Practical Ideas for Growth Podcast

Alice, is there anything you want to share? To further to find some of your experience and background before we jump into our conversation today?

Two things first. Of all I recently published a book, it's on this topic a specifically, it's called accountants Go narrow and the subtitle is turn the power of industry specialization into profit for your firm. And the emphasis here is on industry specialization. So while I am a very strong proponent of. All kinds of specialization, meaning you can specialize in a in a service or a technical area of expertise. My real focus, my strong focus is on encouraging practitioners to focus on an industry or a target market, and I can go into all the reasons why when we go further, but that is my. That is my area of specialization is helping accounting firms or accountants. To go narrow with a specific target market, that would be an industry.

I love it. I did not know about. Your book, but we. Will definitely share a link in our podcast notes for all of our listeners that are interested in learning more about that book. Alice, tell us a little bit more about. Why specialization is more than just marketing. It was something that you shared with me and some of our pre podcast conversations and I I love this idea of of niche niching out and specifically on an industry or target market. But I think. That a lot of our listeners probably think of this as just sort of marketing positioning. And I think you definitely and I both know that it's much deeper than that.

Actually, this kind of a strategy to grow a business a A professional services firm is a very complex, I would say and multifaceted strategy. It's not only marketing, it's all. In fact, it's more about the people in the firm and that what they bring to the table. How they grow their careers and their own differentiating differentiating of themselves in the marketplace. It's as as much as it is about the firms, because for every professional services firm, it's simply the aggregate of all the individual professionals in that firm. So the reputation of the individual practitioners builds together to create the reputation of the firm, and you have certainly. This strategy to grow the business is a go to market strategy. So in every firm that goes to market buying industry, it's certainly they are the individuals, the partners or the professionals are tied at the hip to the marketing department or the market. Theirs and they will help to leverage the expertise, let's say industry specialists, specialties or niche specialties of the individual practitioners. That's their job is to leverage it in the marketplace. But the job of those professionals is first and foremost is to build that expertise. Not just with knowledge and experience, but also. Of course with. Their own network in that in that. Marketplace in that industry marketplace itself, so it's a a very multifaceted strategy, but marketing is certainly key to helping it grow.

What are some of the? I heard you mentioned the professionals, right? There's a big impact in bringing those people along. Are there any other areas to the firm that a strategy like this impacts beyond marketing and you know some of the people in the firm?

It it it? Absolutely impacts the what many firms call LND learning and organizational development, or the the learning or training? Folks in the firm, because of traditionally they are heavily centered and focused on assurance, tax advisory, technical areas of training particularly to help the professionals gain their CPE credit that they need, you know, continuing professional education credits and it's more about the technical areas and a lot less about helping them. Build their their careers helping them build their leadership skills and relationship skills. And even when it does include. That it's often done in a very generic sense, so getting the the learning organization and of the the HR or talent development folks in an in a firm on board with this concept of helping their people understand the importance of specializing. And then using all those soft skills that I was mentioning like leadership skills, collaboration and camaraderie and a team communication skills. All of that through the lens of how to best build one's own expertise in an industry non the non-technical aspects of the of the industry they're targeting all has to work together. They all have to work together. So it's the communications, internal communications, external PR, communications. That's the HR. Department it's the if there's a strategic. Growth officer and that team, the the culture of the firm and the Learning organization are all key to work together with the person who's leading the industry program overall and certainly the marketing folks that are leveraging it as well. So it's it's very much involves a whole gamut of folks to support the program.

And I I think learning and development is so key today and I love that you talk about how deeply that needs to be aligned. And because I I also see some of the things that you see, which is it's very generic, even recruiting the talent right where you're going for that talent, what you're looking for to be able to translate that all critically, important to something like this. A little bit in our opening about, you know, really encouraging firms to look at an industry when they're starting to specialize. And instead of just, you know, like a line of business, which is where I would generally say most firms start tell us a little bit more about that and expand on that attach. And what you've seen.

