Boomer's Blueprint

When ‘how’ isn’t enough

Many CPA firms struggle to scale their advisory and consulting services, yet most have an advantageous position in the market. They have many of the technical skills but do not ask themselves and their clients the right questions to stimulate creativity and inspire innovation.

The gravity of the past is one of the biggest obstacles, as the toolsets and skill sets have changed from those required for transactional work.

Firms create value through leadership, relationships and creativity. Leadership provides direction; relationships provide confidence; and creativity provides new capabilities. Asking the right questions gives firms a competitive advantage as well as new revenue opportunities.

When questioning firm leaders about why their advisory and consulting services are not growing as rapidly as they would like, we usually hear two reasons:

1. We don’t have time; we are too busy doing transactional and compliance services.
2. Our people are more comfortable doing compliance work and less confident with consulting.

These two answers (plus the fact that partner compensation has remained at record levels) don’t motivate change, and we are talking about transformation. Something has to give, and firms generally need to stop doing something to transform.

A good analogy is picking $1 bills up off the floor when there are $100 bills on your desk. The mindset that transactional work is low-value bookkeeping is also an obstacle. Asking how the service can become more valuable to the client and more profitable to the firm can create the right environment for changes in processes, technology and mindsets.

To put this in perspective, think about how children learn before entering our school systems: They ask questions. In “A More Beautiful Question,” author Warren Berger writes how the power of inquiry sparks innovation.

Most firms know why they should transform and many understand the results of what happens if they don’t transform, yet many struggle with how to transform. The “how” question is definitely important, but many firms focus more on skillsets and toolsets than on mindsets and how to build a scalable and sustainable consulting practice.

The “who” question may be the most important question due to the fact that the answer may be multiple people with unique abilities — different people than those currently doing transactional and compliance work.

You have access to both internal and external resources. It also requires a leader and someone with a passion for making it happen. The biggest mistake many firms make is to expect the leader to take on this challenge while managing their book of existing clients and not providing the necessary resources to grow.

The leader and their unique-ability team must have a game-changer rather than a traditional success mindset. Some of the required mindsets members of the unique-ability team should have are:

  • Continuous learning. Many of the skills relate to accounting, but most require new capabilities that are beyond the scope of most accountants’ training. This includes project management, data analytics, marketing, sales, and the ability to leverage new technology. All members of the team require a dedication to continuous learning.
  • Continuous process improvement. New toolsets (technology) have automated most of the aggregation of data into a digital format, allowing automated workflow and increasingly accurate real-time data and information. Firms should continue to improve their processes to reduce cycle time and ensure accuracy of the data to provide the foundation for advisory and consulting services.
  • A future-focused rather than a historical perspective. Accuracy and immediacy of data determine the value of advisory and consulting services. In the past, firms were primarily interested in accuracy for compliance purposes. Today, that data has a new and higher value in the area of predictions, forecasting and business strategy. As data aggregation becomes more automated and compliance services are commoditized, firms can add value through leadership, relationships and creativity in the advisory and consulting services.
  • Team player. The desire to be a member of a unique-ability team has more value and sustainability than that of a rugged individual. Therefore, assessing skill requirements and looking at ways to add increased value from the client’s perspective are paramount. Coordinating multiple services and projects requires management and accountability.
  • Managerial versus financial reporting. The majority of CPAs in public practice are trained in compliance and financial reporting, yet many of the required skills for advisory and consulting services are more aligned with managerial accounting (the CGMA designation). This former training can be an obstacle or an advantage, determined by your mindset.
  • Investment versus overhead. Technology and talent should both be managed as strategic assets, rather than overhead. Yes, there are CPE education requirements focused primarily on technical skills. Most advisors and consultants invest in learning at three to 10 times the CPE requirements.
  • This requires reading, participating in peer workshops, and exploring the next new thing and related processes. Most CPAs are great at managing overhead but struggle with the time element of investments. Undoubtedly this is due to the “hours X dollars” business model of the past. We are in a results rather than effort economy.
  • Abundance versus scarcity. The abundance mentality is not easy for many who have struggled to get to their current position in life, yet technology is changing our capabilities and the way we work. It is also changing the business model from local and incremental to global and exponential. Potential clients and services are no longer limited to just your geography. Technology allows you to work from anywhere at any time. It also requires a unique-ability team rather than trying to do it all yourself. That team can and will probably be virtual.

To some, this may sound futuristic, but CPAs and their peers are successfully transforming themselves and their firms. Mindsets are more difficult than the required toolsets and skill sets.

Sustaining success and being future-ready should be all the motivation necessary for transformation. Just remember, you will have to give something up to take advantage of new opportunities.

Asking the right questions and finding the “who” will enable you to accelerate the process of transformation.

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