Accounting Enters the Creative Economy
This post is adapted from a presentation I gave at Xerocon Denver 2015. In it, I talked about the progression our economy has made from agrarian, to industrial, to service, to knowledge, to what I believe is here in some industries, and now surfacing in the accounting industry ā the creative economy. See this link if youād like to read the full text.
If you look at our nationās history, youāll notice the progression from survival (agrarian economy), to possessions (industrial economy), to freed up time (services economy), to intellectual pursuits (knowledge economy). Some of you may recognize the parallel to Maslowās hierarchy of needs. I suggest we as a society, and as an economy, are moving our way up that hierarchy.
So what comes next? I believe thereās a new age brewing ā itās been around for a little in the broader market actually. But I believe our field, accounting, is now entering the creative economy. In this landscape, itās not acres, itās not physical capital, itās not hours, and itās not even intellectual property that governs the economic paradigm: itās our ability to tap into the human capacity to imagine and create. Thatās what the market will reward the greatest. And thatās why the largest taxi company doesnāt own a single vehicle (Uber), one of the largest lodging companies doesnāt own a single building (Airbnb), and the largest content company doesnāt have any journalists (Facebook).
The next ten years or so, I believe, will be a drama between the characters of Knowledge (weāll call him Kevin), and Creativity (weāll call her Cora) ā something I call, āThe Tale of Two Economies.ā
The Two Most Important Numbers Arenāt on Your Income Statement
Iāve suggested before that accounting is not the language of business, but that I do thinkĀ CPAs bring unique abilities to the conversationĀ of business. In a world of information, perspective is king, and if we can see our finances inĀ their broader context, I think we go a long way to growing stronger.
To that end, Iād like to propose that your (and any other businessā) two most important numbers donāt appear on your incomeĀ statement: (1) customer profit, and (2) opportunity loss. This graphic helps illustrate:
Transformative Systems
Systems are so importantĀ as enabling mechanisms. Sometimes I like to call them āstructures of freedom.ā Iām reminded of a quote from Tim Williams at Thrivealās Deeper Weekend last fall, āProcess is the architecture for getting things done.ā Even creative processes, like transforming your firm, require some level of scaffolding to help you see it throughĀ from concept to realization.
Systems can compete with each other too. The system you know and use now will almost always beat out the one thatās fledglingĀ orĀ undefined. This is why itās almost always easier to spend hours replying to e-mails than to change your firm. Thereās a system for e-mail, but not for transformation.
So our goal is to developĀ a creative system for our firm, shield it during itsĀ fledgling stage, and then let it grow to become part of our way of doing things, that stands its ground and evidences its value as part of our firmās operations.
Cracking this nut is not easy. But I feel like I took another step earlier this year in my own personal system.
Brands Donāt Really Exist
Over the years, Iāve developed a skepticism of brands, a healthy one I hope. And I would venture to say you have too. One ad after another, all making claims to be the best thing ever. Common sense tells us it canāt actually be ā we all want to believe that particular cologne/perfume is going to make us instantly magnetic, but we know better. And then thereās one purchase after another; many donāt live up to the hype, some do, some do to begin with, but donāt last. Each of these experiences eats away at our ability to believe, to trust.
Brands can be so impersonal ā marketing messages connect us to the brand, and humans become merely the means to get to the brand. Ads create a desire for Cheerios, and supermarkets and checkout registers are just a delivery mechanism to acquire Cheerios for ourselves. The quicker and easier, the better. Products, not humans, are the end. (Or perhaps more accurately, the emotional state promised by the products.)
But brands are real, right? I mean, after all, thereās Coca-Cola, Apple, Southwest, and Rolls Royce. They must truly exist. Or do they? Maybe theyāre just made up. Maybe they only exist simply because we all agree they exist. Sorta like language ā we all agree this scrawled shape on a piece of paper constitutes a letter, ādā weāll call it. And we agree that it makes a particular, recognizable sound formed by our mouths and tongues. And when combined with the two other scrawled shapes āoā and āg,ā signifies those panting, four-legged furry creatures in our homes.
JetPack Workflow: On Being an Entrepreneurial Accountant
You may recognize JetPack Workflow as a provider of simple client and workflow management software. It was fun to join David Cristello in their podcast to talk about being an entrepreneurial accountant, where we covered topics like the psychological shift needed to prepare for the future of accounting, the importance of taking breaks (and how to take them, even in tax season), and tips for how to be an entrepreneurial accountant.
You can catch the audio and show notes on the episode page, plus check out their podcast on iTunes or other podcatcher (additional links on the episode page).
