As AI automates compliance, value shifts to measurable outcomes and client aspirations.
This is a preview. The complete episode is first available exclusively to PRO Members | Go PRO here
Sponsored by The Balanced Millionaire: The Advisor Edition by Dr. Jackie Meyer | See Today’s Special Offer
Subscribe to CPA Trendlines podcasts anywhere: Apple, Google/YouTube, Spotify, iHeart, Deezer, Amazon Music, Audible, Player FM, Audacy, RSS.
Gear Up for Growth
With Jean Caragher
For CPA Trendlines
Author and strategist B. Joseph Pine II urges accounting firm leaders to confront a fundamental question: What business are you really in?
MORE Jean Caragher here | Get her best-selling handbook, The 90-Day Marketing Plan for CPA Firms, here | MORE Gear Up for Growth | MORE CPA Trendlines videos and podcasts here
According to Pine, the profession is approaching a critical inflection point as the global economy moves beyond goods, services, and even experiences, into what he calls the transformation economy.
“You use experiences as a raw material to guide people to change, to help them achieve their aspirations,” Pine tells Gear Up for Growth host Jean Caragher, president of Capstone Marketing. This shift, he explains, requires firms to move beyond simply delivering accounting work efficiently to helping clients achieve meaningful, measurable change.
Commoditization is not a market accident. It’s a signal that firms have failed to differentiate their value. “If you’re being bought on price, that’s the first signal that you’re being commoditized,” he says.
As compliance work becomes increasingly standardized and automated, firms that compete primarily on cost face shrinking margins and weakened client relationships.
Outcome-Based Pricing as a Competitive Advantage
Pine argues that pricing tied to outcomes, such as growth, profitability, or cost savings, not only better aligns with client value but also forces firms to change how they operate.
“Charging for outcomes is a catalytic mechanism,” Pine says. “It forces you to do what it takes to actually achieve the result.”
While acknowledging that outcome-based pricing can feel risky, Pine emphasizes that firms don’t need to abandon hourly billing overnight. Instead, they can begin by blending models or piloting outcome-based fees with select clients.
Transformation Starts Inside the Firm
Pine stresses that firms cannot guide clients through transformation unless they are willing to transform themselves. “Once you talk mindset change, recognize that’s a transformation,” he says.
This internal shift requires leaders to rethink purpose, pricing, client relationships, and success metrics. It also demands a new mindset, one focused on aspirations, impact, and long-term value rather than efficiency alone.
Transformation is not a trend; it’s an imperative. “If you don’t do it,” Pine warns, “they’re going to do it to you, and you’ll be commoditized.”
More takeaways
- “Experiences and transformations are distinct economic offerings. They’re not like services. They’re so much more than services are.”
- “Nobody wants to buy accounting services. I guarantee you, nobody wants to buy it. But we need to buy it.”
- “Where are they today? What do they want to become? And how do you then help them achieve those aspirations?”
- Transformation builds on services and experiences. It doesn’t replace them.
About Today’s Guest
Joseph Pine II is an internationally acclaimed author, speaker, and management adviser to Fortune 500 companies and entrepreneurial startups alike, and the co-founder of Strategic Horizons LLP.
He is the author of the recently released The Transformation Economy and the co-author of the best-selling books “The Experience Economy” with James H. Gilmore and “Infinite Possibility” with Kim C. Korn.
Pine consults with numerous companies around the world. He is a lecturer in the Strategic Technology Leadership program at Northeastern University’s D’Amore-McKim School of Business and a senior fellow with the European Centre for the Experience Economy, which he cofounded.
Contact: LinkedIn
Transcript
Jean: Hello, and thank you for joining Gear Up for Growth, powered by CPA Trendlines. I’m Jean Caragher, president of Capstone Marketing, and your host. Today’s guest is B. Joseph Pine II, an internationally acclaimed author, speaker and management advisor to Fortune 500 companies and entrepreneurial startups. Joe is the author of the recently released book, The Transformation Economy and co-author of the bestselling book, The Experience Economy with James H. Gilmore, and Infinite Possibility with Kim C. Korn. Joe, welcome to Gear Up for Growth.
