There has never been a time when carefully planning out the future of your firm has been so important, says Matt Rampe of Rosenberg Consulting, as he offers a roadmap for building the firm you want.
Transcription:
Dan Hood (00:03):
Welcome to On the Air with the Accounting Today. I'm editor-in-chief Dan Hood. We've said it before and we'll say it again and again and again until you all get what the program, no matter what size your program is, you need a strategic plan. You probably don't have one, and if you do, you're probably not really following it. It's sitting on a self somewhere, gathering dust. I here to talk about all that and why you should have a strategic plan. And what it should include is Matt Rampe. He's a partner at well-known consultants Rosenberg Associates. He's also the author of an upcoming book on strategic planning, which is appropriately enough called going to be called "CPA Firm Strategic Planning." It's coming out in November. Matt, thanks for joining us.
Matt Rampe (00:37):
Thanks for having me, Dan. Pleasure to be here.
Dan Hood (00:39):
Excellent. This topic, as I said, we've county, today's done surveys on this and inevitably we would discover that nowhere near enough firms have strategic plans and those that do aren't necessarily acting on them the way they should be. They make a nice document, they come up with a plan that may or may not be good, but then they'll never know because they leave it on the shelf. So I wanted to start by asking, why don't more firms have strategic plans? Why haven't they gone through this exercise?
Matt Rampe (01:04):
Absolutely. It's a great point and my background is in business valuation, so I'm a data guy at heart. You should know that about me. And so I did some research late last year around strategic planning and we did a survey and we asked people, what are the biggest pain points about your strategic planning? And the second most popular one was, we're too busy to do a strategic plan. A third of the respondent said, we're just too darn busy. And one of the comments said, once I get past busy season and hiring and all the whirlwinds, then I'll do the strategic plan. And I think the challenge is that it's the wrong ordering. It's the wrong ordering because the people who did the strategic plans and were successful said, because we have challenges, because we have staffing issues, because we have the whirlwind, we must do a strategic plan because that's where you solve those issues. Those are fundamental business issues and we like to say, and a lot of folks like to say, you need to be working on the business and not just in the business. And it really, when you boil it down, it's not about having time, it's about a mindset shift.
Dan Hood (02:10):
As you were talking, I'm like, wait, this is working on the business, not working in the business than it is as you say, a classic problem for coming firms. There's so much work to do that you never have a chance to think about, how do I do this work better, faster, less of it, do more of the work that I want to do? And as you say, it starts with the planning process. That gives you a chance to look at the work you're doing, for instance, and say, is this what we want to do? Or figure out ways to figure out ways to do it faster and then to build it into a part of a long-term plan that will put you in a better place than just being on the treadmill forever.
Matt Rampe (02:46):
And a lot of accountants have grown up as technicians. I mean, I think, I don't blame 'em either. I think a lot of accountants, you get trained in the technical, you grow up and are rewarded for the technical. Being a business owner comes for some, right. And I think for some maybe not so much or that's harder. So I think that's a challenge too. Not only do we have a lot of work, but the mindset, it is a shift and it's a skillset shift for some too.
Dan Hood (03:11):
Right. Well, and it's interesting because as you say, for the sort of technical work that the accountants doing, right, that's what they're good at. They're expert in, they've been well trained in it. And it involves, I'm sort of making a little bit of a leap here, here, but I don't think it's a crazy leap. Many of the things that will go into planning and engagement are with a slight tweak, the sorts of things you can think that can lead you to create a proper strategic plan. I mean, one of the things you're going to be advising your clients on their own strategic plans, but even just setting up an engagement and planning and setting up who's going to have input and what are we going to do? What's the scope of the thing? How long is it going to last? There are parallels there that if you applied some of that thinking to strategic planning and just gave yourself the time, it might be a little less of a scary exercise.
Matt Rampe (03:53):
For sure, for sure.
Dan Hood (03:56):
Excellent. Well, I have a sense that there's a degree to which strategic planning is, it's always been important for accounting firms. They always haven't done it enough, but there's sort of a sense for me at least that this is an even more important exercise for firms to engage in the current environment. Maybe we could talk a little bit about that. Do you think strategic planning is more important now than it's ever been? And if so, why? And if not, why not?
