As we hurtle towards the third decade of the century, many switched on practice partners are reviewing their strategic planning in professional services firms and considering the landscape of the profession and the services that future clients will need to ensure their firm succeeds to through the next decade.
Set in the context of blockchain and with artificial intelligence (AI) gathering momentum it is clear, unless you have your head completely buried in the sand, that the past ways of managing a practice and delivering client service is not going to work in the future.
Strategic Planning in Professional Services Firms has become a vital necessity!
Do you understand the market drivers and technical trends that will impact the future practice? It requires courage because it means change and for many of those in the professions that can be a little intimidating to say the least. It will mean changes in client relationships, as they may be more demanding and how you value people, as they will no longer follow the traditional career pathways.
But take heart, because this article sets out some of the key areas of focus and likely changes and suggests the key actions and activities that will benefit from an investment of your time when considering strategic planning in professional services firms.
It’s not about software, it’s all about clients
If you are thinking that blockchain and apps is all about software then you are missing the point. This is about WHAT CLIENTS WANT. It’s ALL about the services that clients need to run their businesses. Clients have never enjoyed laywers drafting contracts or auditors completing audit reports but they DO value the advice that good professionals can offer when they have seen other people make mistakes previously. They also value their ability to be impartial and hold their feet to the flame ahead of making avoidable mistakes.
As a seasoned advisor once said to me: “Why do they fit brakes on a Porsche?”
The answer is not what you think: “So it can go faster…”
When you can fully grasp that metaphor you will be on the path to understand why a practice first needs to get close to it’s clients in order to determine how you can really help solve their problems. What do they struggle with? FRS 27? Or marketing, recruitment, client relationships, growth, global supply chains and competition?
How much time do you spend planning your future?
This is a question that we often ask those people who want to improve their sales pipeline and business development prospects. The typical response is that business development is a task that is completed in between other work. If the other work maintains a ‘ceaseless momentum’ then business development is largely cast aside. And so it is, with planning your firm’s future in terms of strategy.
Apart from the odd annual offsite that is used as a talking shop, very few people actually sit down with fellow partners and vote on the decisions they need to take to accommodate changes in the services that clients require from their accountants in the next few years.
How much do my partners need to engage with IT?
Does IT underpin your firms strategic plan and who is driving that agenda on the Senior Management Team? The answer, more often than not, is nobody…
Apart from the ICAEW’s IT faculty, created some years ago that is there to support a firm’s obligations and ensure it is up do date, few people actually running a practice believe they need to be immersed in IT as a backbone of their practice. Until now.
In any corporate organisation you would find a CTO sitting on the board, the Chief Technical Officer. Responsible, not for ensuring that the network is up and running, or that Marion on the sixth floor has got a decent Internet connection, but instead, ensuring that the organisation is focused upon planning how to deliver the: 24/7, instant interaction, client focused, service excellence to build their position in the market.
What does the practice of the future look like?
With the changes that are expected in tax going digital and the advent of a number of widely available apps that our clients are using, it is clear that the shape of a practice must change. Traditionally a pyramid with the partners sitting at the top of the management team and a machine that drives the lower value, higher volume work. In future, with the volume work being done by computer programs the typical firm is predicted to be diamond shape, a few partners at the top, a large number of mid tier fee earners on top of a handful of skilled people who are very IT literate undertaking analysis at the bottom.
This should immediately pose a challenge:
Where am I going to recruit these IT literate staff? What do they look like?
How can I train business savvy, commercially aware and relationship orientated mid tier fee earners, when I do not have a pool of trainees on which to draw?
The available opportunities: using a shot gun or a rifle
The biggest challenge facing the profession is the breadth of available opportunity out there. Having sat through a number of conferences around blockchain, new applications and software developments in the last two years, it is clear that the problem is not so much what to do, but what to ignore as there is opportunity in literally every single sector of a full-service firm. It is easier for the niche practice to adapt because they have a smaller pool of software to review.
And unless you have a Chief Technology Officer, you will not have anyone stepping back to look at the big picture for you. With a limited budget where should you spend your IT development budget? Which services are clients going to need from you in five years from now and where do you need to improve your expertise?
Feel the fear and do it anyway
If you are managing a practice, in your capacity as managing partner, senior partner, or if you are on the management board then you need to be making some noise and deciding who is leading the strategy for your business? In the past, most professional service firms, whether they are lawyers or accountants, have stumbled along with a strategic plan that is little more than “shall we do the same as last year, or perhaps merge if the opportunity arises?”
Few practices are actually on the front foot and this is where you must be, in order not to be overtaken by agile competition in a specific niche. You may want to ask yourself the following questions:
1 How much do we need to understand about blockchain and which industries will be most affected? Given the breadth of technology available in every single faculty, which single area must we invest in that will give us the greatest return for money?
2 As HMRC makes tax digital over the next few years, how can we adapt our service levels, pricing structure, and client relationships to ensure we add value?
3 When do we need to adapt our structure to ensure we have the ideal balance in terms of gender, diversity and technical ability to meet our firms future client needs?
4 How can we continue to provide an excellent career path when we need to recruit IT consultants rather than accountants or lawyers?
5 How do we adapt our in-house training so that our mid tier associates, managers and partners are both, in touch with the software data and are able to translate this and make it meaningful for our clients?
6 If culture does “eat strategy for breakfast”, what is the impact on our culture likely to be when 30% of our staff may no longer be tradtitionally qualified as accountants or lawyers?
These are just some of the questions that we challenge our clients to answer to ensure that they are both informed and the right shape for the future of the profession.
You might also want to attend the Alternative Accountancy Strategic IT Conference, that takes place on 20-21 March this year and has a range of speakers from well-known firms across the mid tier who are focused on many of these issues. This conference, the second of its kind is a reflection that the profession is gradually catching up and we are now engaging managing partners and partners within firms to discuss their common fears and plans for the future to fully appreciate the way in which IT can assist the practice.
If you would like to improve the approach to strategic planning in professional services firms and gain confidence that you are fit for the future of the profession please get in touch by calling Kate Hennig on 0115 855 9464 .