By Jody Padar
The Radical CPA
When I wrote "The Radical CPA," I thought that the four fundamental tenets would take us indefinitely into the future.
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But I realize now the future demands more than that.
Yes, the four fundamental tenets are part of the New Firm model. However, I think there’s a bigger overreaching process, aka management style, that needs to be defined.
It initially took me more than five years to develop and put into practice the ideas for the original Radical CPA book. The world was moving fast, but in the last two years it has been whizzing by. New technologies are coming out and being implemented like never before. Talent is demanding more. Processes and experiences need to be updated all the time. No longer is there an opportunity to wait till off-season to make a change.
Main Street America is also driving this change. Main Street businesses have a different expectation of what a CPA should be doing for them. This is driven by the consumer market, and also because Radical CPAs and vendors have pushed a new way of working and managing. As a result, our customers have new, more sophisticated and specific expectations.
Defining Radical Today
I still believe we should use the term Radical. Being Radical means being very different from what is traditional or ordinary. It also means, as we know, having extreme political or social views that are not shared by most people – no matter whether you’re conservative or liberal.
The term Radical still applies because what we’re doing to our firms and indirectly to the profession is fundamental to its core. It’s abrupt, disruptive, unexpected and far-reaching. We are (and have been) shaking up the status quo. However, if you’re new to this movement, you will learn that it’s not just drama for the sake of drama. We are changing because our customers and the world around us are changing, and demanding we change with them.
The rallying cry that I proclaimed for CPAs in my first book is still true today:
Why should I be Radical?
CPAs must be Radicalized so they cannot be lulled into complacency.
It’s as simple as that.
It’s a proactive approach to managing a practice, instead of being driven by a reaction in their current firm.
You already know the story: The silent majority of employees are suspicious of management and don’t feel heard. They see and experience the changes happening around them and they don’t understand the resistance to change from practice leaders. You may even be feeling this yourself within your firm of one. This toxic condition within many firms is corrosive and detrimental. Employee frustrations are still mounting to the point of verbalization and indifference. And remember, an employee who is indifferent is by far more destructive to a firm than the outspoken team member who is leading a revolt. They can’t wait any longer and neither could the initial core group of Radicals who started the movement years ago.
Today, however, I believe I have a stronger methodology to incorporate those four tenets and core principles. Innovation is not just a one-time business model change. I hate to say it, but the initial Radical changes we made to our firms will only take us so far. They were a solid beginning, but we have a lot more work to do.
As other firms adopt the tenets into their own practices, I see many firms imitating others online. This is not a bad thing, as I believe this is what will keep these firms increasingly relevant moving forward, but I think it’s a temporary solution. Innovation must be our best practices. We need to build it into our DNA.
How Market Demand Influences the Four Tenets
If you had asked me a few years ago how many firms were thinking about implementing value or fixed pricing, I would have said it was just a few.
Things are different today.
Firms are now learning about implementing new ways to price from big companies, such as Intuit, Xero and Sage. Those companies realize that the market has changed and therefore have invested their marketing dollars to help transform a traditional accounting firm to one that is relevant to today’s technology- and customer-driven environment. Of course, these vendors sell software, and this marketing push is to increase adoption of their cloud products. This isn’t a bad thing. With their marketing push comes education and more information for consumers to make smarter choices. As a result, small business owners now realize they have an alternative in how they work with a CPA. And that message is moving upstream as vendors such as Oracle, Microsoft and Gartner are now pushing for the cloud and digital transformation with their customers as well. This is truly a good thing.
The middleman is now becoming minimalized or nonexistent. Customers are going directly to the internet or cloud and asking for the online products they want and need. These customers are not innovators; they are Joe Small Business and Sally Midsized Business. For as much as I thought the Internet was already mainstream, now more than ever, there are greater expectations for what it can accomplish. Our mobile workforce and lifestyle is driving this. People use apps every day in their lives, and they want the same option for business. Every business owner, whether it be a small or midsized business, has an expectation of using simple apps to run their business. They see everyday experiences based in design thinking during multiple events throughout their day.
Consumers experience positive and negative interactions in both the physical and the internet world. Experiences are now being designed with a positive end in mind. Today’s consumer has a different expectation of service and delight, and if they love what they experience, they will socially share.
Consumers compare their experiences, including the one with their CPA, to all the other experiences that they have had previously.
And let’s be real: Our CPA experience is typically not up to par. This new world has created a hyperexpectation that we all must meet. It requires us to truly develop business transformation as part of our core and find a completely new way to run a firm.
The companies that have been able to deliver on that expectation are doing extremely well.
Technology vendors are being pushed in new ways. Yet only some are meeting the challenge.
What exactly is business transformation?
In Scott Anthony’s February 2016 Harvard Business Review article, “What Do You Really Mean by Business Transformation,” he talks about three different categories of effort:
- operational (what you are currently doing better, faster or cheaper),
- core transformation (what you are doing in a fundamentally different way) and
- strategic (how you are changing the essence of a company).
What I think is genius about Anthony’s differentiation of these three models is that they relate perfectly to how we run our accounting firms. Many CPAs are stuck in the operational model or, to put it another way, have just added in technology (like adopting the cloud) but really haven’t changed any of their processes. They are just adding expensive technology onto a broken firm model. It’s the Band-Aid approach.
Core transformation is where The Radical CPA model lives. Anthony points to Netflix as an example of this, as the company has moved away from sending DVDs through the mail to streaming video content via the web. It’s also transitioned from just distributing other entertaining content to creating its own. Netflix is a remarkable example of how tuning in to customer preferences informs new offerings and how it stays ahead of the curve. Wouldn’t you say the Radical CPAs have done this with accounting firms? I would.
The strategic model is our challenge. It’s the structure on how we build the New Firm 2.0. This is beyond what we already know. And as Anthony wrote, “Executed successfully, strategic transformation reinvigorates a company’s growth engine. Poor execution leads naysayers to pounce and complain that a company should have ‘stuck to its knitting.’”