Matt Rampe (04:21):
I absolutely do, and I think as I've been doing a lot of strategic planning this year and as I've been recently telling my clients, when you step back and look at the accounting industry, we have a lot of things changing. And any one of those things alone would be enough to cause massive change in our industry. And we have four of or multiple happening all at the same time. So we have private equity coming in. You have AI and technology disruption, you have the staffing crisis, you have baby boomers retiring, you have offshoring. When you put all those together, we're really in a state of disruption in the industry and it's changing. So much is changing so fast, it sounds cliche, but there really is not a more important time than now to be if you haven't done it before, now is the time to be looking forward and thinking about the heart of strategic planning is thinking about our future and who do we want to become?
(05:16):
What is our place in the world? Where are we in the competitive landscape? What do we care about enough to go build? And I think this is the most important time to be thinking about that kind of stuff. cpa.com released a white paper or some research a couple of weeks ago and they said bookkeeping basically can now be fully automated and the individual tax return prep, some firm got it, 80% automated. So I think when you think about that, we're rapidly proving out that technology now, it's just going to cascade out to the industry if that's where a lot of your work comes from, you really have to think about who are we going to be in five years because the landscape is just changing so fast,
Dan Hood (06:02):
Right? Yeah. Well, and it's interesting because I liked your point about this is who do we want to be in the future? What kind of firm do we want to have? Because I think for when people think about that, the challenges in the current environment that are sort of requiring this kind of thinking about strategic planning, a lot of them are sort of, they're negative, they're disruption. It's PE coming in and changing a million things. It's AI coming in and automating away all the work that you're comfortable doing. But there's also a lot of elements around new stuff that's very exciting and new opportunities for accountants minimum. I'm thinking just cas for instance, as an opportunity area for firms to be thinking about and do you want to pursue that inhouse strongly, ESG attest services using AI to bolster or create whole new services? There's a tremendous number of great opportunities out there for firms that are sort of feeling overwhelmed by all the challenges. Maybe one way to rephrase it, reframe it is to think about you've got to have a plan to make sure that you're making the most of all these opportunities as well. Otherwise you may miss them or you may stumble into them late or
Matt Rampe (07:04):
Yeah, absolutely. And I think something I always poke on with my firms is what do you want to do account. There's a lot of latitude. I think to your point, it's not all doom and gloom or about like, oh, you need to catch up. Whatever plan you come up with, your team is going to own it. Your team is going to put in the time and energy and effort to make it real. What's a vision that you care about? What's a vision that you would be excited to be a part of? I think that's really where I try to get with firms too, is the aspirational side. Like you said, Dan, I think it's super important. If it's not aspirational, you're not going to do it. Well, I'm the thing that you do care about and then you're probably going to perform better on it anyway.
Dan Hood (07:46):
Right? Right. Yeah. Well, I mean that's, you've got to wonder how many of those strategic plans that are sitting on the shelf gathering dust are purely defensive or purely they're not aspirational. They don't give you great goals and exciting goals to aim for. I think we made a pretty strong case. You've made a pretty strong case for the need for strategic planning, why it's particularly important in the current environment and I think it's safe to say as all the things we talked about, none of those are going away. The pace of change isn't going to get any slower. The amount of change facing accounting firms isn't going to get any slower. So the notion you need to have some kind of plan to be ready to deal with it, I think stagger that pretty well. Let's switch to talk about how you go about actually creating a strategic plan and maybe particularly a strategic plan that's going to be fit for purpose, that's going to meet the needs of the current day. How do you leverage the major opportunities accountants face while also navigating around or through or whatever the disruption? So let's start with there, how do you create a strategic plan? That's a huge thing. I realize we have 10 to 11 hours to go through the whole time.
