Zen and the art of strategic planning

Looking back over the first six months of 2019, I can divide my customers into those having strategies that are so complex they are undecipherable and those that have no strategy at all. In the first group there were 50-page documents with diagrams that still haunt me with shapes and connecting lines akin to the first crayon scribbles of a one year old. What I see so rarely is a ‘Zen- like’ strategy that is simple and clear to any person who reads and/or views it. Understandable to the extent that the strategy can be executed. 

“Drink your tea slowly and reverently, as if the axis on which the world earth revolves – slowly, evenly, without rushing to the future.”

                                                                        Thich Nhat Hanh

Effective strategic planning is a process and not an event. The strategic plan is developed in an evolutionary process that eliminates excess and complexity. It is this process that makes strategic planning more difficult; taking what could be complex and creating something simple and essential. 

A small accounting team creates a revolution

An accounting firm was having trouble making a decision at senior partner level to move forward with a series of our programs. Believe it or not one of the issues they identified was poor decision-making processes!

Out of frustration, one of principals decided to move forward with our programs in her regional office. We started out with our Profiling Program for the partners and managers and followed that with Strategic Planning, Performance Management and Advisory Skills Development. 

Change well executed is what will keep your accounting firm competitive.

In eight weeks, we have seen the changed processes and behaviours in the regional office create enormous interest in other offices. The interest was like a groundswell from people in middle management and junior levels who were interacting with people in the regional office. 

The groundswell began as informal conversations and then we noticed emails being sent to managers, partners and senior partners. The messages were clearly motivated by a fear of missing out, FOMO. 

The most common topic in the groundswell was about the new client projects the team in the regional office were working on. These were apparent both in SharePoint and the CRM used by the business. The most common topic among the senior partners was the increase of $55k in the 8 weeks after the Advisory Program.

Other changes took a bit longer to be noticed. The Profiling Program expanded in the regional office to include all of the accounting professionals. As usual, this prompted people talking about their profiles and their efforts at becoming better communicators and relationship builders. People in the regional office would innocently ask about the profiles of their colleagues located in other offices and this generated the ‘why didn’t we do the profiling?’

The revolution was underway. In July we begin our Programs in the head office with a roll-out plan across the firm ending in September. You can drive organisational change beginning with a tribe. In our case, the smaller regional office became the role models for what is possible. They will now be our role models, coaches and mentors for participants in our upcoming programs. 

Our 2019 Business Advisory Survey results are now available. You can request a copy by sending us an email.

How to create a value driver tree

High level value driver tree

The value driver tree is a tool used to identify the root cause of an issue. In our case it is used to identify causes of business issues. The value driver tree is also known as a fishbone analysis. 

The value driver tree is a very useful model to use when engaging in discovery sessions with prospective and current clients. You should be familiar with the model so that you are able to use it in conversations as a way to structure thinking. The best use case is creating a value driver tree  on a whiteboard, computer or flip-chart as part of the meeting with prospects and clients. 

An example of a value driver tree is shown here.  In this case the issue facing the business is declining profitability.

value driver tree
Identify the root cause of issues in your business.

The next level to the right of the business issue breaks the issue of declining profitability down to three possible solutions. The third level are the actions needed to execute the solutions. A key concept when creating value driver trees is MECE. 

The MECE model is used to separate items into subsets that are ‘mutually exclusive’ and ‘collectively exhaustive.’ The MECE model as developed by Barbara Minto at McKinsey and Company in the late 1960s. You can learn more here.

The next level to the right of the business issue breaks the issue of declining profitability down to three possible solutions. The third level are the actions needed to execute the solutions. A key concept when creating value driver trees is MECE. 

The MECE model is used to separate items into subsets that are ‘mutually exclusive’ and ‘collectively exhaustive.’ The MECE model as developed by Barbara Minto at McKinsey and Company in the late 1960s. You can learn more here.

In some cases these actions may directly address the issue or be actions such as research and analysis. In the latter case, this may then lead to a further value driver tree created to reflect the outcomes of research and analysis.

A value driver tree must focus on one single issue. Therefore there may be a number of value driver trees created in the course of a discovery session. It is common to start the process with a value driver tree to determine which of a range of issue should be prioritised and then break that down to individual issues. 

High level value driver tree
Get a big picture view of the issues facing your business.

The example above shows a value driver tree that will then be broken down into the issue that is considered the highest priority. 

For example, in this case my client’s priority was addressing inconsistent sales that were impacting the cash flow. The impact on cash flow was preventing her from committing budget to upgrading the IT hardware and acquiring a cloud based finance and customer relationship management software. 

