The Winds of Change – Or Irrelevance!

 

During college I worked for a time at a Tex-Mex restaurant when in an effort to boost stagnant sales and customer counts, Joe, the manager gathered the entire staff one early Saturday morning and proceeded to draw the face of a clock on a piece of paper. The hands of the clock were squarely on 12. He held it up for a brief examination and then drew a third hand and positioned it five minutes past twelve.

“Most people think that change means having the clock hands go around until they again reach twelve,” he explained. “But even five minutes is change. We don’t have to reinvent ourselves completely, but we need to change – even if it’s slowly.”

In that most basic demonstration he managed to drive his point across and highlight the importance of change and more critically, adaption to change.

Of course, that was years before words and technologies like Internet, texting, email, and Smartphones became embedded in the American lexicon. But the strategic lesson remains the same about remaining relevant by adapting to change.

The landscape is sadly replete with examples of once-mighty stalwarts of business and industry who failed to change when it was necessary for survival. For example, Kodak once commanded a 90 percent global market share in film sales and film developing but failed to see the encroaching threat of digital photography, even though the company, incredibly, owned a patent on the technology but declined to take advantage of it. Reader’s Digest once boasted 16 million readers but missed the gargantuan opportunity with online publishing. Remember Blockbuster Video? The chain once had roughly 9,000 units but ignored the threat of encroaching competitors such as Netflix. Now exactly one unit remains in Oregon.

And I could go on.

Which is why CPA firms need to meet change head on – especially in the current climate of the COVID-19 pandemic which has forced practitioners to adopt new models of operation and boost technology to remain competitive.

One CPA client insisted on the mandate that his staff come into the office during the height of the pandemic instead of investing in remote technologies. The fact that three of his key staff exited for more updated pastures was hardly a coincidence.

Another firm remained tethered to the antiquated motto of “sticking to their knitting” which was a euphemism for their tax and audit lines instead of exploring more in-demand niches such as IT consulting CAS and family office. So, when it came time to explore the possibility of an upstream merger, the partners were astonished they only generated lukewarm interest from potential successors.

With technologies like Blockchain and AI eventually automating the traditional commoditized niches (i.e., the aforementioned tax and audit) firms that do not adopt to change are destined to create real estate and client opportunities for those that do.

Just ask Kodak or Reader’s Digest.