Is it worth the time, the effort, the energy in talking strategy in an accounting firm?
Well, this was a question posed to me by ACCA.
So, on this podcast you'll hear Douglas Aitken, a colleague of mine, and I talk about the core elements of strategy and how those core elements can deliver a true return on investment for you and your firm.
This is podcast 1 of 5 in the ACCA Strategy Series.
"It's been proven in numerous studies that businesses with a really strong sense of purpose grow exponentially faster than those that are just commercially led.
"I think a better way to describe it might be a North Star. It's always there. It's in the sky forever. And any doubt about where we're going, let's find the North Star again and that then provides a really interesting reference point for decision-making."
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Paul Shrimpling: [00:00:00] This is podcast one of five of the ACCA Strategy Series. Welcome to the Humanise The Numbers podcast series. Leaders, managers, and owners of ambitious accounting firms sharing insights, successes and issues that will challenge you and connect you and your firm to the ways and means of transforming your firm’s results.
Douglas Aitken: [00:00:28] Businesses with a really strong sense of purpose, you know, it's been proven in numerous studies that they grow exponentially faster than those that are just commercial led. I think, you know, a better way to describe it might be a north star. You know, it's always there. It's in the sky. If we’re ever in any doubt about where we're going, let's find the north star again, and it then provides a really interesting reference point for decision-making.
Paul Shrimpling: [00:00:58] Is it worth the time, the effort, the energy in talking strategy in an accounting firm? Well, this was a question posed to me by ACCA. So on this podcast, you'll hear Douglas Aitken, a colleague of mine, and I talk about the core elements of strategy and how those core elements can deliver a true return on investment to you and your firm.
Let's dive into that discussion now.
Douglas Aitken: [00:01:27] Okay. This time of year, Paul, often thoughts turn to planning, resolutions even, in the new year. But a lot of people think about planning their year and what they want to achieve and whatnot, which leads us to thinking of strategy. But I want to focus on strategy in relation to accountants in particular.
And you know, why do most accountants avoid talking about or doing anything about strategy? Why is that, do you think?
Paul Shrimpling: [00:01:57] Well, cutting to the chase right at the beginning, Douglas, I think partly because the connotations of strategy are impractical, you know, that's it's a talking shop, lots of words, lots of chat, no action and no return on investment. So, you know, strategy is almost seen as an excuse to waste a load of valuable time and money. What might seem to be important topics, important subjects, but because ultimately the output, the outcome of that strategy conversation is maybe a document that gathers dust and doesn't actually influence the business in generating return on investment.
So I think that's probably the primary reason. I think maybe also there's a lack of clarity as to what strategy actually is. And you use the word planning. Planning is as good a word as strategy, albeit sometimes has a different time connotation. So if I bounce a question at you, Douglas - strategy, what sort of timeframes are we talking about when we talk strategy?
Douglas Aitken: [00:03:12] In my head, Paul, I think about a timeframe of about five years or so. And, and there's a reason why we choose that. I think, you know, if we go to a timeline that's less than five years, people start to, especially accountants, start to think incrementally or even in quarters. So say we went for a three-year timeframe and in most accountants’ heads that equates to 12 quarters and tends to lead us towards incremental change.
When in reality, you know, strategy can sometimes involve dramatic change, which sometimes lends itself to a longer timeframe. Now let's be clear, 10 years is too far. Anything can happen in the world in 10 years, but five years feels far enough away for it to, you know, for us to imagine dramatic changes and allow our brain the freedom to fix some of those issues, but it's also close enough to make us think, yeah, that's still within the normal bounds.
Paul Shrimpling: [00:04:26] So hang on a second, Douglas. So this five-year window is almost – what's the phrase? – beyond the pale for accountancy firms, particularly if, for example, as we're recording this in January, they're in the, you know, they're in the thick of the blood and bullets of self-assessment season. To contemplate a five-year timeframe just seems implausible, impractical. Isn’t there, there’s got to be another way of looking at this that gets any business owner, never mind an accountancy firm owner, to contemplate a five-year piece. What's the payoff? What's the pitch that works out and shows that a five-year window is the right timeframe?