The value driver tree helped my client remain focused and not go off in a number of different directions. In my consulting practice, I only focus on one issue per engagement. I have learned this removes the risks of project creep and uncertainty about closure of an engagement. 

Once I have worked with my client to create a value driver tree on the challenge with the highest priority, there are two necessary steps before we commit to working together. The first step is gaining conceptual agreement. The process to this point is very positive for the client. Once the person is fully able to identify a business issue there is a sense of relief even before a solution is executed. 

The positive state achieved in the value driver tree process is the precursor to conceptual agreement. The conceptual agreement is both parties agreeing that there is a compelling case for moving forward with an engagement to build and apply a solution to the business issue. The conceptual agreement is gained by asking the client whether they wish to solve this issue using you and/or your firm. 

When this question is asked, there may be a few responses. One may be related to cost, another related to time, another related to decision making, etc. There is absolutely no point in developing a proposal with costs, activities and timelines until you have reached conceptual agreement with your client. 

This is always very hard for my clients to accept. Most people in business to business professional services are using an outdated paradigm wherein the proposal is a huge document that is used to sell an engagement to a client or prospect. This is all wrong. The proposal I use includes seven sections and the whole document is rarely more than four to seven pages. I will cover more about proposals in another article.

For now let’s assume you gain conceptual agreement with the client or prospect. You are now ready to create your short proposal. What about the value driver tree?

The value driver tree is captured and saved. You photograph the whiteboard, photograph and roll up the flip-chart paper, save the digital file or whatever. The value driver tree is your navigation tool moving forward with the the engagement. The value driver tree will set the scope of the engagement as well as define the parameters of the activities that are going to be included in the engagement. I will cover more about using the value driver tree to develop your engagement plan in another article. 

The 7 steps on the journey to business advisory success.

7 steps to business advisory success

There are seven essential steps to successful strategy execution in a business or organisation. The MAXSHV program addresses each of these essential steps. 

  1. Clear strategic direction and roadmap: the strategy must be clearly articulated and communicated using as many channels as possible. All persons in the leadership team are able to communicate the strategy accurately without individual deviation. 
  2. Skills: the people in the organisation must possess or be in a position to acquire the skills needed to execute the strategy. If this is not possible the organisation must recruit or use contractors to execute projects and tasks requiring skills not in the organisation.  
  3. Resources: the leadership must ensure that the resources needed for people and teams to execute projects and tasks are available. Resources may include financial, human, time, material and technological resources. 
  4. Systems and tools: in some cases this will require existing tools to be re-configured or people trained in their use. In other cases it may require some degree of digital transformation. At a lower level it may be the development of checklists and meeting agendas to ensure the proper workflow is followed to achieve needed outcomes. 
  5. Right people in the right roles: in some cases you may have the wrong people, in others it is the wrong roles and it very common for organisations to have both problems. Positions need to assessed based on the strategy and not the other way around. You build your strategy and then ensure you have the right people; you do not build your strategy around your current workforce. 
  6. Measures and rewards: you create measures and integrate them into your  performance management process. Your performance management process must focus on the right measures to encourage focus and engagement. To build a great culture you need to reward great outcomes. In some cases you will find your current remuneration is not encouraging the behaviours you need to achieve strategic outcomes. Are you offering incentives such as bonuses, shares or commissions? 
  7. Execution and action plan: your people need line of sight from the strategy to their individual tasks they execute daily. They need to understand the outcomes expected from their team and how their work contributes to the team outcomes. 

What works in building a high profit advisory practice

Building business advisory

Accounting firms are seeking ways to adapt to changing client exceptions, margin reductions and technological and outsourcing threats to their compliance business. There are accountants who are in denial, those that are accepting the threats but doing little to adapt and those that are taking action.  In the latter case many firms are looking for a “fast and easy” button for business advisory success. . 

 Our annual accounting industry research survey has identified three primary actions firms are taking to try to build advisory revenue:

  • providing sales training for their accountants
  • packaging services and offering package prices or subscription terms
  • purchasing software that is ‘designed’ to support advisory processes

Our research survey shows that firms gain little or no benefit from any of these tactics. 

Is it any surprise that sending accountants to sales training does not deliver any results? Firms that send their accountants to sales training show no increase in revenue from advisory services. 

We have visited firms that have an impressive display of brochures and marketing materials promoting the range of packaged services available for their clients. Our research shows the common strategy of packaging services delivers little if any growth in advisory revenue. 

A surprisingly large number of accounting firms have purchased software applications that are marketed as solutions that build advisory services and revenue. 

Our research shows that firms that spend money on software licenses and implementation achieve little or no growth in advisory services revenue. This did not come as any surprise to us after we spoke with many firms that have adopted this tactic. 