When you know when you. Look at the websites of most of the firms out there. They all say here's the services we provide. And here's the clients that we serve or who the here, the people we serve and you'll see under the services your insurance tax and of gamut of advisory services and under who we serve. You could see. 10/15/20 different industries or more? Are listed and oftentimes I'd say most of the time that is marketing and it's smoke and mirrors and it doesn't take long to figure out what are the true industries where this firm has deep expertise and if a firm is just starting, my advice is always don't bite off more than you can chew. Don't choose 10 industries or 20. Choose one or two or three, and if a firm starts as a boutique firm with just one industry, there's so much that they need to do to be effective and really to effectuate a strong reputation of of deep real. You know, expertise that can, that their clients will value. To that's the starting point. So choosing an industry or choosing 1-2 or three industries to start with and do well is the is the starting point. How they choose those industries? That's the next question and it it would be a combination of what's the opportunity in the marketplace in their geographic marketplace. Whether that's, you know, local, regional, national, what what they see as the opportunity for growth for their firm, what do they already have traction in where they already can start and leverage the expertise that or the experience and the clients that they already have. Have and the what's what is the current state expertise of their people? Where to where or where is the passion of their people to to, to, to build on that expertise that they may already have. So putting those three pieces together is where they're going to have to delve into, you know, decide what we're going to put the. Stake in the ground. And we're gonna choose a limited number of industries where we can be successful.

I love it. Those three things align with our pillars and the other one that I Add all the time is not just a passion, but they have to have leadership so many times a firm does actually have what could be a very good niche, but they don't have a leader willing to expand it or take charge of that. And without, you know, all of the pillars, right being aligned, I often see niching fail. If there's just one piece missing. Out of that.

That's right. And. You mentioned leadership and it's so important because in fact we have many we have firms that have leaders that may be the best rainmaker in the firm and incredibly successful in the marketplace himself or herself. But in terms of leading his the people leading people on the team and enabling and empowering others to be as successful as he or she is. Because that's what it takes, you know, to to really and truly be a a leader of a practice and to help the firm move forward rather than just the individual move forward in their own reputation, you know, in their own success. So the the firm needs to be looking for true leadership skills and not somebody who's. Just only the, you know. It's not only it's a great thing to be the great Rainmaker, but that's not the same as Lee.

Absolutely I could. I couldn't agree more on that. We we talk about that in developing out those teams because sometimes it's really hard to find somebody. You've got people that might be really good on. You know the organizational side and follow up and accountability and oftentimes your your deepest set of knowledge, those rain makers, those people that are out and able to. You maybe have a vision and see what's in front of them for that niche and translate that are not usually the best people to, you know, organize and run whatever needs to happen from from that standpoint. And we talk a lot about needing to have both elements. You know, in those groups. And sometimes that's coming. From two different people.

Agreed 100% this is it's a big. Hurdle for a? Lot of firms and what I found to be important in overcoming. The hurdles that hurdle is by setting up the right incentives and motivation in place to. Align those incentives with what the firm is seeking, which is true leadership, true leadership of. We know, of course, that the firms do reward the biggest rain makers with the biggest compensation and, you know, financial reward. But what's in it for me to be a leader? You know of people? Why would I want to? Besides bringing in clients, why would I want to help these other five people to be successful in the marketplace? There's nothing in it for me, so when the incentives when the financial incentives of the person deemed to be the leader is, if that's aligned to the growth of the OR the goals, achieving the goals of the team, not as so team goals versus. This is my own personal partner scorecard with my own goals that's going to make a difference, and it may. It sometimes means a restructuring and a rethinking of partner compensation or leadership compensation at the firm in. Order to make that happen.

Yes, yes, yes, yes. And all of those things, that's a very, very common what I would call roadblock. Alice, what are some of the other roadblocks that you've run into as you are doing this work inside of firms?

Well, another common one is that we have a lot of firms that may the leadership or. You know the either. The the managing partner, or somebody who's responsible for growth close to the leadership of the firm has a vision to expand the firm and accelerate growth through industry. But they're dealing with the vast majority of the partners. Are generalists and you can't necessarily change their mind, especially if they're seasoned older partners been around a long time, have a lot of relationships with clients that they feel are successful relationship. And never did it because they had an industry specialty or, you know, a niche of their own. So they're convinced that they're doing it the right way and change is hard. Change is difficult, but it's even more difficult to win the role models the leaders of the you know, the. People who are. Leading the partners who are leading and. Coaching the younger folks to build their careers around something like industry when they don't believe in it themselves. So you got.

To walk the.

Talk, not just talk the talk. So you know the the firm may the firm leadership may say, hey, all partners you need to have that mantra of tell your people they need to specialize. But guess what? You're not doing it yourself, and it's very that's, I think, a huge a huge challenge and a huge roadblock. How do you steer the ship in a different direction? When the lead you know. The the great majority of partners are are not. Are not really on. The word and you know how how?

How? Who's who's?