Joe: Thanks, Jean. It’s a pleasure to be with you today.
Jean: Yes. We chatted a little bit before the recording, and we talked about two colleagues who have both referenced you in their Gear Up for Growth episodes, Paul Dunn and Ron Baker. So, now, I get the privilege of talking to the Joe Pine that they’re all talking about and mentioning. So, thanks for being on.
Joe: It’s a pleasure. It’s a pleasure.
Jean: So, in “The Transformation Economy”, you argue that we’re on the brink of the next fundamental economic shift, going from goods, services, experiences, and now, on to transformations, and businesses helping people flourish. Give us a brief overview of what all this is about.
Joe: Well, you know, as economies change over time, and what happened in the latter half of the 20th century, is that goods and services more and more and more became commoditized. Treated it like a commodity where people really want to buy it on price and convenience. So, that ushered in the experience economy where experiences became the predominant economic offering, that experiences are what people want. In fact, they wanted goods and services to be commoditized, to be bought at the lowest possible price and the greatest possible convenience in order to spend their hard earned money and the hard earned time on the experiences that they really value. And so, there’s a big shift towards the experience economy.
And now, the next economy, as you said, is getting close to coming to the fore. And it’s where you use experiences as a raw material to guide people to change, to help them achieve their aspirations. You’ve all heard the term life-changing experience, where we only ever change through the experiences that we have. And often, they do help us achieve our aspirations. And one of the key things to understand is that both experiences and transformations are distinct economic offering. They’re not like services. They’re so much more than services are. And so, we need to understand, you know, like, what business are we really in? And do we want to stay in the services business and eventually be commoditized if we’re not already? Or do you want to shift up this progression of economic value to staging experiences or guiding transformations?
Jean: Right. So, how does the transformation economy differ from the experience economy, especially when we’re looking at professional services businesses like public accounting?
Joe: Well, you know, experiences are memorable events that engage each individual inherently personal way. And what we’re looking for is time well spent. You know, commodities, good services, they provide time well saved. Accountants, you know, traditionally provide time well saved. I could do my own books, even if I had to go to school to learn how, but I could do my own books. But you take that burden off of me so I can spend more time on my business, right, that I’m really valuing as a business or on my personal life, and not have to go through this every April 15th and getting all of this done. I assume your audience is both personal and business accountants, yes?
Jean: Yes.
Joe: So, but then ask why businesses and/or consumers are buying your accounting services? Because nobody wants to buy accounting services. I guarantee you, nobody wants to buy it. Nobody wants to have to buy it. But we need to buy it. And why? Because we want… If you look at a business in particular, because businesses want to improve their own businesses in some way. They want to get better at what they’re doing. And you enable them to do that. You enable them to understand their business better than they would otherwise if you weren’t there. You’re able to give them advice and counsel on what they might do differently, not just in terms of tax write offs and that sort of thing, but in terms of things that might help you keep more profit, create more revenue, and so forth.
And so, you know, it’s all these aspirations that people have to have better businesses. On the personal side, generally, they’re looking for more money so that they could spend that money on, again, the experiences they value, on transformations like sending their kids to a taekwondo class or to school to save for retirement, which is a transformation all by itself.
Jean: Big one.
Joe: And it’s all these life aspirations that we have. And money is a means to an end. And it’s the ends that people, you know, they’re buying new ends and means to the ends that they really want to apply their money to.
Jean: So, it may not be focusing on doing things differently, but interpreting the outcome of what the accountants do for their clients and the results that they help them achieve. And in this case, you’re getting to that next level. It’s not like, “Okay, we got their financial statement in on time,” or, “We filed their tax return on time.” It’s, “We help them with ex-service and it resulted in this transformation in the person’s life or family or business.”
Joe: Right, exactly. And I love the word, Jean, you used outcome. It really is about outcome, not inputs. Accountants provide inputs when what people want are outcomes. And so, if you focus on the outcomes to which your accounting services really apply to customers, the impact it has on them personally, professionally, corporately, and their businesses, then you’ll create more economic value and you’ll gain more economic value as a result.