Our discussions with these firms uncovered the reasons why accounting firms that purchased business advisory software do not achieve any significant benefit. Some of these reasons are obvious and others less so. Below is a list of the most common reasons expressed to us:

  • Software applications require people who understand how to use it and are willing to use it effectively. 
  • Most of the accounting firms we spoke to were not offered a comprehensive change management plan to implement the software and this compromised user uptake. 
  • Software must adapt to best practice workflows and processes and not dictate these workflows to accounting firms. 
  • These systems automate some client communications (e.g., needs analysis surveys) and remove the personal contact and professionalism that clients seek from accountants and business advisors. 
  • Most accounting firms already use multiple software applications in the conduct of their business; adding more software to the work environment adds complexity and often reduces productivity.  

Sales training, packaging services and purchasing software will not build a profitable business advisory practice in accounting firms. If these tactics fail, then what works?

We are currently presenting the data from our 2019 Accounting Industry Research Survey and will be inviting participants to attend seminars in each capital city to review and analyse the results.

Strategy in the Age of Urgency

There are some organisation and culture shifts you and your leadership team may want to consider when developing your strategy. 
 
Focus on speed by encouraging decision making outside the safety net you may have in your culture. Do your people make decisions with enough information or are decision stalled by too much research and risk aversion?
 
Design your strategy and execution plan to accommodate the dynamism that exists in your industry sector(s), competitors and within your organisation. Resist the common temptation to build objectives based on expected outcomes and focus on value creation. Value creation may demand more course correction and fluidity in business processes. 
 
Push decision making to the points in your organisations that are faced with the immediate need to make those decisions. Remove your fear and recruit and develop your people to make decisions rapidly and in response to needs. This is becoming even more critical in the competition for the best customer experience. 
 
Change your training models to focus on individual needs. One size fits all may be ok for compliance training but if you want to attract and retain talent, you must offer tailored development that will benefit your people and your organisation. 
 
As you empower people to make decisions quickly, change your thinking about leadership. Shed the outdated model of leadership bestowed by title and position. Any person can be a leader and you want as many in your organisation as you can recruit and develop. 
 
Using principles to align your people and your organisation is far more effective and adaptable that stacks of policy and procedure manuals. Principles require modelling and incessant communication at all levels of the organisation and particularly by leadership.  Principles need to be part of the performance review process. 

Accounting Firms Share Tactics Used to Build Advisory Services

accountants business advisory

Accounting firms are seeking ways to adapt to changing client exceptions, margin reductions and technological and outsourcing threats to their compliance business. There are accountants who are in denial, those that are accepting the threats but doing little to adapt and those that are taking action.  In the latter case many firms are looking for a “fast and easy” button for business advisory success. . 

 Our annual accounting industry research survey has identified three primary actions firms are taking to try to build advisory revenue:

  • providing sales training for their accountants
  • packaging services and offering package prices or subscription terms
  • purchasing software that is ‘designed’ to support advisory processes

Our research survey shows that firms gain little or no benefit from any of these tactics. 

Is it any surprise that sending accountants to sales training does not deliver any results? Firms that send their accountants to sales training show no increase in revenue from advisory services. 

We have visited firms that have an impressive display of brochures and marketing materials promoting the range of packaged services available for their clients. Our research shows the common strategy of packaging services delivers little if any growth in advisory revenue. 

A surprisingly large number of accounting firms have purchased software applications that are marketed as solutions that build advisory services and revenue. 

Our research shows that firms that spend money on software licenses and implementation achieve little or no growth in advisory services revenue. This did not come as any surprise to us after we spoke with many firms that have adopted this tactic. 

We uncovered the reasons why accounting firms that purchased business advisory software do not achieve any significant benefit. Some of these reasons are obvious and others less so. Below is a list of the most common reasons expressed to us:

  • Software applications require people who understand how to use it and are willing to use it effectively. 
  • Most of the accounting firms we spoke to were not offered a comprehensive change management plan to implement the software and this compromised user uptake. 
  • Software must adapt to best practice workflows and processes and not dictate these workflows to accounting firms. 
  • These systems automate some client communications (e.g., needs analysis surveys) and remove the personal contact and professionalism that clients seek from accountants and business advisors. 
  • Most accounting firms already use multiple software applications in the conduct of their business; adding more software to the work environment adds complexity and often reduces productivity.  

Sales training, packaging services and purchasing software will not build a profitable business advisory practice in accounting firms. If these tactics fail, then what works?

Our 2019 Business Advisory Survey will soon be released. This survey provides uncovers what the differentiates accounting firms that are successful with business advisory and those that are struggling. 