Whose coattails should those younger folks get attached to? To be a rising star of the firm? If they're not demonstrating their success through the same, you know, the same methodology that that we're promoting for them. So that had. That has been a challenge for many firms, and you're probably going to ask next well. How do you overcome that one? That's not an easy one. To deal with. Right. So I'm not going. To lie and say it's easy, it's not easy. I think one of the the charmers, of course. Is the diamonds in the rough? Are those up and coming partners or senior manager directors who are, you know, given the space and given the opportunity to become a leader, they're young and hungry and they want to lead and they don't have that baggage. That's the truth because it is very difficult to change somebody's mind after. 203040 or more years doing something one. Way and asking them to. In fact, even those who say that they're willing to change, it's very hard to make that change at that stage of life for many people, not impossible. And I've seen it done, but for the most part, it's the younger folks that are going to have to have an opportunity to to lead and they got to make their own mistakes. And they have to be given that freedom to take charge and and and start leading the younger people. I'm not saying put those other guys out to Pastor. Obviously, but you know there that has been a challenge where you know, oftentimes they're not even interested in relinquishing the title, you know, leader of an industry for which they really don't play that role at all. Anyway, they just like the title. They have a lot. Of that, it's a it's a, it's. It's a people you know, industry. It's all about the. People and and that's every firm's going to be different because every one of them is made-up. Of a different you know. Complex mix of of people, personalities, baggage, strengths and weaknesses. Each one's going to be a different solution. But that's my thought is that, you know, let's let the younger people take take ownership, have skin in the game, have the right incentives and give them a chance to lead as well.

Yeah, I I think. That's so important, and it is one of the biggest roadblocks, right? It is really hard to move a firm from a generalist to a niche and it doesn't happen overnight. And it's not even like, you know, in 18 or 24 months, you can gain a lot of traction. And I I tell most of our firms, I I mean. One to two niches, tops, which is what you said as well, but it's going to take a couple years to get some sort of momentum built and then build on it before you're ready to do that in the process of that, a couple of the. Things that we've seen be successful in that transition. One is we try to pitch it as majors and minors when firms make this leap, it's really hard to go from. Being a generalist to specializing and only doing something in that area, even just moving the clients around, depending on the culture of the firm. And how they approach client service can be you know span multiple years to get that done. And So what we typically start by. Doing is say. Well, you know. Pick pick a major and then pick a minor right? So what are a couple areas that you want to start? And think about doing that and then as we have partners retiring to me, that's always the easiest way to start to align clients. Is, you know, around niches. And we watch firms do that very successfully and then? We watch firms. Totally miss that opportunity to realign those clients as we have partners. But the other piece of this that I think probably plays a really big impact is the culture of the firm and the thought around who owns the client. And you know it's. In order to transition clients in order to be able to do that more successfully, I think firms have to also have a culture where, you know the person that may be brought them in isn't the person that's always going to serve them or serve them for life in some respect.

Yeah, 100% the the, the, the partner or the service provider that can expand the client relationship beyond the service they perform themselves. So if it's. A tax partner if they can bring in some advisory work or audit work or share their tax. With another partner who has a special another specialty area of expertise and experience working with that clients industry, that is a real success. I mean, that's the diamonds, the diamonds or the crown jewels of the firm are the clients where there are multiple services provided to that client and the only way or not? The only I guess, but the the primary way that's going to happen is when the partner who owns the relationship shares that relationship with others at the firm that requires. That the partners trust each other and that they take a risk that they are sharing that client relationship. It is a risk and they'll often say, look, I don't, you know, I don't want that other partner to mess it up because here I've had this plan for years and years and want, you know, I don't want them to burn, you know, burn my burn our bridges. So you're relying on your partner. To be just as committed as you are at partner number one, you know with the relationships to service that client with excellence and certainly these are all again areas where the firm can properly incent partners to to to broaden the relationship beyond just them. Cells and that helps you know to have to have the incentives in place the right way. But I I agree with you also in terms of the major and minors, one of the things I did at one of the largest largest firms I worked for was to build as we were building that compelling case to specialize. Every year, the firm would announce here's the new you know, the the 10/20/30, whatever it was, new partners that people that. Just let's congratulate. Congratulate this list of people who made partner and for each one there would be the person would self-described in a in a short blurb. What is there? Tell us about yourself. It was, you know, one or two sentence. That's their elevator speech. And here's what they do, and I would take that list. And over a period of five years, it changed. Over time, which how many of them mentioned one or two or three or more industries, was how they self-described their areas of expertise versus an A specialty tax or assurance or or advisory area. So that I would say that hey 80, you know initially 8050. Percent of our new partner. There's have, you know, they have an industry specialty and over the years it was 60% seventy percent, 8085% of new partners identified with an industry. But what I did is I anybody who who identified with three or less industries I said, hey, they are building their their career. Around industry, but anything more than three it meaning more than one major and two minors. Then I consider them a generalist, so anybody who mentions a laundry list of industries, it's the Jack of all trades and really the master of none. But certainly three, you know, one major an industry major and up. To two minors. Particularly when they are somewhat compatible or aligned kinds of industries really makes a lot of sense for so many people. Even the bigger firms, the the the largest firms there are. I would say. Fairly few and far between that only do one industry 100% of the time. So whether it's seasonal, you know, depending on the time of year or whether it's because industries are aligned or two different areas of interest or the history of the person's book of business. You can still call yourself a specialist, even if it's among two to three industries. That's just fine. Let's try to. Get to that point, alright.

