Moving from services to products
The four tenets of the Radical Firm gave us a strong foundation. We became disruptors; we turned the profession on its head. We transformed our firms both culturally and financially.
But now we’re going 2.0. We’re going next level. Are you ready?
This next phase goes beyond our business-model innovation. This is about how we create and develop our practice structure. Moving begins with thinking of yourself in a different way. Would you consider your firm agile? If you aren’t yet, how can you get there?
It begins with recognizing the need.
We can apply the term “agility” when we release a “good” product based on our core services but continually improve on it. We define it as a good product of our services because it inherently follows all regulatory rules and standards. We still uphold our ethics and all the other values of being a CPA. The only thing that really changes is how fast we can iterate new ideas.
If we take this mindset, we can continuously improve. If we continuously improve, we will always be relevant and we’ll always have new opportunities for innovation.
As you can imagine, this puts a new spin on change management. Change no longer becomes a goal to reach, or a well-defined process. The change and ability to deal with change is embedded in the culture of the firm. The technology that firms use fuels this continuous change, and because of this, the practitioners have more time and space for innovation. It’s this additional capacity that is by far the biggest benefit that agile firms reap. When you have capacity, it’s easier to improve. It’s easier to do other things. Capacity allows for more customer work. But it also allows for more innovation-driven product development.
THE WAY TO THE FUTURE
What I’ve realized is that firm management is evolving into product management.
Now hear me out, before you think I’m throwing service out the window.
Product management is what technology companies do when they create new technology. It’s the organizational life cycle dealing with the planning, the forecasting, the production and marketing of a product or products in all its stages.
If you look at this definition from Wikipedia, product management “integrates people, data, process and business systems.”
Isn’t that what we do as CPAs? Don’t we integrate people, data, process and business systems? Don’t we do this to provide the best service possible to our customers?
It’s a brain change.
We haven’t before thought of ourselves as a product. We always think of ourselves as selling service hours, but if you move to fixed pricing, or a value-pricing model, we’re in a whole different ball game. We’re selling a product now and, really, a result or even transformation. It’s like what Ron Baker of VeraSage said, “The customers become the product in a transformation.”
In a traditional CPA firm, most deals are structured on a combination of time and scope. As the scope of requirements increases, so does the time needed to deliver them, so the price goes up. In other words, the more work the customer wants done, the more they’ll have to pay. In this situation, the customer is incentivized to ask for less, while the firm is incentivized to find more work for more billing.
A productized service is organized differently. It’s designed to align the incentives of both the provider and the customer around one common purpose: to produce desirable results for the customer.
I’ve seen it happen time and time again with new software products that vendors have created for our firms. It starts with the CPA getting all excited about the tech. You know how it rolls out: “Yes, this is a problem,” says the CPA, “and I think this software can help my customer.” The CPA signs up for the trial. Then it stops there. A year later, the CPA isn’t using it and you can bet none of the CPA’s customers are using it. Yet if this vendor goes directly to the CPA’s customer with the product and it gets adopted, the CPA feels jilted.
And yes, sometimes that happens. In fact, it’s happening more and more. Then what? The CPA is out of the loop. And we know once that takes place, the stickiness of the customer to that CPA becomes, well, unstuck.
What if, instead of the scenario above, we stop? Pause and figure out the actual value of the tool attached to the value we as CPAs bring to the table. Then we take the software tool, the CPA, the process, and the data collection, and create a complete product solution … not just a software implementation. And it is marketed as one solution specifically directed to a specific market or niche.
We have the wrong idea on how to implement new tools today. We’ve been having a hard time developing a solution that can
really help us get closer to our customers. We need to step back and create a “productized service” for each new technology or service that gives us a complete result we choose to implement. This productized service needs to be for a specific customer as well. It must be customized yet standardized so that it is so perfect for a specific customer that it easily scales across that customer base. In our firms today, little is standardized or even customized with intention. It’s just a haphazard approach of different software and services.
We need to strategically think about the end user (customer), our price, our rollout, our value-add, our marketing and, most important, why our customer or a prospect could and would purchase this solution from us. The endgame is to align the incentives of both the provider and the customer around one common purpose, and product management does just that. Most important, it produces desirable results for the customer.
Are you willing to think differently and give it a try?