Why You Need a Business Advisory Methodology

As CEO of a consulting firm that helps accounting firms win significant business advisory revenue, I understand how critical an end to end approach to advisory is.

A great business advisory methodology is a huge competitive advantage for an accounting firm. The methodology that we embed into our accounting firm clients is called MAXSHV™. It covers the whole of business advisory from how to introduce your firm in order to differentiate it through to how to win assignments through to how to deliver assignments and everything in between.

Achieving business advisory success does not have to be complex. But nor can it be dumbed down to a “tick and flick” form.

MAXSHV™ is designed to deepen and strengthen the relationship between accountant and client. Strong and loyal client engagement stems from genuine interest and care in a client’s business issues and a focus on delivering value way in excess of any advisory fees.

Accounting firms should be constantly focussed on ways of delivering value to clients. The point of business advisory is to help your clients solve problems and in doing so add value way in excess of the fees that you charge.

Here are three common traps that we see accountants fall into when they try and move into business advisory.

  1. The accountant thinks they need to know all the answers. Nothing could be further from the truth. What the accountant needs to become skilled at doing is working collaboratively with their client to understand the problem, diagnose its root causes and then do the analysis to figure out the best way of addressing these root causes.
  2. The accountant believes that if a client wants help they will ask for it. Not so. Especially if the client has pigeon holed the accountant and their firm as “tax compliance” experts.
  3. The accountant thinks they have to learn how to sell. Again not so. A sound methodology will assist the accountant and client to see the value in solving a specific problem. Providing the cost of solving the problem is less than the value that the client gains from having the problem solved then there is no selling needed. There is simply a natural conversation about what the next steps are. This is followed by a conceptual agreement and a straight-forward seven item proposal. Assignment won.

Would you like to learn a little more about how a robust and proven methodology for business advisory can help you achieve advisory success? Contact me and I’ll help you to understand more about how such a methodology could help you.

The Critical Start Of An Advisory Meeting With Your Client

The way that you start a business advisory meeting to uncover your client’s needs plays a huge part in whether you will win an advisory assignment or not.

To win a business advisory meeting you need to be seen as a professional advisor who knows what they are doing. Note that this doesn’t mean you need to know all, or even any, of the answers to issues or business problems that your client reveals.

Being seen as a professional advisor means;

  • taking a leadership role in the meeting,
  • speaking clearly and concisely about what you do,
  • having a clear agenda and structure to the meeting,
  • having an insightful method for exploring client issues.

Showing you are in charge of the meeting and have an agenda makes your client feel that they are in the hands of a professional. It also shows that you know what you are doing and that you are working to a structure.

After setting the tone, taking charge and sharing the agenda you should move on to a brief introduction of what your Firm does in the business advisory space. This is true even if you are dealing with a long term client.

Your introduction should be all about your client, their issues and why your Firm is different from other accounting firms.

You should cover these three areas succinctly:

  • Who comes to you for business advisory help and why.
  • The issues your clients face that you help resolve.
  • How you do things a bit differently than other accountants.

This should take a maximum of two minutes to say.

You can have this well rehearsed and you can even cheat using bullet points written in your notebook.

You then use a simple bridging statement to move onto to asking the client which of the issues that you mentioned are ones that they face in their business.

This way of getting business advisory meetings started delivers far greater success than the three most common approaches that we see accountants use to start their advisory meetings:

  • “So tell me about how your business is going.”
  • “Here is a list of our business advisory services. Do you need any help with any of these?”
  • “Do you have problems that we can help with?”

Contact the Sam McNeill for a copy of what you will hear him say at the start of his own client discovery meetings.

Business Advisory Proposals Are A Waste Of Time

Not all of them but most of them.

The biggest mistake that renders Business Advisory Proposals a waste of time is that they are written before Conceptual Agreement is reached between accountant and client.

Conceptual Agreement means that the accountant and the client have agreed on three critical things face to face:

That there is a client problem or issue or challenge that is worth resolving and that the root causes of that problem have been agreed.

What the accountant will do, and equally not do, to help resolve the problem.

What the outcome will be and what client value will be generated.

The Proposal is then simply a written statement of the Conceptual Agreement with the addition of time, costs and resources required.

Without the Conceptual Agreement the Proposal has to replace the work that the accountant should have done in a face to face meeting with the client. This is extremely difficult if not impossible.

The second mistake that renders Business Advisory Proposals a waste of time is that they don’t get read because they are way too long.

One and a half pages is normally long enough. And this is very achievable when you already have a Conceptual Agreement with the client.

There are only seven brief areas to be covered off in your Business Advisory Proposal. Clients really appreciate the brevity and clarity of these short Proposals.

To learn more about winning more Business Advisory Assignments contact Sam McNeill on 1300 332 084