I love that we're debunking that perception because I do think that, especially for some of our listeners that maybe are not in the top 20 or even in the top 50 or 75 in the US I think that a lot of them, you know, think that this is you know. 100% of the time, you know it's much easier and I love that you just debunk the myth that you have the same challenges is what I think all of our other listeners are facing too too, that this is a challenge in every firm. The moving from a generalist to specialization. You know, it's not any easier in a large firm that. It than it is at a small firm.

They're, you know, one of. The firms that I admired tremendously, it's few and far between and that's why I really admired them. They every, every person comes into the firm and chooses an industry. That doesn't mean that they only do that. Clients in that industry. It means they're getting exposed to an industry practice. Group early on in their career that helped and they can switch. It's like a rotational program. They can year in year two, they can switch to a different industry and year three, they can choose a different industry. But the fact that they're involved in the concept of I'm going to go to, you know, serve clients. In an industry through the lens of that, their their industry and their competition, number one, that in itself is a is a mindset. Secondly, everybody at every stage of their career and me and myself and I'm sure you as well, we all have to network. It's all about building, finding relationships and building relationships. Networking is the way to do it. And with with industries with almost with every industry that I can think of, there is an industry community. Just like inside the firm, you have an industry community practice for healthcare, manufacturing, retail. What whatever the the firm has chosen, that becomes the the basis of friendships and camaraderie and trusted relationships inside the firm. Same thing as outside the firm. So in when you're when you're young people. Start feeling a mindset of growth right from the outset. I I'm a part of this firm and I'm responsible to help grow this firm the way I'm going to do it is building relationships. It's so much easier. To do that at. The American restaurant associations local chapter, or the Craft Brewery Societies, New York State chapter, whatever that might be, that's where they are. That's where they hang out. And if you keep going back to the same place over the course of a year or two, they get to know you over there, even if you're. Started out as. A fly on the wall and you didn't say. Anything in the first meeting? To eventually, that's where the relationships start. Building through, you know, repetitive contact and contact, and that's how. Young people can build that skill of building relationships and it it feeds on itself, obviously, and it becomes a self fulfilling prophecy of success when when you put somebody in an environment that is, you know, they share the same lingo, they same share the same. Culture in the craft brewery. Society a little different from the banking association kind of people. So there's something for everybody. And and it's about learning how to build relationships even when you're young and don't have the pressure. To build this. So that's one of the techniques that I. Think works and helps. People move from generalists to to specialists. Just exposure, yeah.

I love it. It well also we are almost at time here, so I'm going to ask you one final question on the same. We asked on all of our podcasts. Do you have any final, final tip that you'd like to leave with our audience, particularly for those that are, you know, maybe struggling with this transition inside their firms?

Well, one final tip. Let's think just real quick would be to put yourself in the clients shoes and it's. Not about the audit work. It's not about the tax work, it's about how can we help them in their business. So the tip would be, even if you're a generalist, don't go out to a new client without learning something about their business. In the context of their industry, that means understand what's happening with their competition, bone up a little bit on the lingo. Well, and the business models in that industry, it doesn't take long 20 minutes. Get yourself, you know, a little bit of research on the industry and and come prepared because no client wants to have to teach you about their business and their industry and the industry that they are. Confronting every day, they don't expect you to be as knowledgeable as they are because hey, they live and breathe it day and night, but you should never come as a deer in headlights, not just clueless. I don't know anything about the business of the client. And that's the that's the tip, that's. The best tip I can offer for both specialists and generalists.

Well, Alice, thank you so much for joining us today. This is a wonderful conversation like to our listeners, I hope you enjoyed it. And we'll have some links in our show notes for Alice's book.

Thank you for the opportunity. OK.