Matt Rampe (08:53):
Lemme give you a chapter one or
Dan Hood (08:54):
17. Yeah, it's 60 seconds. How do I make a strategic plan?
Matt Rampe (08:58):
As you alluded to earlier, Dan, I do have a book. So the long version, the 120 page version is coming out in November. I do go into actually a lot of detail and breakdown what is the process so you can do it too, but I'll give you the kind of snapshot view of our process and I think it encompasses a lot of the way that you could think about it on your own or other folks do it. There's different elements. We call it the five I system at Rosenberg and we have five eyes that we use and five major questions that guide each phase. The first one is initiate what do we want to accomplish? This is before we ever get in the room, I like to ask on the first call, what's the most important part of this? Not every strategic planning has to have the same focus.
(09:45):
I like to surface one or the one or two major things. Is it succession, is it technology? Is it m and a strategy? Is it pricing and client mix? There's usually one or two major pain points or opportunities that a firm really needs to focus on. And so in the pre-work, I want to hone that down. We might talk to the partners or talk to the managers and really surface up, do some benchmarking, stuff like that, gather some data so we've got a good organized agenda that really is going to meet their needs. And then when we get into the room, identify your strengths is the first one. So I like to start on a strength-based foot. A lot of accounting is we're trained to fix mistakes, but we want to celebrate the wins. You've probably done a lot in your firm, you probably have a great history, you gave great client service.
(10:37):
We would take a moment to celebrate those and understand the best of our past. If we're going to create a compelling future, we have to know who we weep in at our best. From there we go into opportunities and those challenges and say what is going on in the market update or opportunities that people are seeing and talk about that. And from there we're pretty well set to get into a vision to say, okay, well if we given the past, given the opportunities, who do we want to be? What are the important elements? What does that look like? And that's usually where we'll spend a lot of time. We might have some robust debates about things of where we want to land as a group on certain issues that are tricky. And then when we get aligned on a vision, the fourth one is innovate.
(11:21):
How do we break this into major pillars or initiatives? I don't want to leave and give you 72 to dos because it's not going to work. I just know from experience it ain't going to work. But if I give you four major priorities that have project plans and clear leadership and accountability, that's a much more likely thing to get done and more palatable. And the last one is implement, and that's where we really go all the way down to who's going to do what by when action items, dates to support those plans. And that can also extend outside of the room to the next process or the rest of the year or to the next year, whatever you want to say. But to your point earlier, where does strategic planning fail? It fails in execution. So we have a process around in the room and outside the room and execution that makes a nice kind of cycle of what's important. We get in the room, we talk about the important things and we have accountability that loops to the next process.
Dan Hood (12:19):
Gotcha. Very cool. That's a neat outline of the process. As you say, they can get all the fill in all the details when the book comes out in November. I want to dive into a couple of specific issues that I think a lot of firms run into or have questions about when it comes to a strategic planning process per se, but we're going to take a quick break first. Alright, and we're back. We're talking with Matt Rampe of Rosenberg Associates. He's the author of a book coming out in November on CPA, strategic Strategic Planning for CPA firms. We're getting a little preview of some of the strategies and tactics and so on that he's going to be talking about in that book, A brief outline of the much greater level of detail that's going to be in there. But for now, if we're looking at that process you were describing for thinking about your strategic plan, going into the meetings to establish it and then coming out of it with accountability and a roadmap to implementation, one question that I started want to bring up is who gets input to the strategic plan? Who gets to have a say in it? Who do you talk to about it? Who gets to weigh in on you talking about what are the firm's strengths? What's its history? What are the things we can do, but also what do we want to do? What are we worried about? Who gets to determine all that?
Matt Rampe (13:39):
That issue comes up a lot, Dan, I'm glad you brought it up. And sometimes people have, I had one firm that I worked with the two years before me, they said we cried, we cried in the meeting and not happy tears, Dan, not happy tears. You got to be careful when you ask for input, you might get it. And I'm a big fan of getting input from as many people as you can or as diverse kind of population. I think there's a lot of healthy reasons for that because you get different perspectives. Ultimately, I'll tell you how in a second, how do we do that? But there's a lot of generational stuff happening too, and we want to know in future leaders, we want everyone to be engaged Whenever we get the vision, we want the whole firm to be engaged and bought into it.