Jean: Right. So, what signals tell you that a profession is ready for a transformation, or maybe even overdue for a transformation?
Joe: Well, the first signal is, are you being commoditized? Are you being bought on price, basically? If you’re competing with people and you submit either a proposal or have a conversation and the bottom line is, “Well, how much do you cost? And I can get it cheaper someplace else.” Then that’s where you really need to focus on, “It’s not about our costs. This is an investment in helping you create the life and perhaps the legacy that you want with your money.” Or, “This is not about the price. It’s an investment in helping you create a better business. I don’t just stop by providing you with reports and doing your taxes. I work with you,” which is where the experience comes in. “I work with you individually. I have workshops that I have. I do online every month. You can come in, you can ask questions, and so forth. We send out videos quarterly,” those sorts of things.
But fundamentally, what I’m going to do is I’m going to talk to you not about your monetary needs, but about your aspirations. What do you aspire in your life? What do you aspire for your family, for your kids? What do you aspire in your business? What do you aspire for your employees, your organizations, for your customers? And then I will figure out how I can help you get those outcomes that you want through the experiences and services that I provide. That’s the attitude that you need to have. The thing about it is it’s like asking five whys. You ever heard of that Toyota production technique, “Ask five why? All right, you bought me. Why do you want accounting services?” And whatever the answer is, “Well, why do you want that? Why do you want that?” Until however many it takes, you get down to some core aspiration. You say, “Okay, that’s something that I can work with you on.”
Jean: Right. Okay, so this leads to another question related to pricing, which as you certainly know, clients, many, many of them are still billing by the hour and they’re tracking their hours of time. Although there are folks out there who are really trying hard to make that different.
Joe: Poor bastards.
Jean: Yeah, this could be a whole other webinar that we’re talking about, a whole other episode of “Gear Up for Growth” on pricing. So, I’ve already mentioned that you’re arguing that the transformation should be priced based on the outcome and not the time, charging clients based on whether they actually achieve their aspirations. So, again, what does that mean for the accounting profession when it’s built on billable hours?
Joe: Well, it’s not that you have to only charge for outcomes. You may want a percentage of it based off of billable hours, but not as much as you charge today. But again, the key is to understand, in your business, your inputs don’t matter. Your time and materials don’t matter. The amount of hours you put in don’t matter. Only the outcomes that they achieve. And sometimes you can measure those outcomes, particularly with a business where you can say, “Look, I’m going to do stuff and I’m going to work with you and I just want a piece of the action of what I help you grow, how I help you save costs, how I help you save taxes,” and so forth, particularly if you’re going over who you had before. And that’s a way of doing it.
You could sort of do success fees or tips clauses and things like that. In some cases, like with tips clauses, it can be qualitative. It can be based on, “Did I do what I said I will do? Did you get out of it the outcome that you wanted?” I got to say, Paul Dunn and Ron Baker in their book “Times Up”, they give a lot of examples. I cite a few of them in my book because they’re very good at it. And they’re totally based off of professional services like accountants and so forth. So, after you read my book, read theirs. I’ll even allow that you might get more out of there. So, read theirs first and then read mine, understand the big picture and some nuances of it and so forth. But the key is to look at those outcomes, help your customers achieve their aspirations, and base your pricing off of the value you create, not the amount of hours you put in.
Jean: Right. And there’s been a lot of talk about that for years and years. And boy, it’s really something that many accountants resist. And I think part of that may be a lack of confidence.
Joe: Sure, sure. It’s well, even more than a lack of confidence. I will allow for this and agree with this, it’s scary.
Jean: Yes, it is.
Joe: It is. It’s scary. And I understand that. I’m thinking about how you do that. So, one, you can try it with a few clients before you try it with everybody and see what works. It may take you a while to figure out the exact right model. And you can have a lack of confidence, which says, maybe you’re not really doing what it takes to create outcomes. You’re not really doing what your customers want. So, you have to think about doing things differently, and how you might go about it to really achieve those outcomes. And then what charge for outcomes really is, though, one, actually, it’s a way to make a lot more money if you charge it off the value you create. Two, it’s a catalytic mechanism. It’s a catalytic mechanism that says that you have to do what it takes in order to get the outcomes, and therefore, get the money out of the work that you’ve put into it. So, you start to change and do things differently.