And be sure to swing by JetPack’s website if you’re curious to see how their workflow solution works.
The Future Takes Time
Itās right before tax season, and Iām sitting here at a table in my officeās frontĀ room, typing away on my laptop. This moment has significance.
We moved into this office space in February 2012, right as tax seasonĀ started that year. It came after an unexpected offer to change suites at ourĀ office park to a ground floor spot. Itās not a big space, 1100 square feet +/Ā. But I got to design the floor plan and had been working with the contractorsĀ on buildĀout, colors, flooring, network placement, etc. There was a conceptĀ then for how we wanted to decorate the front room, but we had to settle forĀ the basics at the time so we could go full swing into tax season.
And now itās three years later. And weāve decorated the front room toĀ welcome our customers into a relaxing coffee shop style feel that was itsĀ original plan. And Iām sitting at a pubĀ-style table here.
The future takes time.
This quote from ReidĀ HoffmanĀ I think isĀ critical for those of us out there trying to do something new:
āInnovationĀ comes from long term thinking and iterative execution.ā
Referring Link: Three Experiments to Try in 2015
I announced the Thriveal Lab’s “3 Experiments to Try” for 2015, which included: (a) coffee coach each of your team members, (b) prototype your evolved business model, and (c) donāt send tax organizers to customers.
For more details, related resources, and more, check out the original postĀ on the Thriveal blog.
Referring Link: Experiment 1 Lab Report Released
I’m happy and proud to release the official Lab Report for the first experiment conducted by the Thriveal Lab: Business Model Prototyping. In this post on the Thriveal blog, I announce the release, embed a video of webcast we had to release it to the profession, and provide a number of links to download your copy and also to continue the experiment using the tools of the Self-Experiment Initiative. A big day!
Thrivecast: Secret Stash
Each December the Thrivecast releases its “Secret Stash” episodes, which are previously unreleased snippets from all of their guests during the year. As a follow-up from my August 2014 interview, the December Thrivecast contained a secret stash snippet where I talked about the genesis of the value accounting model I was working on.
You can listen to the audio right from the page for Episode 42 with yours truly starting at 1:00:50, and of course catch their podcast in your favorite podcatcher.
Referring Link: Become a Thriveal Lab Partner!
As the Thriveal Lab gained steam and was concluding its first experiment, we reached out to continue to build our base of supporters who were organized in what we called Lab Partners (a nice high school reference). ;)
In this post on the Thriveal blog, we reiterated the mission of the Lab, sounded the call for partners, and listed the special benefits they would receive.
Reflections After 3 Years of Value Pricing
I met Ron Baker in person for the first time in 2011. Before that, I had read his articles online and attended a webinar he presented. But in 2011, I attended the first Thriveal Deeper Weekend, which was a āFirm of the Futureā seminar offered by Ron Baker and Ed Kless. That was two days of brain-crushing, mind-altering, future-shifting learning and dialogue.
I immediately started to change things: first with a handful of customers with whom we had strong relationships, then with certain service types, etc. I remember a year later, Iād hardly made the progress I wanted to, and was feeling down wondering if it was ever going to happen. I remember chatting with Ron around that time, and he mentioned in passing that firms usually take three years to fully transition to value pricing. Whew ā I was much relieved: I still had time.
Three years later, I look back, and boy, there has been such a change between then and now. Iām happy to say, weāre now completely value priced ā Iām still learning (and doubt Iāll ever stop), but I feel so much more freed as a business owner having gone through this process. I was recently reflecting on some of the realizations Iāve had along the way and wanted to share them with you:
CPAs Should Own the Profit Equation
Great things can be accomplished by teams. And the best teams are made up of players who have unique roles that mesh and multiply their teammates.
What is the unique role of the CPA? The thing we bring to the table of business?
I propose that CPAs should own the āprofit equationā ā that it be our domain.
Be Aware of Your Cognitive Dissonance
As a small business owner, you have one foot in the future and one foot in the the present: building your firm for the future, while serving the needs of the present. The difference between the two worlds is the gap: the space between where you are and where youāll be. If you let that gap grow too big while your feet are straddling itā¦well, I think you get the picture. š
In some ways, that gap is what defines an entrepreneur. They see the difference between the world how it is and how it can be. Itās an internal cognitive dissonance, a type of itch, that they reach out to scratch.
What can happen nowadays, though, is that so much innovation comes at us, that the volume of cognitive dissonance grows too loud (anyone out there felt it?). Thereās a difference between a music level thatās motivating, and a music level thatās inhibiting, or even downright crushing.