(14:26):
So asking input is an easy way to, one, get a vision that people really are aligned to, and two, get them bought in on the other side. So then we go to the practical question, well that's great. How do you do that? I can't easily put 70 people in a room or how do you make a decision when you've got everybody in their brother in that room? I don't usually put people in the room all the time. You can. There's ways you could do that, but especially if the issues are more sensitive, a practical way to do it is to do online surveys in advance or some sort of pre-work. I will ask all the managers typically, what are the opportunities from your point of view? What are the strengths from your point of view? What do you want? What is your vision from where you're sitting and is there anything else on your mind, anything that we haven't even thought about that the partners should know about?
(15:15):
But then it becomes consolidated and I say it's anonymous and I'm going to put it into themes. And I think there's a difference in what you're promising, setting expectations with those folks to say, I'm not saying I'm not giving you a magic wand where when you say, I want a gumball machine, the partners are going to go make a gumball machine. I am saying, if you're concerned about burnout, I'm going to relay that and we're going to take that into our conversation. And I think when you start to bubble up feedback into themes like that, it becomes very one insightful, but two, you can start to act on. It comes out of the crazy edge cases into more like, okay, people want work-life balance. People want good clients to work with. People want reasonable hours, people want good compensation. The partners want profitability and growth. These things are not surprising. So that stuff comes out. So managing the process can help a lot, but then on the back end you can communicate, we heard you, we listened, we baked it into the vision and this is where you're going to see it connected to the vision.
Dan Hood (16:22):
Yeah, no, that's got to be word. I will say though, that achieving work-life balance versus buying a gumball machine, it would seem to me like buying a gumball machine is really the easy lift there, but I understand not everyone's going to want different flavors of gumball. It's going to get complicated, but I think that's an excellent point. I mean that whatever whoever's input you receive, you do two things. One, you make clear how far they get to take you say you don't get to determine everything the firm's going to do, but also that you then reflect that you've heard it and wherever possible reflect where it's reflected in the plan. Because the interesting thing, you talk about future leaders, if you're building the firm of the future, they're the ones who are going to be running it, so you want them to at least be somewhat engaged, right?
Matt Rampe (17:04):
Absolutely. Absolutely. And I think that also helps shift the mindset from it's two days in a conference room to this is a change cycle. The way I think about it's you're running a full year change cycle and you have to happen to have some intense work periods, but you're really thinking about how do we do the activities that'll make us who we want to be? And part of that is communicating out through the whole organization ongoing of here are the changes, here are the wins, here's what you said here is, and you're becoming that future leader that you want it to be.
Dan Hood (17:38):
Right Now, I may be reading into your comment there a little more than you mean, but you say full year change cycle. Would we suggest that people revisit their strategic plan on a yearly or a different regular basis or how often should they be going back and looking at that?
Matt Rampe (17:53):
Yeah, I would say to do some kind of event, whether it's strategic planning or you want to call it a partner retreat or whatever on an annual cycle, I'm a fan of that. Some of the firms that got the best results in our research did an annual cycle, and I think the reason I like that is you might not do a full five year look every year, but I think it helps to pop back up every year and say like, here's the five year and then we're going to do a one year sort of sprint, if you will, and then we're going to reassess and we're going to see if maybe the market's changed, maybe something internal has changed or maybe we're on course and then we're going to do a year and then we're going to look back. And so I think that some firms do it let's say every four years, but then it really becomes disconnected. You sort of lose the thread before too long and the accountability goes wonky. So I think if it's coming, it becomes more like clockwork and it's like, okay, every year we set the major goals and we do the major goals and we see how it went, and then we set the major goals, et cetera.
Dan Hood (18:54):
And if it's beyond more than a year, right, you're running out of a chances to course correct on a five year plan, you can find yourself well off four and a half years at it and go, wow, we didn't achieve anything or totally. We've suddenly become an entirely different firm than we expected to be.