Douglas Aitken: [00:05:11] I think there's two elements to that, Paul. And it's an interesting point, you know, for businesses who are not used to thinking strategically. Sometimes giving a time window that allows them to open their mind is important. So hence moving away from, you know, the relative short term, anything up to, you know, three years or so, and moving into an area where, yes, there might be discomfort, but also it's far enough away to give us a different perspective on things or to allow us to see things from a different angle. Of course, once strategy is in place, you know, a lot of businesses tend to refresh every year, so it's not their…
Paul Shrimpling: Sorry, refresh what?
Douglas Aitken: Refresh their strategy. So have a good look at things again and just assess, you know, is this still valid and go through the exercise, but in a different way, acknowledging that there is a good strategy in place. Does it remain relevant? Does it acknowledge the trends that are going on about us?
Does it acknowledge the challenges and risks within the business and the environment in which we operate? And is it still fit for purpose? And if that's the case, then the refresh exercise tends to be very straightforward. But going back to the five-year window, Paul, it can be daunting, I think, if we imagined a blank sheet of paper, but I think it's also important to acknowledge that there are tools and techniques that allow people to anchor themselves to envisage the future, to, you know, to acknowledge trends, for example, and just to cautiously dip their toe into the future, have a look at, you know, what it might look like and acknowledge that within the business model.
Paul Shrimpling: [00:07:16] I think what I see, and I know it's worked for my business as well, is that I'll go, well, I've got some goals for the year with a bit of a longer-term perspective. And you, I think you made the point about that's sort of an incremental – this is where we are now, what do we bolt on to what we've got in order to change the business, as opposed to a five-year window where you're going, hang on a second, start with, to use your phrase, that blank piece of paper.
What do you want it to look like at the end?
Douglas Aitken: [00:07:51] Well, it’s a good point, actually, Paul, so I guess the question for you is how has that five-year window impacted on your thoughts on strategy, because you have actually gone through it, in terms of your own business?
Paul Shrimpling: [00:08:06] I have, you know, interestingly I've set out, started every year in business, and this is our 14th year at Remarkable Practice, and I've started every year with some very clear goals on what I want to achieve personally and for the business in that year. And sort of ignored that strategic piece up until recent times. And now we're looking at, and it's not just me, it's the whole team, we're looking at a five-year perspective for the business.
And I'm tapping into greater zeal for the business then I've actually had for quite a while. I know I'm not known for being unenthusiastic and unenergetic, but I’m actually tapping into a deeper pool of motivation and enthusiasm then I've had for awhile, partly because I know where I'm going, and partly because I've set goals and not achieved them so many times. And, you know, I'm sure lots of people listening to this, they'll be in the same boat. And I've concluded, it doesn't matter. It's, you know, that bit doesn’t matter. It's the fact that you've got something worthy, you know, to chase. Now one of our values, and I'm going to pose the question to you in a minute but, you know, we've been very clear about the behavioural values in our firm for, since the get-go, since we started.
And we've got the three core values: be wholehearted, do worthwhile work and do stuff that's worthy of notice. And I look at what we're doing around the five-year strategy for Remarkable Practice and all of a sudden it feels more worthwhile than it did before.
And it's certainly worthy of notice more than it was before. And as a consequence, I've tapped into that resource of being even more wholehearted than I was before. And I think it's not just me. You can see that coming from the team as well.
Douglas Aitken: [00:09:58] Can we explore that just a little bit further, Paul, because I'm interested and I'm sure, you know, any listener that's tapping into this just now has a real picture in their head right now of Paul Shrimpling on juiced-up, Duracell batteries, which is quite an alarming thought, but what's, you know, tell me what's behind the increased zeal. What's changed in terms of that planning process that brought a different energy?
