Howard’s Inner Circle, No. 14: What is a Community?

Some might suggest a dictionary is the best place to find the definition of the word “community.” Others might point to the entry in Wikipedia. After reading, Wikipedia at http://en.wikipedia.org/wiki/Community, it is readily apparent that the definition depends upon the context in which you are using that word.

You no longer have to live in the same town, nor have direct personal and business contacts, or vote in the same local election to be part of a community. The Internet, e-mail, and other technologies have really broadened what constitutes a community and how many members can belong at any particular time. Also a member of a virtual community takes many forms including being an observer, a registered member, an active participant, and a community administrator. The form can change in an instant. Unlike geographic communities, there are often few ties (a job, home, family, etc.) which bind you tightly. You can simply leave that community and go to another if it doesn’t serve you well.

What do you look for in a virtual community? How about a mission statement you feel comfortable with, that the members believe in, and try to follow. Throw in a code of ethics and list of responsibilities for all its members and participants, including advertisers? How about transparency and full disclosure? And like some geographic communities, security, comfort, and diversity. Deep down a community that promotes the common good, while still encouraging, within reason, self-interest.

Much of business is obtained from referrals. In my experience, writing about CPA firms for many years, they were often the result of a CPA’s relationship building skills with clients and other professionals in the immediate geographic area. The problem is those geographic communities don’t have the stability they once had. Globalization, changing economic conditions, and technology are decimating some communities and creating new ones, often at a dizzying rate.

What communities you belong too is an important decision. In the past, it often revolved around the geographic location and great thought and due diligence would occur before joining a particular community. Because of the ready instant access and the need to participate within these virtual communities, I believe similar standards should be applied in selecting all the communities that we “live” in.

© 2010
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The above is from the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle, No. 13: Two Diverging CPA Firm Business Models

Being a detached, independently paid and unpaid observer of CPA firms for over two decades allows me to freely comment.

The early successful business model was a firm with a number of rainmakers, often as little as two or three. They were great at business development especially via one-to-one contacts, and also adept at maintaining and working a tight referral network where referrals were expected to go both ways.

Over time, this well-established model has morphed itself into two new distinct business models. One is where those rainmakers have become the executive committee of a CPA firm that runs in a corporate style. Where previously, firm policies and strategies were hashed out in open discussion at partner meetings, decisions are now made at closed executive committee meetings. And no matter how it is sugar-coated, it is understood who are the powers-that-be, and how getting into the inner sanctum, the management committee, is only done by invitation or by a successful power play.

Contrast that with the second business model that also developed from the earlier rainmaker model. These are firms that strive to operate as a team with management building consensus and having a real understanding of the importance of the various individual’s contributions in the firm’s successes.

If I were to predict which of these two models will prove better, I would select the later. This modified team approach:
• Grooms successors;
• Encourages collaboration;
• Has greater multi-disciplinary capacities;
• Rewards innovation
• Promotes a firm-wide project management instead of a capture-what-you- kill mentality;
• Is more susceptible at building real working alliances;
• Taps well into intergenerational resources;
• Promotes widespread mentoring in both directions;
• Supports technology at all levels; and
• Is structured for everyone to be focused on their roles in business development.

In both models relationships remain the key, and referrals are still the main source of new business. The real difference is the lack of community in the corporate model. Although lip service might be given; it exists only in name and spin. The second model, the modified team approach, with a real manager rather than a CEO, truly promotes community. This approach will turn out better in the long run as all indications are technology, globalization, outsourcing and many other factors are permanently changing the rules of the game. Businesses and professional firms will be seeking to become members of various communities and will do so only by building trust and cultivating loyalty as the basis for relationships. Only one of these diverging CPA firm business models lives that.
© 2010
*************************************************************
The above is from the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.