An accounting firm’s ability to successfully weather the waves of disruption coming at the profession starts with being able to answer three questions, according to Randy Crabtree.
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“Change is coming at us so fast,” he told attendees at the Bridging the Gap Conference he is hosting in Charlotte, North Carolina, this week. “I don’t think I’ve ever seen this profession this excited and this anxious at the same time. Excited because the opportunities are amazing, but anxious because the change is coming at us so fast.”
To stay ahead of that change – and to get the most out of the opportunities — Crabtree, who co-founded specialty tax services provider Tri-Merit Tax Services, said in his keynote address that firms need to be able to answer these three questions:
- Who do we serve, and who do we not serve?
- What would they genuinely miss if we didn’t do it?
- What do we refuse to do, even when it’s profitable?
“Who you are decides how you change,” he said. “We can’t decide how we’re going to change without deciding who we are. … When you know who you are, change gets easier, and less scary. It doesn’t get easy, but easier. The decisions start making themselves when you know who you are, and when you don’t, every new thing that comes along feeds anxiety.”
Understanding those basic facts about your firm makes it simpler, for instance, to determine whether a proposed merger will be a good fit, or whether you should add a new service line, or take on a potentially problematic client.
‘Kodak answers’
But firms should also be careful in how they answer these questions, because too narrow or superficial a definition can severely limit them.
Crabtree cited the famous example of Kodak, which defined itself as a film company, and was destroyed when the market for film collapsed. Competitor Fuji, on the other hand, defined itself as a company with a deep expertise in chemicals that just happened to direct that expertise mostly at making film. As the film market declined, it was able to turn that expertise toward skincare, cosmetics, advanced materials and a host of other applications.
“Both companies knew who they were,” he explained. “One defined their identity with their product, and that product died and they went with it. And one of them identified with the expertise underneath the product, and went with that. ‘We’re a tax firm’ or ‘We’re an audit firm’ – that’s a Kodak answer. But if you identify yourself with what’s beneath it, you can thrive.”
As you define your firm, Crabtree advised, be careful to go beyond just the services you offer, to the overarching goal — such as helping individual clients meet their retirement goals — or the underlying theme — say, bringing peace of mind to business clients.
“If your answer would survive a change of product, then I believe you’ve gone deep enough,” he said.
Why this isn’t new
Amid all the anxiety, Crabtree said that it’s important to remember that the profession has gone through similar periods of disruption many times.
“This isn’t the first time we’ve had this feeling, a version of this feeling, that the ground is shifting underneath us and that the way we’ve always done things might not survive,” he said.
He offered a long line of apparently “existential threats” that accountants have faced down – and often coopted — from spreadsheets, to desktop accounting or tax software, to blockchain and, most recently, artificial intelligence.
“We’ve been promised extinction at least five separate times,” he said, “but we’re still here. We are a very, very, very hard profession to kill.”
“We’re not that fragile — fragility is not the problem,” he concluded. “The question isn’t whether we’re survive change; the real problem is harder and more personal. The future of accounting isn’t really about accounting, it’s about this one question: Who are you?”