Pathways to Growth
Reprinted with permission from Accounting Today
When working in the high tech sector, before the dot-com bust, we were engaged in sophisticated and powerful growth strategies. After the bust, it became apparent to me that these could be replicated within public accounting firms. I just had to understand how the model applied to the uniqueness of accounting firms in general, and to the needs of individual firms.
So, I brought over approaches that were successful in technology companies and committed to bringing the art and science of practice growth to forward-looking firms, helping them to pursue their Pathways to Growth.
The Test of Time
“The more things change, the more they remain the same,” the French proverb says. From the outset, my intent was to develop a set of evergreen strategies and tactics. A growth model based on foundational elements that could be leveraged regardless of market conditions to help a firm fare better than its peers. The approaches needed to be practical and not just theory.
I would like to, but cannot, say that I was prescient enough to anticipate the roller coaster ride of the next few years. After the dot com bubble burst, then the 9/11 terrorist attacks shook Wall Street to its core, creating a Tsunami-like effect throughout the financial world. Less than a year later, the executives of Arthur Andersen were found guilty of charges relating to the handling of the Enron account. The result was an upending of the accounting profession and a crisis of confidence in our financial institutions. A consistent growth model that could carry a firm through storms of this magnitude? Time would tell if it could work.
In fact, the model worked. It succeeded during the flush, post-SOX conditions of the mid-2000s and continues to pay off today as we manage through challenging market conditions – high levels of competition, reduced demand, discretionary projects in abeyance and general uncertainty about the future.
Think Football, not Golf
The first foundational element is to realize that this is a team sport – and to get our act together by clarifying and assigning team positions. This is SOP within successful corporations, but was more or less unknown in our profession.
CPAs typically pursue growth as an individual sport (think golf). I wanted them to learn to play a team sport (think football), with assigned roles for everyone.
Successful firms go to the market using the combined wisdom and expertise of all partners to figure out the compelling value that will resonate with the buyer. This does not diminish the value of a business developer, but it does require that partners learn and use marketing, selling and product management strategies.
Full, ongoing engagement in the growth process is standard in the corporate world. If a division of Success Company of America has developed a profitable widget, it does not shore up that division while permitting others to languish. Accounting firms tend to do this, emphasizing their construction or hospitality practice at the expense of other less-robust pursuits. A purposeful, committed attitude toward each focus area is essential. The old model in which a couple of rainmaking partners do the heavy lifting is no longer sustainable.
The second component in the growth formula is structuring a firm’s ability to focus in on a buyer group, becoming intimate with its challenges and culture. One mid-size firm came to me with a vague interest in growth. They had no pipeline and no sustained process to pursue opportunities. Today, the firm’s managing partner proactively drives the process based on an inventory of opportunities that is regularly reviewed, assessed and matched to tactics. They have dozens of partners in multiple locations on the phone together for 30 minutes every other week. They know what’s going on in every nook and cranny of their markets.
The partners continue to increase their expertise in identifying the value proposition that gives them the competitive edge. A pro-growth culture brings a laser-like focus to efforts within individual markets. Partners favor tools like in-depth interviews with would-be clients over generic socializing at Rotary breakfasts and Chamber dinners.
The third tenet takes the next step – developing the capacity to go beyond understanding the market you wish to master and getting inside it. Typically, CPA firms look inside out. They view themselves as expert in audit, SAS 70, etc. and anticipate that client needs will fall within these categories. But firms on the pathway to growth look from the outside in. They study and master their markets’ needs first, getting into the heads of their buyers and then matching those needs to the firm’s capabilities.
Case in point. A CPA firm that wished to penetrate the medical market had identified several specific offerings. Then they drilled down into the niche, learning through diverse techniques what physicians’ practices most needed. They determined that the top concerns were very specific, namely maintaining profitability, effective practice management and planning for the future.
Now the firm could tailor its expertise to these needs, becoming a solution provider rather than “a firm with good client service and capable partners.” They took this focus to the next level, presenting their offerings in language that mirrored the words doctors and practice managers use. Their services include healthcare accounting and the year-end financial review was renamed the annual checkup. The affinity they developed within the niche has been remarkable.
Here’s the Secret
While speaking on a panel to representatives from several firms I was asked recently, “Gale, what’s the secret of firms that continue to grow during challenging times?” I answered without hesitation. “They have a relentless, purposeful commitment to growth. It’s not enough to ‘give it their best.’ They look for a quantifiable end result – solid revenue growth and profitability.”
Firms must be hungry for growth and capable of pursuing it in a systematic clear-eyed manner regardless of the chaos or calm around them. No more random acts of networking. No more ganging up and descending upon a non-decision maker. No more burning the midnight oil on proposals they have no chance of winning. No more chasing opportunities in markets they don’t target. No more brochures full of chest-thumping. Getting all this right, now that’s the pathway to growth.