Practice Profile: A formula for forecasting the future
By Danielle Lee
The “future of accounting” inspires impassioned discussion, preparatory measures, and even dread across the profession. But for a collection of accounting firms, the encroaching waves of change represent a new way forward.
These firms are guided by the “Anticipatory Organization” learning system, created by futurist Dan Burrus, and further developed into a profession-specific training model in partnership with the Business Learning Institute, helmed by thought leader and Maryland Association of CPAs CEO Tom Hood. These “AO” firms are certainly not alone on the front lines of change, but their commitment to very intentional and actionable innovation has made them vanguards for the type of future-focused firm that will thrive in today’s evolving business landscape.
According to Burrus, who authored “The Anticipatory Organization: Turn Disruption and Change Into Opportunity and Advantage,” and adapted the book’s learning model into an edition specifically for finance and accounting, today’s firms have a series of binary choices. Do they want to be reactive or proactive? Disrupted or disruptors?
“Firms and companies are focusing on being as agile as possible to deal with the rapid pace of change,” he explained, which is “one side of a two-sided coin. Agility is a reactive strategy — to react quickly after a disruption disrupts, to act quickly after a problem happens, for the pace of change to be driven as technology accelerates. Being reactive, no matter how agile, adds less value. We are teaching the other side of the strategy coin, to anticipate disruptions before being disrupted. The choice to be a disruptor or disrupted. To pre-solve problems so as to not have them in the first place, to see amazing new opportunities with anticipatory mindsets.”
Burrus’ framework contains three key actions, he explained: elevating planning based on hard trends; accelerating innovation; and “what auditors, finance professionals love most”— transforming results.
The AOLS process begins with identifying “hard trends,” which are future facts (as opposed to “soft trends,” which might happen and can be influenced). Participants rely on their industry expertise and the learning system’s guidance to discuss these trends as they complete various AOLS online learning modules and take part in instructor-led workshops. These hard trends (in categories including technology, demographics and government regulations) provide the foundation for firm members to identify associated challenges and opportunities, both internally and for clients in their own industries. Using AOLS frameworks (like the “Eight Hard Trend Pathways to Innovation”) and innovation-focused language, participants can establish proactive, strategic plans for their firms and help guide clients to do the same.
This action plan, which Burrus outlines frequently at the various industry conferences he keynotes, has attracted firms to seek out his learning system. Firms that adopt the model begin with a pilot program, setting up a selection of firm staff to take the system’s online learning modules.
Ridgeland, Mississippi-based Horne, which became an early adopter of the AO model when the Top 100 Firm started using it three years ago, will be launching a whole new business plan in the coming months based on the AOLS.
The decision to first implement the learning system went “all the way back to just understanding that the ability to anticipate the future is not a pipe dream,” shared Kassi Rushing, Horne’s director of people growth and engagement, “to anticipate the opportunity to impact our business and our clients.”
While many AO firms are still in the process of introducing the training across their workforces, all Horne employees have taken the online learning modules, with new hires preferably completing them within their first three months at the firm.
The AO framework centers on recognizing opportunities for clients by identifying critical “hard trends” in those clients’ industries. Often, this means firms will focus on one industry at a time during the initial training process.
That was the case for Greenville, S.C.-based Top 100 Firm Elliott Davis, which introduced the pilot program last fall.
“We selected a group of firm leaders, primarily within one industry,” said CEO Rick Davis. “We felt the industry focus would lend itself more to collaboration as we developed skills, and took them as the pilot group, to go through all the learning modules. We found that to be a good way to introduce that to the firm as they got into it, and we got feedback from them. We launched a second group before we were finished with that one, The second group was more varied than the first group, to expose it to a broader group.”
This incremental training approach also helps with a common barrier to innovation: lack of time.
“We have different groups, different busy teams that work on it when they have the availability for their people,” Davis explained. “It works nicely to have certain groups that are not as busy.”
Still, he continued, time management is always a challenge. “Anything new, it’s easy to get excited and want to use it, but it’s a challenge to keep from falling back into the busyness of everyday. We try to keep the dialogue fresh, with ongoing discussions with different practice groups.”
While Burrus recognizes the time constraints on professionals, he warns against accountants sticking to the traditional model of historic-based compliance work and missing out on the opportunity for proactive advisory services.
“If you’re not scanning the horizon, looking all around, and not just at one view, you’re in trouble,” he said. “Firms are all looking at the same place, which is why, at tax time, they don’t work on strategy, they just work on taxes, with heads down. There are a number of months they can be strategic, these months they have to be tactical; the world is not slowing down for them. Traditional work will be automated — [for example] the automated audit, real-time accounting, and artificial intelligence will be doing a lot of the lower-level activities.”
