How might it be in 2023 and how to get there — part 2

By Jim Stelten, CPA, partner, BerganKDV

The CPA profession is undergoing the most significant transformation ever in the next five-plus years!  This is an exciting time for all of us -- at every level. It is also a time of concern for leaders as they make decisions about their firm's future direction.

This is the second article of a two-part series intended for leaders, partners and staff -- to envision the future and to learn how we all have a role in helping take next steps in shaping our firm's future.  

What is creating the need to transform?

This transformation will result from the disruptive effect of artificial intelligence, machine learning and big data converging, to only name a few. Many current CPA compliance activities will be performed by artificial intelligence-based programs.

In addition, as blockchain technology continues to evolve and become commercialized, it will also have a significant impact on CPA firm attest services as we know them today.

According to Barry Melancon, CEO of the AICPA, "We will not recognize our profession in the next 10 years. ... I said 10 years so it wouldn't scare you so much. It will probably be unrecognizable in five." Melancon went on to say, "Most of you think your competition is the firm down the street, but it may well be a company that doesn't exist yet."

What else might we be doing?

This is where it gets exciting. In the not-too-distant future, we will have extra time to become even more relevant to clients by solving problems, creating opportunities, saving them time and helping reduce risk.  

Expect firms to create deeper industry expertise to bring insights regarding how their clients can change "What is going to happen?" versus "What did happen?" Some firms will provide enhanced risk assessment and risk monitoring solutions.  Some will create advisory services using big data analytic tools not only in finance, but talent management, operations and other parts of client business.  

There will also be more opportunity for assurance solutions for systems, process and controls -- including in the blockchain. Firms will pivot to provide more technology solutions including cloud applications and software robots to lean out client-accounting departments.

There will continue to be client needs for business transition. Firms will still provide tax consulting/compliance work, financial statement attestation services, wealth-management solutions and client-accounting solutions. These will all be performed using new tools that will create greater efficiencies and require different staffing models than what we have today.

The answers and direction are not obvious

Know that most CPA firm leaders and their management teams don't have the answers on what to do regarding a transformation for their firm; many are stuck trying to determine a next step to get going. There is no playbook that has been scripted for firms to follow -- and each firm will be different. Even the brightest thought-leaders in our industry and other industries are not able to predict exactly how things will be in five years' time.

Some things seem certain, though, based on several current macro trends: There are some big digital technologies converging in sheer numbers and at a pace that is unprecedented. And, some firms will mobilize and align their team members to transform to new heights. Those firms will realize the significant benefits of a more engaged culture, raving clients and profits better than their peers. It seems that firm's biggest enemy today is passage of time and inaction.

Where to start for staff, seniors, managers and partners? 

  • Dedicate some time to educate yourself on the change coming. What might be one opportunity for your firm? What things interest you? There is much out there to consume online and in seminars.
  • Help create a sense of urgency. Continually ask your leaders what their next step is on their journey to pivot or not. Offer to help or be a sounding board.
  • Support those involved in helping your firm innovate and ultimately cast a vision for your firm's future. This isn't going to be easy for them.
  • Partners retiring in the next three to five years. Support the investment of time and resources that will affect firm profits to explore alternatives. Encourage some level of risk taking and entrepreneurialism for the long term.

Be curious, be open to new ideas and be pushy -- all for the benefit of your firm's future.

Where to start for leadership?

Leadership includes managing partners, executive teams, leadership teams, boards of directors and advisory boards -- all depending on your firm governance structure.

  • Make discussion about converging technologies and your firm's future direction a priority. Consider having it on all future meeting agendas for your leadership team meetings, partner meetings and partner retreats.
  • Commit to a process to align your teams, innovate and ultimately pivot your business model so you take advantage of the converging technologies. There are several processes out there.  
  • Assign accountability to someone who has the passion and energy, aptitude and time to own leading your firm through the process immediately above. This is not a "do it when you have time" job; there is much riding on the outcome to your firm's future value and relevance. Also, the time to begin your pivot is already here.

    This role is to not do it all. The role is to be the facilitator, aggregator, collaborator and, at times, taskmaster to make sure things keep on track and issues get elevated and resolved. Some firms and companies have already created roles for this innovation -- some call it Chief Innovation Officer, Partner in Charge of Innovation, Growth Officer, etc.
  • Determine if innovation work is done in your formal or an informal structure. Your innovation work involves ideation, trying things and research and development. Your formal organization structure that you're running your firm on today is generally set up to execute. A structure to execute versus a structure to innovate are very different. So are the people who thrive in each.

    The formal structure can kill innovation -- unintentionally. One example is the formal structure tends to prioritize "execution type matters" that need to get done higher than innovation work.

    Know that any work done in your informal structure needs to ultimately be brought back to the formal structure to collaborate on implementation issues, get buy-in and alignment.  

    John Kotter, a change management guru wrote a book ("Accelerate") on how to create an informal structure to work alongside the formal structure to be more agile, capitalize on opportunities with greater speed and innovate.

    Think of the two structures as two twisted strands that form the shape of a DNA molecule. Both are extremely critical and dependent upon each other.
  • Get help. There are many good consultants in our industry who can help guide your firm through these choppy waters. Consider also forming an advisory board that has individuals who have undergone business pivots and transformations. We don't do this type of work every day, so there is a chance we may not get it right and we might only get one chance at getting it right!

Make relevancy of your firm the No. 1 priority above all other priorities, including execution of current plans. Why? If you don't know where you are going, you may just execute your way off a cliff. Both innovating to become relevant and executing on your existing business plan need to be done simultaneously.  

Imagine

Imagine what your firm will feel like in 2023. You will have worked through some tough issues regarding how to remain relevant for your clients. You will have some new talent that has joined your firm that bring different skill sets and different thought processes that when added to your current talent make you much stronger. Your clients see you as someone they can't be without -- you are impacting their business. And, the value of your firm has gone up significantly!

All the above can be done and several of you will do it.

Jim Stelten, CPA is an innovation, growth and customer experience partner with BerganKDV. You may reach him at jim.stelten@bergankdv.com.