Academic journal article Journal of Accountancy

Models of Success? the Ability to Develop New Service Offerings May Determine the Fate of Accounting Firms in the Future

Academic journal article Journal of Accountancy

Models of Success? the Ability to Develop New Service Offerings May Determine the Fate of Accounting Firms in the Future

Article excerpt

EXECUTIVE SUMMARY

* "There will be multiple successful business models for accounting firms of the future."

The first experiment from Thriveal Labs tested this hypothesis and prototyped new lines of business for accounting firms.

* "Business model design ... will become a competitive advantage." Adrian G. Simmons, CPA, co-founder of Thriveal Labs, argues that the CPAs most likely to succeed are those skilled at and comfortable designing and deploying new ways of doing business.

* Participants in the Thriveal experiment used "The Business Model Canvas" template, developed by the Business Model Foundry AG. The template focuses on key components for success in a line of business.

* Value pricing serves as a catalyst for many new business lines. The structure allows for more client contact and greater pricing flexibility than hourly billing, opening the door to different kinds of services.

* Initial meetings with clients play a key role in the success of engagements. By asking the right questions and listening, firms can understand the client's goals and objectives, making it possible for the sides to determine what success looks like-and how much the firm's services should cost.

* Firms are experimenting and succeeding with new business approaches. A Michigan firm has leveraged value pricing and niche specialization to offer consulting services to restaurants. Another firm, based in California and New York, bolstered its consulting offerings with strategic advertising and marketing advice provided by the firm's recently hired marketing manager.

Adrian G. Simmons, CPA, would like to see the term "The Firm of the Future" become a thing of the past.

"[It] is somewhat of a limiting term," said Simmons, chief creative designer of a Maryland accounting firm and co-founder of the Thriveal Laboratory. "It presents the idea that there is a single model we are evolving to. We need to get rid of that idea. The Firm of the Future' is really 'Firms of the Future.' "

That concept was at the heart of the first experiment conducted by the Thriveal Laboratory, which was created by Simmons and Jason M. Blumer, CPA, chief innovation officer of Greenville, S.C.-based Blumer CPAs and founder of the Thriveal CPA network, a community of accountants pushing for creativity and change in the profession.

The hypothesis of the first Thriveal Labs experiment was that "there will be multiple successful business models for accounting firms of the future." To test that hypothesis, Thriveal assembled a team of six small firm leaders to prototype new business models for public accounting--a process that reinforced Simmons' belief that the ability to develop and adapt business models will be a key differentiator among accounting firms in the near future.

"Business model design is going to become a strategic skill that will become a competitive advantage," Simmons said. "CPAs who have a comfort level playing with business models will be the ones who succeed."

While Thriveal uses the term business model to describe the prototypes outlined in the experiment report, the models presented could also be adapted to lines of business within an existing firm. The tool used to develop the prototypes focuses on areas related to a line of business--customer segments and relationships, revenue streams, cost structure, and key partners, activities, and resources. It does not directly address culture and talent, other areas identified by the AICPA Private Companies Practice Section as essential in developing accounting firm business models. In light of those definitions, this article uses the term lines of business in explaining the Thriveal prototyping process and examining a couple of firms not associated with the Thriveal experiment that have found success experimenting with new business lines.

THE FIRM OF THE FUTURE: A VALUE PROPOSITION

Before you can relate the Thriveal experiment's conclusions to your firm's current situation, it helps to understand the context in which they were created. …

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