Burrus, along with Hood, spoke about these risks at a partner meeting at Cherry Bekaert, emboldening leaders like assurance partner Bonnie Cox and HR senior manager Karen McManus to seek more information. But while the Virginia-headquartered Top 100 Firm was eager to adopt the AO learning system, it wasn’t until Michelle Thomspon took over as CEO in May 2018 that the firm moved forward with the plan, with Cox and McManus taking the lead.
“I knew about it, but it was not until the passion and momentum of a new CEO that it came into fruition,” McManus said. Cherry Bekaert asked for training volunteers and from that list, put together five teams focused on different industries, helmed by a practice leader. The firm also formed a sixth team dedicated to internal innovation.
“What we’re doing now is the team captains, industry leaders from the first round, are meeting every two weeks and following up,” Cox explained. “Individual teams came up with their own action items, and we had some preset goals laid out for them. Some are specific, that you as an industry leader need to take action on, to further industry specialization; some are applicable to everyone, and some are more unique. We put together an action list, and are checking in every two weeks.” The firm just kicked off a second round of shepherding six teams through the learning modules in early May.
Horne, which has made the AO system foundational to its learning and development strategy, recently launched a firmwide competition based on those principles, called #BeBetter. Last May, Horne encouraged teams of four to six employees to use anticipatory organization methods to present a business opportunity, a solution to a current problem, or a way to avoid an anticipated challenge that could benefit the firm. More than 100 firm members, in 19 teams, participated in the competition, which boasted a $15,000 cash prize for the winners. To encourage collaboration and “overcome the barrier of silos,” Rushing said, teams were required to include members from at least two industry focus areas and members from at least two different office locations, and could have no more than one manager/senior manager/director per team.
Hood and a blind panel of judges chose the three finalist teams, which were then provided feedback from Burrus and assigned coaches for the final round of competition. The final teams made 15-minute presentations at the firm’s leadership summit in August, and the winners (including second and third place, which also received a monetary prize) were decided via live voting by the entire firm.
The first-place team made a case for Horne to add a new human resources service line, based on hard trends in the HR industry.
The team “pointed out that in 2017, there were 85 changes to payroll and HR regulations, and based their business case on hard trends,” Rushing explained. “From there, what are the opportunities from this, based on what we see? [They] fleshed that out, in a section called ‘shape the future,’ and based on that, the opportunity for Horne, and the clients. In this case it was a brand-new service line.”
The team’s research and presentation, “a very in-depth and huge investment on their part,” according to Rushing, not only won them the inaugural #BeBetter crown but resulted in Horne following through on their proposal, with plans to add this service line.
In addition to a new revenue opportunity, the competition brought excitement around the AO model.
“There was a ton of energy throughout the firm,” Rushing said. “Twenty percent of the firm essentially participated actively. The process of talking to the team, feedback from partners … at some point we had at least half the firm involved, up until the voting, and then the whole firm. It heightened the sense of involvement, and with the money involved, cash prizes.”
“With the teams, the energy this created, there is a possibility of shaping the future of the firm, a heightened sense of pride for their idea, that you’re going to leave your mark,” added Marla Saxton, Horne’s people growth and engagement manager.
The competition so effectively exemplified the purpose of the anticipatory organization that Hood and Burrus will share Horne’s idea with other AO firms. Generally speaking, Hood hopes to foster a space for firms to more easily exchange these kinds of ideas as they continue on their anticipatory journey.
“Now, what we’re trying to do, is I’m working with Dan to create a community for these firms so they can begin to share some best practices with each other,” Hood explained. “That’s what’s probably going to be next.”
First, though, firms should master sharing these experiences internally. To do that successfully, the AO model relies on using a specific, shared language, which is also used to explain the concepts to clients.
“The biggest challenge, and the ways to talk them through it, is continuing into collaboration and capturing the key learning,” Hood continued. “In other words, we recommend creating a shared community, with examples of how you are using training and tools, the kind of results you’re getting, saying ‘I used hard trends on my clients, here’s what they said…’ Get it into the partner meeting to facilitate, and get all kinds of examples. If you don’t continue to capture and report that you are doing something, it will fall to the background. The language is permanent. If you remind them periodically how they are doing, how people are using [the model], where there are extended benefits, it will transform firm culture. That’s what [Horne managing partner] Joey Havens has done -- if you stick with it, that’s the perfect example of keeping it alive. Horne onboards every employee with it; it’s part of the culture now.”