So, I’ll give you an example outside of accounting, but it’s one of my favorites because it’s two-sided, which is Texas State Technical College in Waco, Texas. They have like 10 campuses across Texas and that. The state of Texas, a number of years ago, came to all of its technical colleges, two-year colleges, not four-year universities, and said, “We pay you based off of student hour.” Students will pay tuition. It doesn’t cover all those costs. The state institutions, so they pay the rest of it, basically, to cover some costs and make some profit in those colleges. And the problem with student hour is an input. It’s like, this isn’t how they phrase it, this is me, but, “I paid you student hour when they sign up for a class whether or not they actually show up for the class or not, whether they learn anything in that class or not, whether they use anything in that class or not, whether it benefits them, and whether they graduate or not to become a productive citizen.” So, they said, “What we want is we want you technical colleges to put some money at risk based on how well your students actually do.”
And many colleges said, “Nope, sorry, we like it the way it is.” Others said, “Okay, we’ll do 5% or 10%. I can see how you might want that.” State Technical College said, “We’ll do 100%.” Now, imagine how scary that is. They said, “We’ll put 100% of our funding from the state,” without which they would be losing boatloads of money, “We’ll put 100% based on the outcomes that we achieve.” And they figured out some formula that I don’t know the details of. But basically, what Texas wants is productive citizens. The easiest way to measure that is they pay taxes and how much taxes they pay. That’s how they’re productive in a state sense. And so, that was one of the cores of the measurement.
And what it did, it was a catalytic mechanism. Again, so that the TSTC completely did things differently. They got rid of some majors that they had. They said, “These aren’t yielding good hiring outcomes.” They added some more that they know are hot and coming alive. Some of the professors didn’t even like the very idea of it and they said, “Okay, goodbye.” And then they hired others that knowing that this is going to be the case, that you’re going to be measured as a professor, as an instructor, on how well your students learn. And if that scares you, go someplace cushy. We’re here about creating outcomes. We’re here about making a difference, having an actual impact on these student lives. And how they did things differently, including working with them while they’re going to school to make sure that they’re, in fact, meeting the requirements for graduation, which before they sort of left it up to them, including helping them get a job before they ever leave and bringing more employers on campus, helping with resume building, and all these other things.
And it was wildly successful. They made much more money than they did. Not orders of magnitude, but big percentages more money than they did. And they became so good at it that they turned it around, they started offering their students transformation guarantees, which is what I like to call it, transformation guarantee. “If you don’t get a job within your major, within six months of graduation, we give you your entire tuition bill back.” And then in the end, that’s another catalytic mechanism that says, “Okay, we’ve got to do this even better than we did before.”
Jean: Right. Okay, so I can relate that to an accounting firm looking at its client base. So, I’m not saying anything new. Getting rid of the clients that aren’t appropriate for that firm, you know, the most difficult ones that pay them the least amount of money. Taking on better clients that they can serve and build those experiences and transformations because they’re motivated clients. You know, making their people more accountable for what they’re doing. And some firms are doing that. But in our conversation, I think they understand the experience part of it now, because firms are even hiring and promoting people to feel like a client experience role within their firms.
Joe: Exactly. And some have chief experience officers or equivalent.
Jean: Right, exactly.
Joe: All right. So, they understand how important the experience is right now. It’s just go to the next level. And remember back when you first heard this word experience having to do with accounting, you went, “Pshh, are you kidding me?”
Jean: Exactly. What?
Joe: Remember what that was and how now you’re focused on experience. And I’m telling you, your reaction to transformations now means, like, 10, 20 years, if you don’t do it, they’re going to do it to you, and you’ll be commoditized.
Jean: Right. Yeah. And that experience is more than having a TV in the lobby. It’s tracking a whole lot of stuff, right, and giving you the data to see, like, if it’s working or not. So, this is another area of change, right, in a super changing world. What is the mindset change that has to happen inside firms before they can actually embrace these transformations and to charge and price based on transformations?