Thrivecast: Thriveal Lab
My first Thrivecast appearance was to chat with two great hosts and great friends, Jason Blumer and Greg Kyte, about the newly christened Thriveal Lab and our first experiment on business model prototyping for the accounting profession.
In addition to the genesis and operation of the Lab, we talked about the principles of experimenting, and why accountants can find it hard even though it’s so necessary.
You can listen to the audio right from the page for Episode 38, and definitely be sure to subscribe to the Thrivecast for lots of great information, inspiration, and fun. If you’re an entrepreneurial-minded accountant, the Thriveal CPA Network is also a great way to connect with your tribe and grow - I highly recommend it!
Doodle in the Margins
When Iām reading for content, Iām all about the marginalia: underlines, questions in the borders, even oneĀ sided handĀwritten debates with the author. Which is why I was much relieved that the Kindle allows you to digitally underline text and add notes too ā you can even export them to a PDF to save and search, a way cool feature that Iāve taken advantage of many a time.
But what if the text in a book went from edge to edge? No spaces between the lines, no space on either side of the page, none at the top, none at the bottom: a page littered with letters. Hard to read, cramped with lines blurring, and eyes crossingā¦
Now imagine if that book is our firmās story: tasks and activities wedged endĀtoĀend, no space inĀbetween, no real breaks, no room in the borders. When all the space is filled, thereās no place to make edit markings. When all our resources are committed, thereās no capacity for change. When the entire page is full, thereās no space to doodle in the margins.
Referring Link: Lab Experiment 1 - Business Model Prototyping
Today I launched the inaugural experiment in the Thriveal Lab with theĀ hypothesis that ‘there will be multiple successful business models for accounting firms of the future’. We discussed the premise and experiment framework, solicited experimental firms to participate, and thanked our founding Lab Partners for supporting the important work of the Lab.
Check out the original post for more!
Referring link: The Phrase That Will Change Your Business's Future
What is the ‘phrase that will change your business’s future?':Ā āIād like to try an experimentā¦letās see if this works.ā
In this post on the Thriveal blog, I announced the Self-Experiment Initiative of the Thriveal Lab – a structured way accounting firm owners couldĀ think through and design an experiment, and then record their results to a central repository to be shared with other experimenters.
Read more about the initiative and the surrounding tools and concepts in the original post.
How to not be Strategic, Strategically
Thereās a balance line somewhere between having everything planned out and having no idea whatās going on.
And the ideal is not āhaving it all figured out.ā Thereās no reason to feel bad or punish yourself for not being fully organized. Chaos is a natural part of the picture ā you canāt pull order from chaos without a little chaos. Which is why itās okay to deliberately mess things up now and then. Or as we say in Thriveal parlance: blow things up.
When asked the question, āWhat does your firm want to be when it grows up,ā itās okay to say, āI donāt know.ā Discovery really best happens from the side rather than head-on. You really canāt plan āa-haā moments, or else itās not really a discovery. Discovery is, by nature, unexpected. All you can do is put yourself in different places or situations where it might occur and remain open to it happening, without compulsion. A little trust in Providence doesnāt hurt either.
The Customer is the Product
Those of you tracking the Thriveal blog for a while may have noticed one of the themesĀ Iāve been exploring over time through my posts is: where is the practice of accountingĀ headed? Entries on that topic include:Ā Ā A Profession In Search of an Identity,Ā The Firm(s) of the Future(s),Ā Accounting Is Not the Language of Business,Ā andĀ theĀ mostĀ recent:Ā Accounting For What.Ā In that post, I came right up to, but didnāt take, the lastĀ leap in the hopscotch of the thought process, which is what Iād like to share now: āTheĀ customer is the product.ā
I first heard that phrase uttered by good friend and Verasage founder, Ron Baker, at aĀ conference last fall and it caused me to do a full stop in my tracks. I realized I can beĀ focused on what weāre selling, and changing our offerings, and marketing our productsĀ and services, and on and on. But the truth of the matter is, itās the customer thatās theĀ product. And what I do is best measured by how it changes their lives.
What we do is best measured by how it changes our customersā lives.
Trough of Disillusionment
Itās coming. But somehow it helps to know itās coming.
Thereās always the initial excitement, and the expansive vision of new possibilities. Then reality sets in.
The key is to recognize itās part of the process: One does not reach the āplateau of productivityā without walking through the ātrough of disillusionment.ā The trough is where the idea is purified, distilled, crystallized ā stripped of its misconceptions, to see what truly lays inside.
You do not reach the āplateau of productivityā without walking through the ātrough of disillusionment.ā
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This is true of so many different scenarios.