Paul Shrimpling: [00:10:31] I think it's a greater sense of confidence and certainty that A, we’re on the right path and B, we're likely to get somewhere near. You know, we're looking at, you know, I’ll be quite open about it, we're looking at a business that's five times bigger than it is now, in five years’ time. And it's like, that's just almost ridiculous. And yeah, but what if it's only double? Well, if it's only double, you know, that's still pretty good in a five-year window. And so there's the numbers part of it, but it's not just the numbers part of it, it’s the humanity and that is tapping into, you know, our core purpose, if you will, the, you know, humanise the numbers is connecting people to numbers, numbers to people in such a way that it means more. And actually, what's happening for me is it means more to me than it did before, partly because it's clearer then it was before. And actually I can see a path to achieving it. You know, people talk about a strategy about being vision and goals and values and those things are important, but it's not enough, you know, vision, values and goals. It's just, you know, they're crucial cornerstones of strategy, but not enough.
So you know we're posing and answering, you know, a number of questions with those things, but just having a goal, just having a vision isn't enough. You've got to have a route map. To answer your question in short, what I've got, the reason I've tapped into greater zeal and energy is because of the route map.
Now don't get me wrong. It feels almost ridiculously ambitious, almost. But is it over ambitious? Well, other businesses have grown faster than the one we're planning to grow, other people have done it bigger and better than we have, so why couldn't we do what we've set out to do. It's, and I think, and it's not just about me and Kate, the, you know, the owners of the business at the moment, it’s about the whole team, you know, can we tap into that greater zeal and energy from the team? I've just read some research from a very large Gallup study across 182 countries, and across those countries and millions of employee surveys, the research that comes back, it's quite frightening.
It says that 15% of people are fully engaged in the work they do. And you go, you're having a laugh – 15%? So what they're saying is 85% of people are not fully engaged in the work they do, you know, they’re jobsworths. Gallup don't use that language and I'm sure that's not the case in the UK in isolation.
I'm sure that the number that will be better than, stronger than that. Pretty confident, but Gallup don't isolate the UK numbers, so it's hard to see. And I'm certain that in a professional service world, like accountancy, the numbers will be higher again in the UK. But even if we get them up to 50% or 60%, or even 70% fully engaged, there’s still, you know, 30% of people not entirely engaged in the work they do.
Well, what if having crystal clear strategy shared with the team, you know, like you say, refreshed every year, it's not just a one-off thing. And I don't think a refresh every year is enough and I'll bounce that question. I've got three questions for you now, Douglas, I’m banking them up. And certainly it's not enough for me.
So I think strategy is a vehicle to use that enables us to tap into greater resources within our team. And if we can tap into those resources, even if we haven't got a crystal clear path as to where we're going, but we've got enough that taps into that energy and those resources and the motivation and drive, then all of our businesses are going to be better anyway.
So let me pose a question to you, because there's a few hanging there. One's on values, which isn't about vision and goals. It's about behaviour standards. How important do you think that is as a cornerstone of strategy?
Douglas Aitken: [00:15:04] Well I think it's crucial, Paul. Firstly, what do we mean by values? In my head, values is your code of conduct, if you like. It tells people, you know, so they know how to behave. I think that would be a nice way to put it as well. And of course, you know, at a certain level, everybody knows how to behave, but what we're doing is isolating certain things.
What we're doing is isolating certain things that really provides a lot of direction, a framework, if you like, in terms of expected behaviour from people. It informs not just the internal team. I think there's a far wider application with values that people overlook.
For example, in recruitment if we have a very strong values suite, if you like, then it gives us a real benchmark against which we can gauge potential new recruits. So suddenly we're not just looking at technical competence, we're looking at how are they going to fit in here? You know, what are they going to bring that sits within that current value set that gives us comfort that we've got the right person?
So it really gives us an additional framework. And I think what businesses have been doing of late Paul, you know, let's call this the 21st century business model, they're taking the values outside the organization. So they're being very explicit to the outside world about what their expectations are of their people.
Now, you know, it's a really interesting move that, isn't it, but I think it's a really shrewd move. Because why shouldn't we be proud about how we treat of people or what our expectations are of our people? So values, I think are one, I would put them in the top three cornerstones of any business planning strategy, as one of the key things to get right within a business.