Joe: Yeah, so once you talk mindset change, recognize that’s a transformation. And you have to transform yourself, your company in order to be able to really take advantage of this. And so, you may also need a guide, right? The economic function of experience, you deliver services, you stage experiences, you guide transformation. They have to transform themselves, right? You can’t do it for them, but you can guide them through what it takes to be able to do that, so you may need your own guide to be able to help you do that.
I do recommend, you know, getting the two books we’ve talked about, “Time’s Up” and my own “The Transformation Economy”, use them as guides, walk through step-by-step. I’m actually coming out with a transformation toolkit that’ll help companies do that, taking ideas from the book, and then be able to use them to see how you should change your business. How do I understand my customers? How do I charge for it? You know, charging for outcomes is one of the things that gives you all the different ways that you can do it and some worksheets and how to think about it. So, mindset change is a great deal.
So, the key, I think, is ascend to the proposition that you are in the transformation business, right, or at least, should be, and work your way towards that. Recognize it’s not, yes, transformation is built on experiences, experience is built on services. You’re not stopping doing your services. You may be able to do them much more effectively, especially through AI. AI may also be able to help you suss out, you know, what are the aspirations? And how might I help them do these beyond, again, just the facts and the figures that you’re accumulating? And if you ascend to that proposition, then you will figure out what it takes to be able to actually make it happen.
Jean: Right. Okay. So, if you were advising a managing partner today, what is the first strategic question they should ask about transformation?
Joe: I would… There’s so many. How do I start? It’s the first one. Well, the first one I always ask them to ask themselves is, what business are you really in, right? Decide you’re in the transformation business. Secondly, think about your raise on debt, your reason for existence, your meaningful purpose as a business. And you don’t have to make this up. There is one. I mean, almost always there is one. You just never articulated it, never thought about it, but draw out of the leadership of the people, of the heritage of the company, and figure out, why do we exist other than making a buck, right? There’s gotta be some reason, and let that then be your North star, your guiding star.
You mentioned at the beginning the focus of, you know, Chapter 1 is, what business you’re in. Chapter 2 is on fostering human flourishing that, that for business overall, it’s raise on that. It’s reason for existence is to foster human flourishing. And if you don’t foster human flourishing, then as my friend Stan Houston told me once, and I put it in the book, you’re a racket. And there’s a lot of business today’s that are rackets. You can think of all these social media companies that all they do is try and addict you with their products, right? That’s a racket.
And so, you need to provide real value to them. And if you are selling to individual people and families, recognize that they want to flourish. They’re only buying your services again today, your offerings, because it will help them flourish in life in some way. Otherwise, they’d rather keep the money in their pockets. And for me, believe me, doing accounting does not help me flourish. It’s like as anti-flourish as it is. I’m willing to pay somebody to do that, but recognize that, how might you better contribute to flourishing? And make that part of your purpose that you do.
And then the third thing then I would say is understand your customer’s aspirations. Which I like to say are from two statements, you know, from blank to blank. Where are they today? What do they want to become? And how do you then help them achieve those aspirations? You go to a fitness center because you want to go to flabby to fit. You do a smoking sensation program because you want to go from smoker to non-smoker. You go to a hospital because you want to go from sick to well. Those are all generic aspirations, right? What’s one? What’s your primary aspiration statement that gets down to you, and you individually, why you exist, and what your customers want, and then recognize though that every customer is different. And so, you still have to talk with them individually. You have to collaborate with them.
One of the experiences you should stage, and there’s no reason you shouldn’t charge for this, is understand your life workshop, which can be done as a group or as an individual, or your understand your business workshop, right? Create workshops that are the marketing experience for people buying you, right? Help them understand who they are, and then they can naturally say, “Well, I want to work with the guy who helped me understand who I am and what I want to become.”
