The Value of Innovation
It’s long been my view that the accounting profession is one primarily made up of followers. I don’t mean that in terms of leadership – there are plenty of fantastic leaders at firms all over the country – I mean it in terms of innovation. The majority of firms are most comfortable when they’re following a clear path, not blazing a new trail.
This is nothing new: it’s been this way for my entire 44-year career in public accounting. And there are all kinds of reasons that firms operate this way. But the industry is changing. Firms that fail to innovate will stagnate and ultimately be replaced by more entrepreneurial firms that aren’t afraid to pioneer new ways to better service clients.
Exploring the Reluctance to Innovate
Public accounting is highly regulated: accountants have a clear set of rules that we have to comply with. Of course, you can create value by strategizing effective plans for clients that work within the bounds of these rules, and many firms have seen success with the approach. But in the future, the real value creation opportunity lies in thinking outside of these boundaries.
Few firms understand the value of innovation, instead preferring to follow a proven approach to operating. This results in predictable revenue and minimal risk but rarely unlocks game-changing opportunities. Innovations don’t tend to be viewed favorably, and there’s often resistance to new ways of doing things. It’s something I’ve experienced first-hand through my experience with the Managing Partner Bootcamp.
When I started the Managing Partner Bootcamp, I had 27 years of experience as a managing partner. I’d grown my firm from a small family business into the 37th largest accounting and advisory firm in the country, taking revenues from $225,000 to close to $100 million.
After successfully selling the firm to BDO in 2014, I wanted to share my knowledge and experience with emerging leaders in the industry. But when I started the Managing Partner Bootcamp, I couldn’t get anyone to attend. Nobody wanted to take the risk of spending money sending their people to a bootcamp nobody had ever done before – regardless of my track record.
I gave away scholarships to the first nine Managing Partner Bootcamp attendees, and since then we haven’t looked back. Today, we sell out every Bootcamp. That’s because this isn’t a new concept anymore: it’s a proven approach to upskilling your leaders. We’ve got a list of 120 firms from all over the world that have sent partners to Managing Partner Bootcamp to prove it.
Innovation is difficult, and there’s no denying it can be a risk to step outside of your comfort zone. But fortune favors the bold. There’s no shortage of ways firms can innovate: marketing, human capital, the way you service clients, and much more. The most exciting firms of today are doing exactly that, and to me, it’s clear that this is a strategy that’s going to see them evolve into industry leaders in years to come.
What can we learn from them?
If You Want to Be Better, Be Different
It’s possible to be better by excelling in a particular service area, but the reality is that everyone else is trying to do that too. One of the keys to building differentiation is to operate in verticals or service areas that other firms don’t really compete in.
Throughout my career, I’ve worked with hundreds of firms. A lot of them are very similar: they have the same business model, organizational structure, and website. Often, their biggest point of differentiation is their location. While many firms do well with this proven approach, the truth is they could be doing much better.
One of the most exciting elements of what I do is working with leaders who are pushing the boundaries of what a CPA firm does. I’ve seen people start up their own firms (a rarity these days), and build them into multi-million dollar practices by taking an entirely fresh approach. These firms are led by visionary leaders who aren’t afraid to take calculated risks and challenge industry norms.
Building a Digital Moat
One thing that many of these exciting new firms have in common is that they’re succeeding in building digital relationships with their clients. The accounting profession has been relationship-driven for hundreds of years, but the world is changing fast, and relationships are rapidly moving online.
Now, when people need a CPA, they’re not necessarily asking their banker or their lawyer for a recommendation. Instead, they’re turning to Google and making the decision for themselves. More often than not, they’ll go with the firm that has established domain expertise in the area of accounting they need help with.
Building this digital moat takes commitment, but over time, it cements your firm’s position as a leader. This demands a strategic approach, with a well-defined, data-driven plan that outlines a cohesive path to establishing authority in your domain.
At Winding River Consulting, our mission is to guide the firms of today to a more prosperous tomorrow. We work with a range of top accounting firms across the country, acting as a trusted advisor in areas including strategic growth, firm strategy, and leadership development.
Interested in working with us to unlock the value of innovation for your firm? Contact us today.