(19:11):
You had mentioned sensitive issues, which are obviously this is stuff that's going to come up tier sometimes, but there are a lot, I mean there's a lot of sensitive issues that are probably good you're going to want to reserve for the partner group I would assume, but it's things like compensation, it's things like accountability. One of the big problems a lot of accounting firms have, particularly as they grow, is that point where which you start to say, okay, we're all partners here, but some of us have to answer to other partners, and some of us may not be being as accountable as we want and some of our units may not be performing the way we need them to, or some of us are not firing the clients. I can go on for a long list there, but all kinds of sensitive issues that are going to come up at least at some point in a strategic planning process. How do you handle that one? I mean, accountants are past masters at glossing over this kind of stuff or just avoiding it entirely as most people are to be fair. But how do you make sure that the important sensitive issues get surfaced and handled?
Matt Rampe (20:06):
Yeah, I think that's a huge question and I think you're right. I think CPAs, and again, probably most people, but CPAs more than most are not trying to run towards conflict. And if, as I tell folks, if you sweep things under the rug, you get a lumpy rug. So it doesn't make it go away. And sometimes that's why I am brought in is to help people have a conversation with each other. That's difficult. Succession is one that comes to mind that I've been working on with some firms recently where although it feels like it shouldn't be that hard to tell somebody you've worked with for a long time that they need to leave. There's a lot of emotional, the logic is clear, the emotion, it's rich with avoidance or difficulty or layers. So the first thing is a hundred percent you have to deal with it head on.
(20:58):
You can't pull the punch. You have to. I talk a lot about psychological safety. We have to be very honest and very respectful with each other. Is the baseline for these conversations to be effective. I think that's where you can bring in a facilitator or for yourself, have at least one human in that room who's pretty good at a hard conversation, pick up your radical candor or your difficult conversation book of choice and pick a good framework. But I think often it's like start with observations. Don't attack the person and say, you lazy slob, that's going to get your shouting match going real quick and shut down the rest of the afternoon. Start with observations. Hey Bill, I see that you're retiring in seven months from mandatory retirement. I understand that the clients haven't been transitioned and you haven't notified them yet. You can go to your feelings, how that makes you feel in a kind of work context.
(21:55):
I feel nervous and anxious when I think about that and a little bit sad, but I'm hopeful we can do this together. Go to your needs, what the business needs and what I need is some clarity about the plan, and we need continuity for the team, for the partners and for the clients. Go to an action specific request and action. Would you work with me on a client transition plan for your 10 most major clients? And again, insert whatever framework you want to use, but I think there are ways to have that conversation in a non-defensive way and you got to wrestle it to the ground. There's no one in Vista. I did litigation support for a while, so I got real used to those conversations. Just got to wrestle it to the ground and then you'll be better on the other side.
Dan Hood (22:44):
Right, right. Yeah, it's maybe a short, sharp, a bit of unpleasantness, but it beats 5, 10, 15 years of dragged out annoyance and unhappiness and discord amongst the firm. Let's talk about one of the most important problems with any set of plans, regardless, strategic plan or any kind of engagement plan, anything like that is getting the implementation, the execution rate. You talked about execution being a particular problem with strategic planning. What are sort of the major pitfalls that go into the, what are the things firms need to most avoid to worry about to make sure that their strategic plan gets enacted in something like the shape they hope it to?
Matt Rampe (23:27):
Yeah, so that was our number one pain point with 63. Almost two thirds of firms said strategic planning fails in execution. It wasn't that they had the wrong ideas or whatever. So we dug in a little bit and we asked people, would you rate your plan successful or not? And the people who've rated it successful also rated accountability as very high. So one of the antidotes to how do you make it not fail on execution is high level of accountability. What does that look like? I think specificity, this is where you kind of, it's kind of two things. One, project management stuff of who's going to do what specific task that's measurable by a specific date. Being very clear about those things. I think a lot of people are like, Dan, you're going to run with that and I'm going to run with this thing.
(24:22):
And we're like, we're good. But I think making it very clear in sort of project management sense, and that's where we'll pull in our one year project plans around those strategic priority areas and we'll make it very detailed. So I think that's one thing. Another loop is accountability at the partner level. How does that work? What is the process? Does the managing partner meet with the partner or the partner in charge or where does the responsibility live and how many meetings are they having? If you meet every six months or nine months or you're like, well check in next year, you're going to miss the course corrections, who has to be frequent enough? If it feels like a pain in the butt, remind yourself that this is the most valuable work. You're working on the business. It's going to take time, it will take time, it will take effort.
