The case for remaining relevant

In the mid-1980s I somehow lied my way into the sports department of the county newspaper where upon my first assignment – a regional playoff contest out on Long Island - I was instructed by the no-nonsense executive editor to sign out one of the papers Radio Shack TRS-80 portable computers to file my story remotely.

Without the slightest idea of what I was doing, I somehow figured out the modem and sent the story through.

I was reminded of this nerve-racking rookie reporter test because I saw last week that Radio Shack had filed for its second bankruptcy in less than two years – including the closing of nearly 200 locations. The brand, which opened its first store in 1921 in Boston selling ham radios and related equipment, had been bleeding about $200 million annually in its mobility division alone.

Sadly, Radio Shack had joined a dubious roster of companies that had failed to remain relevant in the 21^st Century and were either on their way out or had officially soaped the windows and locked the doors. That list includes such once-proud stalwarts as Blockbuster Video, Polaroid and Kodak – companies that failed or were too slow to recognize the efforts of more progressive competitors in their space. Blockbuster for one arrogantly dismissed the challenge of a promising start-up called Netflix.

Need I say more?

That also applies to CPA firms. In each of my presentations during the year I usually focus a slide or two on the dangers of a failure to recognize a growing competition.

And that competitive threat is not always from CPA firms.

For example, many banks and financial institutions offer many of the same client services as CPA firms – from 1040 preparation to financial planning and concierge services.

This is why I continually remind attendees of the importance of brand differentiation – a fancy way of telling them to distinguish themselves from their competition.

For example if Firm A offers tax and audit services and Firm B offers tax, audit and financial planning, which firm would be more likely to attract potential clients who need advice on managing their retirement savings?

Ditto for other niches such as business valuations or outsourced CFO services.

Upon filing for Chapter 11, Radio Shack issued the traditional statement of how hard its talented team worked to revitalize the company. But that’s akin to a CEO resigning to “spend more time with his family and pursue other interests.”

Too many companies don’t see storm warnings until it’s too late.

The sad part of that corporate myopia is that I’ll never run out of examples.