The Accounting Profession

I have been a student observing this industry for over 40 years and progress on developing a strategic advantage has been very slow, in part, because there has been little pressure to change. It has been more about fiddling at the edges rather than transformation. In recent months, or perhaps it has only been recently that I have noticed it, there seems to be some acceleration in some parts of the profession.

I have always thought that there were two pressing needs in the typical accounting firm, firstly to develop a production culture with regard to producing compliance reports, and secondly, to introduce value-added services to help clients generate more profit and growth. I have to say the success in both areas has been limited but more effort has been invested in the value added services and sales process.

I know believe it is difficult to do either strategy, and virtually impossible to do a good job of both. The main reason for this is the culture and the processes for production is so different to that required for value-added services. I have observed in recent months an increased amount of mergers (really take-overs) as good firms try to get bigger. The challenge for firms on the acquisition path is to have the leadership needed to manage something bigger. By leadership I don't mean just leaders, I mean the whole leadership structure and processes.

Having said that, the leaders that come front of mind doing this are very capable people, I worry about the (lack of) depth behind them. If they get it wrong divesting will fix it so hopefully no permanent damage done. The real cost will be the loss of confidence to try it again! Then there is the issue of will they step up the production culture or just try harder doing more work using the same inefficient processes they always have?

I think there is a huge opportunity for the smaller firms, I am thinking less than 20 Partners, to become a boutique full-service firm. My vision is $1 of value-added fees for every $1 of compliance fees (for a start at least). What needs to change? Firstly, the majority of Partners need to sign of for it. Secondly, the skills and confidence in delivering value-added services needs a massive step-change. Then we need a better sales process and pipeline. We can throw away time sheets. Sounds pretty exciting to me.

Sure these smaller firm should not be able to match the production costs of the big firms but that assumes the big firms can do it right and I'm not confident about that. The key point is the value-added services that will be the magnet that attracts and retains good clients so the accounting firm can still make a margin on compliance.

Who will have the courage to take this one rather than fiddling at the edges? If I owned an accounting firm, a boutique, full-service, strategy sounds exciting, and, of most importance significant value to the clients.