Is a legacy firm one that follows tradition, or one that’s interested in maintaining its legacy for years to come?
Most firm leaders today understand that modernizing and adapting is the real key to “legacy.” Business transformation is a process all firms can benefit from to secure a certain and successful future.
Why transform business processes and culture? Well, not only are new recruits from Gen Z and beyond demanding modern workplaces with a forward-thinking culture, but clients are seeking efficiency and added value like never before. With the added wrinkle of growing investor interest in the accounting arena, business model transformation is the smart way forward.
What is business model transformation?
When talking about business model transformation, I find it helpful to break the process down into steps. Ultimately, the goal of transforming a firm’s business model is to make a firm future-proof. This means securing the right talent, clients, technology and governance structure to ensure a firm’s success, both for the present and for future succession planning.
There are five key areas a firm needs to address when transforming business practices: strategy, talent, technology, governance and service offerings. Transformation will not look the same for every firm. The beginning of this process is always a conversation: What are our goals and priorities? From there, you can build a strategy that takes your firm where you want it to be.
The first step to transformation is to map out a pathway, or in other words, create a strategy. Change is right in front of you — listen to what your clients, as well as new recruits, are asking for. Gather firm leadership and plan to create a vision that is shared by all in the firm, one that can be understood and implemented by everyone in the organization.
This can be accomplished by asking lots of questions and creating space for conversation. This is, after all, how I get to know the firms I talk to every day — in-depth conversations with lots of listening. In these meetings, create open conditions where any idea is welcome. Allow conversations that expand everyone’s thinking and build on themselves. Encourage questions like “What do you mean by this?”, “What would that look like?”, and “Can you tell me more?” And trust the process.
Firm leaders should be mindful to inform, excite, empower and involve everyone in this process. Business transformation requires everyone to be on board, and on the same page.
When creating strategy, talent may be the centerpiece of the plan. Hiring the best accountants for your culture and clients, and making your firm attractive to those hires, is a great investment in the future of your organization. As a firm grows and evolves, and veteran staff retire, having a good flow of new thinkers ensures a firm continues to stay ahead of the curve.
Traditions of the past dictated a specific path for young accountants — graduate, find a good position at a large public firm, and build your career via the traditional pathway to partnership. Today, I see new graduates are looking first for firms that support a balanced lifestyle and offer interesting, rewarding work.
Business model transformation must include a serious look at technology within the organization. Clients today want everything now. They want their questions answered as they arise, and they want their firm to understand and anticipate their needs. A client dashboard can no longer be boilerplate, and neither can your approach.
It’s important to build a tech stack that helps staff be as efficient as possible and serves clients the best. But in today’s tech-enabled, remote-work environment, that’s a given — it’s also important to consider aspects like data security and cybersecurity insurance, for example, to avoid costly pitfalls that can arise from targeted attacks or a slipup from staff.
Some challenges I see to tech transformation within firms are typical across the board: budget constraints, lack of buy-in from leadership, and the need to prep staff with technical knowledge and training. But incremental changes are key here — everything doesn’t need to be done at once.
Evaluating governance structures at your firm shouldn’t be painful — it should simply be in service of supporting a firm with a clear vision (which comes from strategy). Does the firm leadership structure support efficient, strategic decision-making focused on long-term success? Does a model built around partner consensus aid or hinder decision making? A focus on governance is key especially when considering M&A or other types of investment in the firm such as private equity, which is on the rise.
Transformation sometimes involves becoming more specific in your vision and finding the niche that makes sense for your firm. This might be an industry niche you serve, or service offerings that focus on one accounting function or the other. I find that some helpful questions to ask in this area are: “Do clients pay for your time or your expertise?” or “Do your clients see you as a trusted adviser or a necessary evil?”
The answers will guide you into further interesting areas. When you review what you offer clients, recognize your strengths and where you could improve. When you review your pricing structure, look for ways to move from hourly billing to value pricing. There is a major need and opportunity to change billing structures to match new ways of delivering business — consider options ranging from flat rates and subscription pricing to monthly retainers paid through automatic bank drafts. Look for ways to move from providing compliance services to serving as a trusted partner, providing key advice that helps your clients run and grow their businesses better.
Transforming the way you do business at your firm is the next step in the evolution of the profession.
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