Why accounting firms need a strong strategic plan

Note: This article is the second in a series about how firms can successfully reassess and reimagine their business models. Read the first article here.

Failure to plan is planning for failure.

That adage rings especially true for accounting firms in these modern times. Buffeted by hurricane force winds of change, firms must ponder how to proceed through uncharted, unsettled waters.

Faced with such uncertainty, some firms have chosen to stay in place while they weather the storm. Their strategy, it seems, is to hope that what has gotten them this far will carry them safely into the future.

“Hope is not a strategy,” said Kassi Rushing, an organizational development consultant who specializes in accounting and financial services firms. “We’re in a time of such exponential shifts affecting the profession that standing still, maintaining the status quo, waiting to see what’s going happen, is really the most dangerous course of action.”

Rushing and business growth expert Dennis E. Sherrin, CPA, CGMA, propose a different path forward for firms through the creation of a strategic plan.

“You need to have a high-level, 30,000-foot view of where you want to be and how you get there,” said Sherrin, CEO and strategic consultant at the Avizo Group, a firm in Fairhope, Ala.

And, he added, “It’s got to be in writing.”  

A strategic plan is crucial to success because it accounts for and helps organizations keep pace with the ever-increasing speed of change in the marketplace. Properly built and communicated, a strategic plan allows all staff to understand and commit to the firm’s collective goals and KPIs. This cannot happen without a conscious decision by firm leadership to build a plan that includes certain essential elements using an effective process.

“Strategic planning is a discipline,” said Rushing, who who was tapped by the AICPA Private Companies Practice Section to develop the recently released PCPS Strategic Planning Toolkit based on material from the Business Learning Institute, a business unit of the AICPA & CIMA.  
“What we’re really advocating and championing for firms to do is to get serious about planning for their future.”

What makes a good strategic plan?

A strategic plan is a comprehensive first analysis of where you are and where you want to be. It’s an action plan to reach your goals.

To develop an actionable strategic plan, firms should collaborate with their team members.

In forming the core group that will develop the plan, firms should bring in a variety of voices, including members of different generations, according to the toolkit. Diverse perspectives are important. It’s also a good idea to find leaders outside the firm’s inner circles. Include people within the firm whom colleagues go to for assistance and whose capabilities could gain the buy-in of others.

“Strategic initiatives are best implemented from the grassroots,” Sherrin said. Such a plan “must have champions and people assigned with due dates. It must be shared with your whole firm. Get them to understand why the initiatives are critical and how it impacts them directly.”

The importance of anticipation

In her conversations with firms, Rushing has heard varying reasons why they don’t have a strategic plan. The partners at one firm told her that while they saw all the changes hitting the profession, they weren’t sure how or if they would be affected. “Everybody thinks they’re in this unique position where it’s going to impact other people but not them,” she said.

A partner at another firm said they were just really busy, but Rushing warns that busyness is a precursor to becoming obsolete, noting that she’s sure that companies like Blockbuster were also really busy before they got disrupted and went out of business.

Other firms think they have a strategic plan when what they actually have is an operational effectiveness plan, she said. An operational plan deals much more with the day-to-day running of the business than with the transformation of the business to meet future demands.

“And so incremental change is going to be the downfall of many firms in this environment,” said Rushing, who designed the PCPS toolkit to work for firms of all sizes, including small firms. “They’re just not going to be ready for the competition that’s coming at them from so many different sides.”

To prepare for future threats and opportunities, the strategic planning committee should make one of its top early priorities identifying the hard trends affecting the firm and anticipating the unique opportunities they may create. The process involves identifying “future facts” and breaking them down into demographic, technological and regulatory categories.  

“We treat anticipation as a skillset,” Rushing said. “And so when we talk about anticipation as a skillset, we are talking about the ability to look at hard trends, recognize what they are, see the opportunity or the disruption that they they’re going to create and then figuring out how we can create a future built around the opportunity, whether it’s for our clients or whether it’s for our people internally.”

The benefits of strategic planning

In addition to creating a roadmap to the future, a well-executed strategic planning process accomplishes several purposes for the firm, Rushing said.  

• It creates a shared experience that breeds unity. When people are a part of creating the plan, they are much more prone to support and promote the plan. Weigh-in equals buy-in.
• It creates a shared perspective of the future. People rarely see challenges and opportunities the same way, but through thoughtful discussion and deliberation, they can craft a common view that brings alignment and agreement.
• It casts a shared vision of the type of firm the committee is trying to build. A vision that is co-created and compelling is powerful enough to keep the firm on course even when the seas get rough.

Once those elements are in place, the committee must then build a plan to bring the vision to life. This plan must be actionable and accountable. Once the vision is set and the action plans crafted, the firm should craft compelling communications that help the workforce see themselves as part of something bigger than they are.  

Four reasons strategic plans fail

In Rushing’s experience, she has found four main reasons that strategic plans go off the rails.

Lack of commitment

Strategy fails when commitment fails, and that usually happens when key stakeholders are not brought into the conversation, Rushing said. The firm needs people listening and engaging in a healthy debate so that when the plan is put on paper, everyone is rowing in the same direction.  

Lack of accountability

Plans fail when accountability is absent. The strategic plan needs to make clear who’s responsible for each aspect of its execution and outcomes.  

To keep the plan moving in the right direction, the strategy team needs to regularly report on progress, or lack of progress, on key objectives. This process can raise hard questions when a project is behind schedule or not happening in the way it is supposed to be. This can lead to conversations that are hard but necessary, Rushing said,” because accountability is the precursor for real results.”

Lack of consequential results

Plans fail when their results are not measured properly, resulting in a lack of meaningful impact on the organization. Firms need to figure out what metrics to measure and how to measure them, but that’s easier said than done.

“We have to measure what matters and we have to understand that in today’s environment, not everything that matters can necessarily be measured by traditional means,” Rushing said. “That is super hard for accountants, so the results themselves along the way have to be thought about, talked about, celebrated when they’re met.

Lack of communication

Strategy fails when communication fails. Inadequate explanation of the plan will lead to the workforce not executing it. Personnel need key questions answered before they can commit.

• Why is the firm following this plan?
• What is the destination and why are going there?
• What’s in it for me?

Providing satisfactory answers to those questions is essential for people, especially younger ones, to find purpose and meaning in their roles. 

Moving forward with the plan

Once you have your messaging set, you have completed the strategic planning process and can move forward with implementing your plan. To ensure the plan is functioning well and still appropriate, given changes internal and external to the firm, the strategy planning team should meet at least quarterly to review the plan, with assigned subject matter champions accountable for agreed actions.

“This needs to stay top of mind,” Sherrin said. “The strategy must be regularly refreshed or reviewed. Otherwise, it will gather dust. It can’t be a static document or else you stay comfortable in your traditional ways, and that’s not always a good thing.”

Or, as Rushing puts it, “The world is different now, so what got us here won’t get us there.”

The new PCPS Strategic Planning Toolkit includes tips for success and a sample agenda showing how your firm can do it in a day.

— Miti Ampoma is a senior content writer for AICPA & CIMA, together as the Association of International Certified Professional Accountants. Jeff Drew is the editor-in-chief of the Journal of Accountancy. To comment on this article or to suggest an idea for another article, email joaed@aicpa.org.