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Conversations: Providing Solutions, Providing Value

Cathy Roth
Posted by Cathy Roth on Jul 28, 2022 12:49:00 PM

If you've ever had the chance to sit down and chat with Ed Kless or have listened to The Soul of Enterprise, you are well aware of both the breadth and depth of Ed's knowledge. I recently had the opportunity for a one-on-one chat with Ed, and I asked him questions ranging from lessons for accountants and bookkeepers to news about Sage and The Soul of Enterprise. Read on for fascinating knowledge, powerful lessons, and some great quotes.

Ed's early career included accounting software implementation and consulting. With this strong foundation in technology and his current position as Senior Director, Partner Development and Strategy, you might anticipate that a conversation with him would focus on technology. However, early in the conversation, he pointed out, "There's a lot of people who talk technology... I'm interested in technology, but I'm more interested in business models, business strategy and pricing structures."

Those interests are why Ed so frequently talks about non-technology topics, and those interests are why Ed jumped straight into a discussion of our economy and value.  

According to Ed, our economy is founded on the creation not just of wealth but also of value. "Business isn't a zero-sum game... There's a difference between the purpose of an organization and the result of an organization." An organization's purpose is not for profit, that is the result - even not-for-profit organizations have profits, they call them reserves. Instead, businesses exist for an externally oriented purpose.

As leaders learn lessons throughout their careers, they are more able to effectively work toward that purpose. 

Lessons for Accounting and Bookkeeping Professionals

Ed learned two valuable lessons very early in his career. 

1. Don't prescribe before you fully diagnose the problem.

This lesson came about from an experience at the beginning of Ed's career in 1996. In the middle of an accounting software demo, something that tended to be an all-day affair at that time, the prospect interrupted Ed and said, "We'll buy. Please, stop talking." 

The prospect expressed that what he really needed was an inventory report that showed inventory turns by item category. Ed, wanting to solve the problem, sat down and created a Crystal Report providing the needed information. He then gave the impromptu report to the client.

The result? The customer did buy; the engagement included a $30,000 software purchase and $30,000 in consulting engagement, which at the time was a fairly substantial engagement.

About six months into the engagement, the client told Ed, "You know that report you gave me? Because of the information in the report, we have been able to increase our sales this year by 40%."

Ed's report launched growth for a company that is now on a trajectory to be a $14 million company. And Ed got nothing specifically for the report. He couldn't even put it on a timesheet since it was done during the demo before they were a customer. Well, he got the $60,000 for the engagement. 

This experience taught Ed that he was a solutionist. Ed said, "I jumped into the solution, I was too willing to provide a solution before I understood the magnitude of the problem." In this case, the solution worked out in favor of the customer; in some cases, providing a solution before you understand the problem can harm the customer.

The lesson is that you shouldn't prescribe before you fully diagnose the problem.

The next lesson is the key to being able to diagnose the problem. 

2. Prior to each meeting, set a goal for how much time you will spend listening versus talking.

This is how Ed coaches about the ratio of listening and talking with prospective and existing clients. "When you're going into a meeting - any meeting - think upfront about what's your goal. What percent of the time do you want to be talking and what percent of the time do you want to be listening?" 

Over the life of an engagement, the percentages will change. Early on in the process, you should spend about 80% of your time listening and only 20% of the time talking. Later in the engagement, that may flip and you will spend 80% of the time talking. The best practice, though, is to think about your intended ratio for time spent listening versus the time spent talking prior to all business meetings.

After discussing these early lessons, our conversation turned to a different topic. 

The State of Accounting and Bookkeeping Today

"If your job can be completely replaced by a bot, then your job sucks." That was Ed's first response when I asked if he anticipated bookkeepers or accountants would be replaced by technology. He laughed, and then went on to explain that behind-the-scenes tasks have already become highly automated, pointing out that about 80% of the transactions filtering through Sage Intacct currently are never touched by a human being. 

However, Ed added, "One of the great things about humanity is that we've been extremely adaptable at figuring out how to serve each other." 