Paul Shrimpling: [00:17:18] But isn't this another one of those, yeah, let's get clear on our values and let's put it on a nice plaque in the office and in reception and on our website, and then forget about it. Isn't that sort of what happens with values?
Douglas Aitken: [00:17:33] It can be, and and let's be clear that we've seen that, you know, on a number of occasions, but equally it's also very visible in firms that get it right, the dramatic difference that it can make. And yes, we're talking genuine ROI here. You know, the values that are lived are values that are properly inculcated within a business. So the paper exercise, I'm gonna say, okay…
Paul Shrimpling: [00:18:01] Hang on, hang on, inculcated - too many syllables for me. What do you mean inculcated?
Douglas Aitken: [00:18:07] Embedded? Yeah, let's say embedded. Lived, lived is probably more straightforward, properly being lived. And what do we mean by that? We mean that they are being lived and exhibited every day and that the behaviour that we are, the explicit behaviour that's being looked for in the values, is being sought out and demonstrated and reinforced on a daily basis.
It's vitally important to get it right. So it's almost like, you know, let's call it a scorecard. I'm not sure if that's that right connotation, Paul, but let's stick with that. It’s almost like having a scorecard where we are actively measuring and seeking out those behaviours and people reinforcing them when we see them done properly.
And also, the flip side, holding people to account when we see behaviours which don't follow the values.
Paul Shrimpling: [00:19:12] Which I think, you know, accountability is something people shy away from, Douglas. You know, accountability to performance numbers is hard enough, but accountability to behavioural standards where there isn't hard measurement attached is arguably even harder.
Douglas Aitken: [00:19:35] So let's talk about that then, Paul, in relation to accountants in particular, because, you know, let's be clear, in terms of an accountant’s training and background and qualifications and, you know, the way that they are, it's all about the numbers, isn't it? So when we are talking about, as we are here, humanising the numbers and bringing a behavioral element to, you know, to our firms, how easy is that for them?
Paul Shrimpling: [00:20:07] Well, it's not. It's not easy. It's not easy, but I guess, you know, this conversation, you know, strategy is not easy. You know, establishing a set of values isn't easy. Holding people to account for a set of values is harder still. But I think if you, if that's a question that you're posing, I think there's…
I think a good question to ask is, how do we hang on to our best people and recruit more brilliant people? And then you go, right, well if we've recruited the right brilliant people that fit with our values and we fail to uphold those behavioral standards in someone else in the team, we’re sending a message to all of our best people that we're not serious, and therefore run the risk of, you know, if not losing our best people, then certainly de-motivating or demoralizing them to some degree and therefore no longer tapping into their full resources and capabilities and motivations. So I think, and there's some interesting research that David Maister did a couple of decades ago who was, you know, recognized as one of the uber gurus of the professional service world, in his research that he published in a book called Practice What You Preach. And there were four cornerstones. And if you're going to ask me what the four are, I might struggle, but I know one of the cornerstones was the perception of standards of our fellow colleagues. And it's, you know, what standards? Standards to the behaviours that we agree, the right behaviours in our firm.
And you know, when that was high, the performance of the firms was 20%, 30% higher than the norm. And that's anecdotally referring to a book I read 15 years ago. But I do refer back to it often, you know, so there's a… I can recall all four because I used to go from stages.
This is what David Maister says. He says, what you should do is SACC your people. And that's SACC. So the four cornerstones of high-performing professional service firms were: make sure you've got and build a sense of satisfaction within your team. And that was make sure you got the right people on the right seats on your bus, in your business, you know, square peg, square hole.
So someone who's not comfortable communicating with clients, don't put them in a highly focused client conversation role. So there's that, you know, square peg, square hole – Satisfaction. A – sense of Accomplishment. C – Commitment of our colleagues and the other C is make sure there's a sense of Challenge.
And I think, you know, that commitment from colleagues taps into this values conversation and the accountability piece, which isn't easy, but does pay off. There is an ROI in the way you can keep and tap into the resources of your best people and maybe set your firm up to recruit other brilliant people into the firm as well.