Jean: Right. And this goes back to another like, you know, age-old, you know, point of the importance of asking smart questions, in-depth questions beyond the scope of the project or engagement that they’re working on to really build those client relationships and enables you to get to these answers of what you’re looking for for your clients about the transformations and what the firm can do to help them achieve those transformations. So, listeners and viewers, this isn’t hocus pocus. This is, I mean, really just doing a lot of what you have been doing, but in a deeper, more meaningful way. Is that a fair statement?
Joe: Yes, absolutely. Right. Focus on that.
Jean: Okay. So, my last question is a bonus question. What experience in your life most profoundly changed you? And did you recognize it as a transformation when it was happening?
Joe: Yes, absolutely. So, for me, I’m very much of a nerd, right, growing up. I aspired to be a geek, but I was only a nerd. I got an applied math degree. I worked for IBM for 13 years. But soon after I joined, I realized I wanted to go into management and so forth. And so, I did that, became less of a nerd, more of a management geek. And as a reward for a project I did at IBM, they sent me to MIT for a year to get my master’s degree. And I knew this was going to be transformational. Whatever happened this year is like, “I’m going to learn so much.” I could be one of those lifetime students that just spends all his time in universities. I love learning.
But what I quickly decided was, I had to do a thesis, so I said, “I’m going to do a thesis I can turn into a book.” I always wanted to become a book author at some point. And so, I spent all my homework, all my classes that I could towards my first book, “Mass Customization”, about efficiently serving customers uniquely. And so, that book is basically the first four chapters, or the first four chapters of the book are my thesis at MIT plus the appendix. Then when I got back to IBM, I found an organization that would give me time, about 40% of my time to work on the book within the IBM consulting group, so they could consult with companies on “Mass Customization”.
So, that’s what I was able to achieve. I knew that was a transformation going in. It was incredibly transformational coming out. It was about seven months. It wasn’t my intention at all. I loved IBM. My father accused me of being brainwashed by them. But because of things going on in the business back when John Akers left and Lou Gerstner came in. If you’re familiar with that, Lou Gerstner just died recently as the CEO of IBM from 1993 on. Is that they gave my wife and I, she also worked there, six months’ salary to leave. And I eventually, you know, not sure we wanted to do it, prayed about it, finally decided to do it. And that changed our lives. So, that was on top of the MIT. It’s like, “Okay, I’m going to go out on my own.” I said, “If it doesn’t work, I can always get another job.” Ever since then, you know, I’ve been trying to figure out what’s going on in the world of business and develop frameworks that first describe and then prescribe what’s happening. That’s my purpose in life. The short version is frameworks are us, and every book I’ve done.
So, then shortly after I left IBM and discovered “The Experience Economy”, discovered transformations at the same time. They’re actually in the last two chapters of “The Experience Economy”. And now, here’s a full book on them where I hope to change the world. Like, “The Experience Economy” changed the world. People started understanding about experiences and creating great experiences and helping people flourish through the experiences they have. Now is the time to help them most directly flourish. All economic offerings help people flourish. But transformations is more direct as it gets right at that core aspiration of, who do you want to become?
Jean: Joe, that is a great story. And one of the things I heard there was that we need to be motivated to look for these opportunities with our clients, to identify those aspirations they have, and to help them with these transformations. They’re not going to knock you in the head. You know, we really need to be motivated to find them and act upon the information that we learn.
Joe: Right. And you need to create that motivation within your customers as well, because most often, they’re not staying around thinking about this either. I mean, but they generally view accountants, pardon me, as a necessary evil, one step above lawyers. How do you turn that around? How do they get them to view accountants as a necessary good? Something that really enhances their lives and their businesses. And if you do that, again, you’ll be economically rewarded.
Jean: Right. Well, I’ve been speaking with Joe Pine, author of “The Transformation Economy”. Joe, this, for me, has been inspirational. I really appreciate your time today and sharing your thoughts. And it’s going to be very interesting, not only within the accounting profession, but in business in general, you know, how this transformation economy takes off, you know, and what we see from it.
Joe: All right. So, it’s been a pleasure being with you, Jean.
Jean: And thank you for tuning in to “Gear Up for Growth”. Be sure to check back with us next time when we focus on another topic crucial for accounting firms aiming for smart growth in today’s competitive marketplace. I’ll see you then.