The more that historical transactions are taken over by technology, the more bookkeeping and accounting will transition further into providing insight to business owners. Those who embrace this business model will flourish, while the demand for those who only do transactional work will fade out.

When asked if the nature of accounting education needed to change to meet the changing nature of the profession, Ed said that it does and, in fact, that change is already starting with proposed changes to the CPA designation.

NASBA and AICPA have joined forces to create a new approach to CPA licensure. This "CPA Evolution" highlights the rapidly changing landscape in the profession as tasks once performed by new CPAs are being automated, offshored, or done by paraprofessionals, and new CPAs are taking on roles that were once handled by seasoned professionals. 

The new licensure approach is based on core training in accounting, audit, and tax with a greater emphasis on technology. Then, each CPA candidate would select one of three disciplines where they would demonstrate greater knowledge and skills - information systems and controls, business analysis and reporting, and tax compliance and planning. This new model is expected to launch in 2024

As you look at the ripple effects technology is causing in the accounting and bookkeeping spheres, the push for the adoption of high-value advisory services becomes even more clear. However, to be able to learn advisory services, there is a need to create bandwidth to learn new skills. This brings us full circle back to technology. 

Deliver High-Value Engagements with Sage Intacct

When we turned the conversation to discussing Sage, Ed started out by emphasizing that Sage offers some kind of general ledger system for nearly everyone on the business spectrum with the exception of maybe the top Fortune 1000 businesses. Sage solutions include: 

Sage Intacct provides a unique opportunity for accounting firms that have multiple practitioners and want to implement high levels of automation. Most importantly, these firms are on a growth trajectory and understand the value of high-value advisory and coaching services. 

More and more businesses are outsourcing those types of roles. They may still have an in-house bookkeeper, but they prefer to outsource for an advisor who will provide insight into the business and provide coaching around what the numbers mean, both in real-time and in a predictive manner. Because of the tremendous growth in this type of client business model, these businesses are an ideal client base for a firm that provides advisory and coaching. 

There are several options to learn more about Sage Intact.

Accountants interested in pursuing a Sage Intacct-based advisory practice to deliver high-value engagements such as virtual CFO services can join the Sage Intacct Accountants Program. The program provides extensive training resources, tools and support, such as a dedicated account manager, product training including product certification and self-paced virtual and in-person training, partner services implementation assistance, a dedicated partner technical support team and sales and marketing resources.

Advisory and coaching are more and more becoming the heart of accounting and contribute to the growth of business enterprises. And that brings us to The Soul of Enterprise...

The Soul of Enterprise

No discussion with Ed Kless is complete without talking about The Soul of Enterprise: Business in the Knowledge Economy. "The Soul of Enterprise is designed to champion the insight that wealth is created by intellectual capital, a product of the inexhaustible human spirit." In The Soul of Enterprise (TSOE), Ed and cohost Ron Baker hold insightful and high-energy conversations about issues surrounding knowledge work and interviews with business leaders, authors and influencers. 

TSOE has been so well received that it has been on the air for eight years this month. In fact, on July 25, 2022, episode #400 was released! In this episode self-described as a "rollicking good time," Ed and Ron took on objections - one by one - to a subscription business model for professionals.

To learn more about why the duo is recommending this new business model for accounting professionals, read what I learned about the topic when I had the chance to sit down and chat with Ron. 

Interested in diving deeper? Ron's 8th book, Time's Up!: The Subscription Model for Professional Firms, is due out this fall. In this Ron Baker and Paul Dunn collaboration, you will learn how to create and capture more value in your business, with a focus on relationships and lifetime customer value. 

If you pre-order the book, you will become a member of the Time's Up! book club and will receive a free Patreon membership to TSOE, be invited to a launch day video call with Ron (anticipated to be in November) and participate in follow-up calls with Ron for the next three months. Simply visit this page and follow the easy directions. 

You can listen live to TSOE on Fridays at noon PT on VoiceAmerica's Influencers Channel or at 1 PM PT on VoiceAmerica Business Channel. Alternatively, you can subscribe to your preferred podcast platform here

Topics: Practice Management


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