Douglas Aitken: [00:23:16] And of course, that kind of echoes the Sirota research as well, doesn't it, Paul, where the three criteria were very similar, if I recall: a sense of fairness, a sense of achievement and a sense of camaraderie, and what really came to mind there was the, you know, the sense of unfairness if people aren't being held to account for their behaviour, isn't it? So that impacts on the top people – they see poor behaviour or anti-values behaviour being accepted. And that's what switches them off. Is that fair?
Paul Shrimpling: [00:23:54] Yeah, it is fair. Absolutely. So let's just go to Sirota research – 13.6 million employee surveys. This is not like a Gallup study of 500. This is the biggest research we have been able to find into high performing teams. And yeah, they say there's, you know, there's three things. Sense of fairness, as you say, sense of achievement, sense of comradery, but of all three, if you haven't got a sense of fairness, you don't stand a chance of building a sense of achievement or a sense of comradery.
And one of the, you know, what are the cornerstones of a sense of fairness? Well, people are paid fairly and there's a number of elements to that. People feel their job’s safe, which in the current economic climate is a bit of a challenge, but there's, you know, there's work that we can do. And people are treated equally to a set of standards.
So I think you're right, but if I can just twist this conversation into a slightly different direction, Douglas, which is one of the other questions that flagged up in my head. So you quizzed me around why strategies worked for me in terms of tapping into energy and resources. And I said, well, we've got a crystal clear view now as to what we stand for, which is, you know, humanise the numbers, connect people with numbers in a better, deeper way. And then all of a sudden you stand the chance of tapping into a greater resource than you ever would have done, which enables you to transform your practice. Okay. So shouldn't firms of accountants have some crystal clarity, therefore. Strategy, isn't part of strategy getting clear on what the core promise, core purpose of their firm is?
Douglas Aitken: [00:25:30] Yeah. I think it's a really interesting point because, you know, for many accountants, having a sense of purpose is not really something that they've thought about before. You know, I…
Paul Shrimpling: [00:25:48] I disagree. I disagree.
Douglas Aitken: [00:25:50] Let me explain where I’m coming from.
Paul Shrimpling: [00:25:53] No. Isn't the purpose to make money, Douglas?
Douglas Aitken: [00:25:57] Well, yeah, and I think, you know, when we ask accountants questions like that, that's one of the answers that we get. But when we change the question, Paul, and ask them, you know, why do you really exist? You know, what do you want to be known for? Deeper questions around business that maybe personalize it to them.
You know, why do you get out of bed every morning? And once you get past the glib answers about making money and, you know, to do accounts and blah, blah, blah, well, you know, what we've found is that a lot of accountants actually do have a deep-seated purpose. You know, they'll answer that question by saying things like, well, I want to help my clients. I want to see my clients succeed. I want to, you know, help that family business that's been around for 80 years carry on for another 80 years. You know, most, when you tap into it, really do have a deep-seated sense of purpose around what they do. They don't articulate it in the best way and they certainly don't lead with it in terms of their messaging.
And I think the challenge for the profession as a whole is to start uncovering messages like that because they create a real emotional connection, not just with clients and with team members, but with the owners themselves, because, you know, let's be clear, as a business owner, we can sometimes get disconnected from the very reason that we started up in the first place and we forget…
Paul Shrimpling: [00:27:39] In all the busy-ness, just busy, busy, busy.
Douglas Aitken: [00:27:41] Yeah, we’re too busy doing and we accept too readily that our lot is to work seven days a week for a pittance of a pay. That just seems to be the acceptance that that's life as an SME business owner.
Well, it doesn't have to be that way. And I think what we are, you know, what we're finding is that businesses with a really strong sense of purpose, you know, it's been proven in numerous studies that they grow exponentially faster than those that are just commercial led, and it may be, Paul, that that sense of purpose… I think, you know, a better way to describe it might be a north star.
