As midsize regional accounting & advisory firms expand to serve more client industries, they struggle to identify leaders for these new areas. In fact, expansion aside, they may not have enough strong leaders for their existing portfolio of industries. For this reason, it’s important to cluster industries to match a firm’s leadership bandwidth. The composition of an industry cluster in a particular firm will depend on several factors, but here are some good examples:
• Media, Entertainment and Sports
• Manufacturing and Distribution
• Professional Services
• Real Estate, Construction, Architecture and Engineering
• Nonprofit and Government
• Communications and Technology
• High Net-worth Tax, Family Business and Bookkeeping
• Healthcare, Medical Devices, Pharmaceutical and Biotech
The goal is to have no more than six clusters. Five is even better. Once this is accomplished, the next step is to name cluster leaders who will manage the cluster P&Ls, providing a great proving ground for future firm Managing Partner candidates.
This approach to grooming leaders is a big change for many firms that have historically named industry experts as industry leaders. Under this model, leadership and industry expertise are separated, recognizing that the go-to person for impressing clients — a very important continuing role — often lacks the leadership ability to grow and scale a major piece of the firm’s business. There are many nuances to consider in getting this aspect right, and they vary from firm to firm.
Also, the firm’s management structure should not be confused with its sales and marketing strategy. Keeping the full list of industries on the firm’s website and treating each industry as distinct for external purposes continues to make good business sense.