Pennsylvania firm Stambaugh Ness keeps the AO model top of mind with weekly “war room” meetings, so the concepts remain fresh months after the firm completed the learning module training last December.
“We have continued to meet — we came up with the idea in order to keep the energy and passion,” explained principal Rick Hogentogler. “Tuesdays from 2 to 5, in the AO war room, we talk about experiences — what we talked to clients about -- to build the momentum, engagement, and participation.”
Hogentogler was tasked with leading the charge by firm president and CEO Steve Hake, who brought Hood in to kick off the firm’s participation in the program last August. Hogentogler helps manage these weekly meetings in a designated conference room, sending out an agenda three to five days in advance, identifying champions for specific initiatives, and assigning presenters for future meetings based on topics that arise.
“Executive-level sponsorship is certainly necessary to have someone hold everyone accountable,” Hake said. “Also, the investment we were asking with the initial pilot group of 20 people, we asked Rick to really champion that. He’s been our cheerleader here, holding everyone to task, challenging us as we work through various aspects of the training.”
The war room extends that training, with one common exercise in those meetings being to role-play client conversations.
“I’m a big believer in practicing,” Hogentogler said. “We go through role-playing of sitting there having a conversation with a client, how to broach this conversation, and explain what we’re doing with the Anticipatory Organization. Everyone comes up with an elevator speech, and we critique those, to have a better understanding, and be more comfortable talking about that.”
A few key discussion topics emerge.
“One we’ve really focused on is demographics, and talking about baby boomers,” Hogentogler shared. “We sit back [and say], yeah we have baby boomers, but who steps into that role of succession at these companies? We’ve come out with a platform speaking to all those issues, and those future owners.”
Succession, unsurprisingly, was also a hard trend Horne that identified in the firm’s AO discussions, and one that has provided them ample new opportunities to cross sell clients.
“We focus a lot on the construction industry, even in hard trends around demographics, with baby boomers exiting the workforce, a lot of ownership of our client base — the succession issues and opportunities,” Rushing reported. “The construction practice collaborates heavily with the wealth strategies group, to talk to business owners, using the hard-trend approach of succession. They help them with business exit planning, how they are going to handle family-owned businesses. Collaboration is a huge part — getting us out of our silos is one of the byproducts.”
Similarly, Rushing explained, the firm’s focus on cybersecurity “really came about in many ways as a result of anticipatory organizational thinking, looking at hard trends, future problems, and how to solve them. Cybersecurity is emerging as the No. 1 business problem for companies; we are perfectly positioned to help clients navigate that. Horne bought a small cybersecurity firm in 2015, and we’re growing that.”
Burrus commended firm MP Joey Havens for Horne’s large strides since adopting the AOLS: “It takes leadership and it takes people having the courage to make a bold move to do what firms normally don’t do — to invest in innovation, and make changes.”
Culture of change
Bold moves are easier to make when they are based on hard trends, Burrus explained.
“Hard trends give certainty,” he said. “When you are uncertain, you don’t make bold moves. Certainty gives the confidence to make bold moves … The ability to share confidence with the other partners helps [firm leaders] see the risk of not taking action is greater than taking action — it’s psychological.”
Confidence also breeds more intuitive decision-making, as many AO firms, including Elliott Davis, report. The firm has incorporated the AO model into expected behaviors and various levels of goal-setting for team members.
“As we’re all thinking ahead to the future, to develop the skills we need to bring to our clients, the anticipatory thinking component really comes naturally once people understand the basics behind it,” Davis explained. “It’s not that difficult — the framework behind it gives a roadmap. The ease of use makes it more simple to talk through, have discussions with clients, and engage at a higher level.”
At Horne, the anticipatory model is “how we run our business,” said Rushing. “From a people standpoint, we use hard trends for how we’re recruiting, how we’re training, how we’re engaging. Every group is impacted by the whole concept. If you stop to think about it, it’s not revolutionary how Dan Burrus took it and taught us to apply it— we use his concepts to build faster, learn faster. It’s basic but groundbreaking.”
Cherry Bekaert has benefited from this higher-level thinking, according to Cox, especially with the idea of focusing on solutions instead of “complaining about what we can’t do, and the barriers.” And when challenges do arise, they use them to the firm’s advantage.
“One of the concepts in the Anticipatory Organization Learning System is to have a postmortem to identify the things that could go wrong, things we need to be aware of,” Cox explained. “It’s not necessarily in the AOLS language, but [the concept of] failing forward, of being OK with not being right, of not knowing exactly what’s going to happen. We’re all on the same page, and have everyone’s back. That’s how you create a culture of change.”