You know, it's always there, it's in the sky. If we’re ever in any doubt about where we're going, let's find the north star again, and it then provides a really interesting reference point for decision-making. You know, when we're day-to-day absorbed in what we're doing, sometimes we're challenged with situations and whatnot, and just occasionally looking at the north star might inform our decision. And then when we go back to our conversation of a few minutes ago around values, values also then provide great input to that decision-making process. So suddenly you've got two reference points that you may have had subconsciously, but because there are now fully articulated, upfront and centre and visible, suddenly they provide a real framework and reference point for any decision-making.
Now, if that applies to us as a business owner, how powerful can it be for our teams as well?
Paul Shrimpling: [00:29:24] Well, I think, you know, you posed the question at the beginning of this around why is it accountants avoid strategy? And my answer was to a degree because it's a load of words, no ROI, and it's a document that gathers dust.
Well, actually, if a good strategic process enables you to get crystal clear on the core purpose, the core promise of your business, and also crystal clear on the behavioural standards, the behavioural values that you've got for your business, and those things show up every week in the firm. You know, that's not gathering dust, is it? It’s actually, it's influenced every decision, or not every decision, but, you know, key jugular decisions.
It could be every decision. But it's influencing decisions on a daily, weekly, monthly basis and therefore influencing action on a daily, weekly, monthly basis. That's not strategy gathering dust, that’s strategy coming to life. I think that's stunning, that is. I'm reminded of Peter Drucker, who’s arguably the most referenced business mentor, guide, coach, consultant, whatever you want to call him. And he talks about our team being volunteers. We have to treat our team like volunteers just as we, as business owners, are volunteers as opposed to employees, and he even extends that and says, look, you know, people volunteer for stuff, not to earn money.
They volunteer to do things because they care deeply about what it is that they're doing, whether it be an environmental project, the local sports club, you know, a church group, a book club, whatever it is, you know, people invest time, effort, and energy, you know; it means a lot to them for no pay.
And that's what we're looking to tap into, isn't it? There's an ROI there. If we can get into that with our team by having to do the hard miles, strategic miles, strategic work in working out what that crystal clear purpose or promise is. And then we'll, again, we stand the chance of, you know, elevating the drive energy and enthusiasm for what we're doing as a firm for ourselves as business owners and leaders for our team.
For our customers as well, because I think your point earlier about values is important, we need to go public, we need to share, we need to almost campaign what it is we stand for, what is our central purpose and what our values are, as opposed to it just being a framed piece in reception or a page on your website, because that just looks like marketing BS to me.
Douglas Aitken: [00:32:10] Yeah. I think the beauty about going public with that, Paul, is you know, there's a number of facets to it, but a couple that I'd like to pick up on is one it's a very visible way of telling the world what you’re about. So that in itself breeds accountability.
And in the world that we're in just now, people can deep dive on you and your business effortlessly. So they can find out very, very quickly whether or not your purpose message is authentic or not. Now, this is a really interesting point where we've seen some surveys where some businesses have treated it as marketing BS, and they've been found out very, very quickly, and it's actually negatively impacted the brand significantly.
Paul Shrimpling: [00:33:07] Have you got an example, Douglas?
Douglas Aitken: [00:33:10] Yeah, there's been a few. Well, if we look at, even in the pandemic, Paul, I think we saw a number of examples of purpose-led businesses who reacted naturally and wanted to help out because they were purpose led. I'm thinking of, you know, people like BrewDog or Leon, the fast-food company, where they shifted the focus temporarily just to help out. In BrewDog’s case it was hand sanitizer and in Leon's case it was distributing food to key workers and care workers, because that was what was needed at the time.
Paul Shrimpling: [00:33:50] You’re going to love this, Douglas. I did some background research into the purpose piece, which you know, I've been doing, and there was a line on the Leon website connected with their purpose, and the line was ‘if God did fast food….’, and you go, oh, how cool is that? So their purpose is, you know, if God did fast food, then they’d rewire the logistics that feed all of their restaurants in order to feed the NHS, which is exactly what they did. And if God did fast food, they'd look after the planet, and you know, Leon's food is, you know, focused that way. As opposed to what would be a counter-version of that, you know, the opposite if you get it wrong and it's just a BS marketing tagline type thing.
