiency. In the future, innovation will focus on business transformation. The following five high-priority observations apply to firms of all sizes.
Observation No. 1: Efficiency
Most of the innovation firms have accomplished over the past seven years has been focused on efficiency through standardization and continuous process improvement. The pandemic and remote workforce accelerated this trend. Most firms were unprepared for a lockdown pandemic from a technology, talent and process perspective. Almost every firm became a multioffice firm overnight, and most remain so today with more multistate and international employees (including outsourced) than before the pandemic.
Considerable work remains in process and automation, focusing well beyond efficiency. The focus now is on the employee and client experience, which are related. Some high-priority projects are billing and collections, onboarding clients and staff, aggregating data, preparing, reviewing and delivering business and personal tax returns, packaging and pricing, proposals, and using agile methodology to accelerate the speed of change.
Observation No. 2: Commitment to the vision
Early innovation projects often had the majority (partners, managers and staff) sitting on the sidelines. Many firms utilized pilot projects. Today, a shared vision and plan with total commitment is required. Jim Collins often states, "It is not only getting the right people on the bus but also about getting them into the right seats."
More work needs to be done in the visioning and strategic planning area. Too often, firms don't take the time to think but simply spring into tactical mode. This is where checklists can be an advantage or a disadvantage.
Observation No. 3: Technology – fully operational systems or platforms
First came tools, applications and now cloud-based platforms. Accounting has suffered from "spreadsheet disease" for over 25 years. Spreadsheets have become the tool of choice for many accountants, yet to meet client needs and wants, the evolution is to an integrated cloud-based platform with data integration, process, workflow and document management, security and privacy as high priorities. Transactional and compliance-based tools/applications should be a part of the technology platform or stack.
Firms that can reduce or eliminate the time spent in data entry and reconciliations will have a competitive advantage over those with inefficient workflows and loops in their processes. One-way workflow is now imperative with real-time reporting. This advantage allows employees to focus more on the client experience and higher-value advisory and consulting services.
Observation No. 4: The business model
Four primary factors make the effort-based business model obsolete: technology, talent, marketing and sales. Visionaries saw this coming four or five decades ago with the introduction of computers into the accounting profession. The fact that technology is more exponential and nonlinear validates Ray Kurzweil's law of accelerating returns. Artificial intelligence is just one example. Firms need someone in charge of experimenting, staying up to date on capabilities and prioritizing opportunities, just as they need someone responsible and with authority to act regarding technology.
Technical professions typically undervalue marketing and sales. The prevalent sales strategy has been to rely on partners to cross-sell and bring in new clients. This has not been effective in most firms, so the movement has been to a replicable sales process utilized by trained sales professionals. Partners should be an integral part of the sales team but tend to under-scope and underprice.
Marketing goes beyond leveraging social media and focuses on messaging the advantage of multiple services ranging from transactional, compliance, advisory and consulting services. A target client utilizes three or more services, and three or more people in the firm have relationships with three or more members of the client's team (the 3x3x3 Rule). Packaging and pricing are critical components in developing your menu of services.
Observation No. 5: Seeking a competitive advantage
Attitudes and mindsets eventually change. A decade ago, many professionals were satisfied with keeping up with the competition. Today, that mindset has changed, and leaders demand a competitive advantage. Their approach is to define target clients, including niche industries/professions, and then focus on providing increased value to the top 20% of their client base. Other firms focus on adding services to the remaining 80%.
This strategy creates the "pull effect" where your best prospects (out of the 80%) want to become members of the top 20%.Another advantage is you have now focused on innovative services (strategic byproducts) rather than commoditized ones. This strategy allows for better margins while remaining future-ready. This is a difficult, if not impossible, task due to capacity and capability issues if you focus on the other 80%.
As Dan Sullivan says, "10x is easier than 2x." He didn't say 10x is easy, but having the right mindset will help you develop a competitive advantage.
Think — plan — grow!
