Decades ago Peter Drucker observed that “culture eats strategy for breakfast.” Fewer business maxims have proved to be more accurate. However, when it comes to developing a business strategy for an accounting firm, success often depends on the partners’ willingness to accept culture change. Let’s look at a few examples:
Specialization — As firms move upmarket, continued growth and appeal to larger clients depends heavily on specialization. A key prong of this is the need for partners to choose a line of service – either audit or tax. This is a strategic “no-brainer” for many firms. Here’s the rub; The firms’ existing non-tax specialist partners, sell and deliver large amounts of tax work to their clients. The thought of changing this and becoming audit partners who introduce tax partners to clients to do the tax work can be difficult to accept. It means sharing a client relationship, as well as giving up a piece of their business book. A similar situation exists where, as part of its business strategy, a firm makes a serious commitment to industry specialization. Partners who have worked in multiple industries may be understandably reluctant to embrace this change.
Investment Focus — Business strategies call for investments in industries and services that have the strongest growth potential. Other practice areas remain important but will not get that same level of investment and resources. For partners in these other practice areas, it can be difficult to feel that they are working in areas that are somewhat less important.
Staff Development — In many firms, continued success and growth depends on partners upping their focus on developing staff through mentoring and experiential learning. This requires a big change in priorities for partners who for years have been told to develop business and serve clients, with staff development being a secondary priority. Putting people on par with clients and new business means that partners will need to behave differently which will take some real adjustment.
In all three examples, it is critical that partners embrace change. This is most likely to happen if the partners play an active role in determining the new strategy. This means that a significant number of partners, usually 10% to 20%, need to be actively involved in the task force or committee developing the firm’s new strategy. And all partners need to be heard on their perception of strategic priorities before the active strategy development begins. This is best accomplished in small workshops or focus groups of 6 to 8 partners.
Here’s what’s most interesting. When engaged properly, the partners will surface the right issues rather than defend the status quo, even though change may be hard for many of them personally. Once that happens, they will support the changes, but not without some understandable resistance. At that point, the two key leadership principles need to be timing and tolerance. These are generally 5-year strategic plans. Give partners a year or two to ease into new roles and behaviors, and don’t be absolute with each partner; Select exceptions, if made based on abilities vs. politics, are ok. If you get 90% compliance with your strategy, it’s a big win.