Douglas Aitken: [00:34:42] Well, you look at companies like Wetherspoons where, you know, the way that they were seen to be treating their people was, you know, they generated a significant backlash. Even now to this day, I meet people who are saying, oh, I'll never drink in a Wetherspoons again.
Paul Shrimpling: [00:35:03] Yeah, because they just got the message wrong because they're not really, you know, it was a focus on making money as opposed to maybe a focus on something that was deep, meaningful, worthwhile, worthy, worthy of notice.
All right, Douglas, I think we need to wrap this up. So we've covered quite a lot of elements of what strategy is, but I guess we've not gone, well, how do we define it? How do we define strategy? And I think for me, it's got to come to life on a daily, weekly basis in a firm.
And, you know, we've talked about how that happens around a central purpose, core purpose, what you stand for, what difference you want to make in the world as an accountancy firm, in your community. We've talked about values being lived on a daily basis, acknowledging the challenges and trends that are, you know, if we would talk about inevitable trends and unyielding rocks, you call them, you know, we call them things stable in time.
So these aren't airy fairy intangible things, they're really quite concrete, that facilitate and help the, the firms install and implement. Because isn't strategy, something that, you know, when you talk about living values, it's something that has to come to life, isn't it?
Douglas Aitken: [00:36:34] Yeah. And it's a really good point, Paul, to avoid the very thing that you talked about earlier, which is, you know, a piece of paper gathering dust on the shelf. You know, that the danger of just creating a strategic picture, if you like. So there's a number of elements to it, which you've touched on, and purpose is most definitely one.
And values provide that behavioural framework. There's a couple of others that I wanted to touch on, if I can. I think, you know, one of the cornerstones as well is knowing how you'll succeed, which you could probably subdivide into, you know, knowing exactly what you do and how you're doing it.
Paul Shrimpling: [00:37:21] Also, it's where you're going as well, isn't it? Because success, you've got to have a reference point, so it's good to get clear on where you're going. But you're not talking about that, particularly, are you? What is it you're trying to get to?
Douglas Aitken: [00:37:29] I am embedding the kind of vision piece as well, Paul, but I think the, first of all, knowing exactly what you do is, is quite an interesting one, isn't it? Because a lot of people tend to default to well, I'm an accountant, so I do accounts. Whereas actually, maybe the question should be, what business are you in? And if we frame the question in that way, sometimes we might take ourselves to a different place. You know, what business are accountants in? They're in the professional service business, in my view, which automatically then has connotations of serving clients and being very client focused and taking the accent away from the product or the output of what we do. So being really clear about that can help businesses, but I want to touch on the one area which I think is the, it's almost like the bridge between strategy and being able to implement on a day-to-day basis, and we call that knowing what's important right now. Now, you know, there's a lot of research gone into what we call OKRs, objectives and key results. A lot of the big companies, Google, you know, Amazon, they follow a model where they look every quarter at what's important right now. Now, it's not just acknowledging, you know, a set of priorities to deal with the here and now. It’s also with a look at that five-year picture of where we want to go. It’s looking at the vision, checking the values. And then it's acknowledging the current challenges and risks and within that whole framework is deciding, okay, within that framework, what’s your top priority for the next three months?
Now, you know, Paul, you know, when firms have done this properly, you know, what number of OKRs are we actually talking about here? Are we talking about a suite of a dozen or, you know, what's the right number?
Paul Shrimpling: [00:39:45] Well, it's never more than three. And it's never more than three just because, you know, people's bandwidth is already committed, you know, everyone's got a day job, you know, that they're responsible to deliver results on a daily, weekly, monthly, quarterly basis, which is the nuts and bolts of, you know, earning the money, doing right by your customer, you know, daily, weekly, monthly. Strategically, though, if all we do is, you know, what we do daily, weekly, monthly, and don't do something which moves the business forward, by definition what you’re actually doing, you’re moving the business, you're moving your firm backwards.