(25:11):
I think the last part about accountability, which really is the core of all of this is leadership. At the end of the day, the leader or leaders or leadership team has to make a choice that we will get this done. We are committed to getting this done. We're going to follow up with people, we're going to push through challenges. We're going to cajole politely, cajole or champion or help or support or whatever it is to really make it get done. One of the guys we interviewed for the research was a very successful managing partner, and he said, if we write it down as a goal at strategic planning, we'd just make sure it happens. It's just that simple. The expectation is it shall get done. And I think that's where you don't have the excuse of like, oh, I got busy or the clients or the whatever.
(25:59):
It's like, I don't care what happens within human reason, we're going to get it done. So there's a commitment. I think one last thing on accountability that also supports it's, I think do those things first, partner compensation is a strong tool. It's not a cure all, but if you've done all the hard work to do the strategic plan, you've got the alignment, you've got the detailed project plans. If you then pay your partners to do something different, that's a problem. You're pulling them in a different, you've got competing systems, you're pulling them in a different direction. You're either pulling them off course or just not, or penalizing them if you don't pay 'em for it. You're penalizing them for spending time on nights and weekends on strategic planning, but they're not getting a reward. So I think ideally, in the best case, some amount of compensation, if not a meaningful amount of compensation is attached to the accomplishment, successful accomplishment of the strategic plan, and then you've got that nice alignment that will drive people to remember it and try their best to accomplish it.
Dan Hood (27:09):
As I said, we could spend 10 to 11 to 12 hours talking about this. We don't unfortunately have 10 or 11 or 12 hours in the podcast. But I do want to ask one sort of last question about that just because talking about accountability and the importance of that, how much of that, do we just assume that this is all going to fall on the managing partner, or does it often fall on the managing partner to sort of hold everyone accountable, or are there ways to make it so that everybody is holding everybody accountable?
Matt Rampe (27:33):
It's a good question. I think I want to mix. I want to mix in that I want to spread the workout. From my perspective, how I go about it is I want to share the ownership of the plan and give it to all the partners to have some touch or some area, probably a more specific area, like somebody might be on the staffing area or somebody might be on technology or somebody who's on whatever, building out the niche. So the partner has responsibility. That's not so gigantic, but that if that partner then reports to all partners, I feel like that gets real muddy. So I want either the executive committee or the managing partner to have ultimate authority. Maybe there's a better phrase, Dan. I always think of one neck to choke, and
Dan Hood (28:26):
It's a little Caligula for the average firm, but it lets people know you're serious.
Matt Rampe (28:32):
It's the point across, but I want one person, and sometimes we'll be engaged to help hold the accountability, and I want to be able to go to that one person and say, what are you doing? You're not doing the work, but you're making sure the work is getting done. Who is that one for? Maybe three or five if it's the ec, but a small number of people who really is then driving the work delivered by a wider group of folks is how I like to do it.
Dan Hood (28:59):
Right. No, that certainly makes sense. I mean, the more diffuse responsibility is for these goals, the easier it is to, I don't want to say dodge it, but the easier it is to start to be like, well, I can't do it this month. Someone else will pay attention to it. This I'll get to it after. Exactly. Susan is always trouble. I've never liked her. But yeah, no, I think it's an excellent point, and it's all about that level of accountability is crucial element for this. As I say, we could go on and on and on. There's a lot more to talk about, but we're going to have to leave it for now because we've run out of time. So I'm going to say that come November, you should look for the book all about CPA, affirm Strategic Planning by Matt Rampe. Matt, thanks for joining us.
Matt Rampe (29:39):
Thanks so much for having me, Dan,
Dan Hood (29:41):
And thank you all for listening. This episode of the Air was produced by Accounting Today with audio production by Adnan K. Ready to review us on your favorite podcast platform and see the rest of our content on accounting today.com. Thanks again to our guest, and thank you for listening.