You know, standing still is not an option. You’ve got to be responding to the trends, the key influences, whether it be the shift in technology, the shift towards environmental consciousness, the shift towards whatever, you know, there's lots of things influencing people's attitudes and approaches to the way they're living their lives and therefore the way they're buying their products and services.
And so you've got to acknowledge all of that. Ignore it, and you become less and less relevant to your customers. You know, strategy has got to make your firm as relevant in five years’ time, three years’ time, two years’ time, one year’s time to your clients and your community. And what I find interesting in what you just said, and I know we chew the fat over this quite often, is what we've essentially done in this discussion is go strategy isn’t something that gathers dust, it’s yes, you have a kickstart process that defines the strategy of the firm, you know, long-term, big picture, you know, blank piece of paper thinking.
That creates a vision and a set of values and a central theme and purpose for the business, acknowledges the challenges and risks that the business faces, you know, takes into account the trends and shifts that are taking place so that we remain relevant. And then we refresh it once a year. But actually what you've just said is that every quarter we make sure we do one, two or three things every quarter that moves us along our path towards our vision.
And then if you do that, there's no way, there's no chance of your investment in time and money around strategy, there's no way it's going to gather dust. Because it's the values coming to life every day, every week, every month, you know, the, central purpose and central promise of the business of the firm is alive and living.
It's not just a tagline. It's not BS. It is real, it's genuine. It's authentic. And it sounds as though what we’ve done is had a conversation about building in deep-rooted health into a firm of accountants. You know, we're talking about the health of business, just like as a human being, we need to drink water, yes, good food, do exercise and not over consume but consume the right things, do the right exercise, emotionally connect with the people we love. And so there's lots of things that contribute to a healthy, rounded individual. Likewise, there’s lots of things that contribute to a healthy and rounded business that you can be proud of that achieves the results, because we've not talked much about profit here, but ultimately, you know, profit cash and capital value growth comes from where? Comes from doing the right things and actually the healthier the business, the more you're going to be able to enjoy it as well as feel pride towards what you've achieved for yourselves, your colleagues, your team, your employees, and your clients and your community as well. That's been brilliant, Douglas, thank you for acting as a sounding board. I'm not sure who was leading that or, but it doesn't matter, does it, it just felt like a really healthy capture of and summary as to what strategy actually means. Have you got any parting shots?
Douglas Aitken: [00:43:34] I really enjoyed it, Paul. It was a good exploration of it. And I think your summary at the end there was really good in terms of the impact that it has on, not just on you as a business owner, but on your clients and on your team and on your community.
So yeah, really nice exposition.
Paul Shrimpling: [00:43:55] You know, if there was an action for people to take, just Google ‘firms of endearment’, and it's a whole suite of businesses that have got connected to their team, connected to their central purpose. And if you scroll down the homepage, you'll see a graph and it compares the performance of firms of endearment with the performance of the good to great companies, from Jim Collins’ research, which shows firms outperforming their best and most effective competitor I think he talks about 11 companies in that. And then the S&P stock exchange index, and it compares and contrasts, just have a look at how, over a 15 year window, how the firms of endearment perform against the other two categories.
It's sort of American and it's biased, but they do look at international companies as well. So there's an international index and that, compared with a good to great index compared to the S and P over a 15 year window is fascinating. You know, it takes a minute to Google it and just scroll down and have a look.
And you'll see that actually, strategically, if you get your act together what's possible. Brilliant. Really enjoyed it today, Douglas, thank you very much.
Douglas Aitken: [00:45:09] Thank you.
Paul Shrimpling: [00:45:18] Douglas and I have just talked about the core elements of strategy, in overview really. What you can now do is dive into the series, the ACCA series on strategy, which covers each of those core elements in more detail, actually in discussion with accountancy firms who are either on the path to installing those elements of strategy or have already put them into place. Go to the show notes for this podcast and click the link to get access to the full series on strategy for accountants. You can also sign up to be notified each time a new podcast is made available.
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