This one idea has helped us to understand a lot of frustrations we were experiencing in our accounting firm towards the end of last year.
We had better processes and systems, powered by better technology.
We were attracting our dream clients and our MRR was higher than ever before.
But things still felt…….tough… tougher than ever in fact.
But why was that? Wasn’t technology supposed to be making our lives easier?
THEN, one day, I came across this concept of the COMPLICATED versus the COMPLEX in a book called “Brave New Work” and I immediately saw how it applied to our firm and the accounting industry as a whole.
Complicated vs Complex
So let me start by explaining the difference between something that’s complicated and something that’s complex.
Complicated – A good example of this is a car engine. Something that’s complicated can be understood. We can write instructions for it. We can learn about it. It might take time, but eventually we can dissect it. We can write rule books for it and fundamentally, we can control it.
That’s the key aspect of something that’s complicated. Something that’s complex, on the other hand, is quite different.
Complex – Something that’s complex can’t be controlled. It can only ever be managed.
If complicated is a car engine, then complex is traffic.
Traffic is complex because you have different drivers, of different abilities, driving different cars, going in different directions with different focuses.
All manner of complexity surrounds that. It suddenly becomes a very difficult situation.
We can’t control traffic, all we can ever do is do our very best to manage it.
Complicated vs Complex in accounting
The services we provide and the prices we charge in our accounting business are complicated.
They take time to learn. We can put processes in place to plan, maintain and fundamentally, control them. We can get the right technology. We can train our team to use and sell them.
However, the complex side of accounting is introduced in the businesses that we serve. Our clients.
This is due to having different business owners, with different agendas, different levels of experience, different operating systems, different sized businesses, different markets and many different frustrations that appear.
These are people. They’re not processes and systems.
The challenge that we face in providing accounting services to these businesses, is that it’s where the complicated meets the complex.
It is in the meeting of these two entities, that causes so much frustration.
Where we were going wrong…
All of our efforts were being poured into controlling the COMPLICATED (our services) and a much smaller amount into ‘attempting to control’ the COMPLEX (our clients.)
The problem though, as I mentioned above, is that complexity can never be controlled…. it can only ever be MANAGED.
And it doesn’t matter how good the technology gets, managing that complexity will always be challenging, because it’s a hands-on process, which is why we need to develop skills and tactics to arm us in this mission.
Now I don’t have a silver bullet, but I can help you to understand the problem better and moreover, help you to articulate the problem to your team more clearly.
What I want to do in this video, is to help you to unravel the difference between what’s complicated and what’s complex and to understand the approach you have to take to solve each of them.
This is an interesting and strong concept for us to get our heads around.
Watch the full video below, then join in the discussion on Linkedin >>
We put so much effort into our training, in our systemisation and in our checklists that we produce for staff. But we put very little effort into learning the required skills to go and actually manage our clients, to sit with them and to have difficult conversations.
A lot of this is to do with mindset and overcoming the fear of having difficult conversations and what might happen if we do. But for me, this is where we’re really going to be winning and moving forward.
We have all this great technology in the accounting industry, but life doesn’t feel any easier than it was 5 or 10 years ago.
The reason, I believe, is because no matter what technology you bring in, managing the complexity, managing your clients, always has been and always will be a hands on experience.
And that’s where the real skill lies. That’s the real art.
Therefore, isn’t the complex what we really need to invest our time and energy into in 2020?
6 tactics to start thinking the right way
1. Manage the value exchange
Agree exactly what services the client is getting and agree exactly what fees they will be paying each month for these services.
If you can’t manage that part, you’ve got no chance of managing the complex.
This was the whole reason GoProposal was created. It gives you some granularity about the exact services your client can expect to receive and the exact fees they will be paying for it.There’s no more sophisticated system on the planet like this for accountants. We designed GoProposal originally to help us in our firm to manage our complex.
2. Review early and review often
At the start, you have no idea what you’re getting in to. Therefore, we always do a full review after three months of their engagement letter being signed.
This means that you can simply say ‘hey guys, this is what we agreed on, but this is not working for these reasons’. You can then adjust the price or service level as necessary and keep the value exchange system in check.
So, review early and then review often.
3. Map out the process.
You need to give your clients insight into the services they’re getting.
They need to know what to expect, what they need to give back to you, by when and what happens if they don’t.This needs to be fully and clearly communicated at the start.
4. Set your standards.
If you want to have any chance of managing your complexity, you need to set and stick to your standards from the get go.
There’s no point in saying to the client ‘you need to improve your bookkeeping’ or ‘you need to upload things on time next month’. You need to explain exactly what that looks like.i.e. If you want them to improve their bookkeeping.What technology do they need to update by when? How do they get receipts to you? What does your VAT return process look like? Show them everything.
Then, you have to explain very clearly if they fall short or don’t deliver as you’d expect.
There’s no point in saying, look, you need to be better next month, because if they submit one extra receipt next month, they’re better than they were this month, and that is not actually what you mean.
Set your standards clearly. Then, if they can’t achieve that standard, you need to look at ways that you can help them achieve it.
5. Be firm.
You can’t control a wild horse from a distance by being friendly and by being nice. You’ve got to get in amongst it. You’ve got to get hold of it.You can’t do this by email. You’ve got to do this live, sat in front of that person or on a video call.
Either way, you have to have a real conversation with them. It might be a difficult conversation, but you’ve got to be firm.
You HAVE to lay out your rules of the game, how you want this to work and what happens if it doesn’t.
This is where being firm is being kind. Your client doesn’t want to be a wild horse. They want to be tamed. Because by being tamed, they are taking proper control of the finance function of their own business.
It is in everybody’s interest for us to be firm.
6. Upserve Them.
If your clients aren’t quite able to fulfil the standard that you need them to, maybe there’s an opportunity here for you to upserve them.
For you to say ‘hey, look, you’re just not generating the invoice is in the way that we need you to. Would you like us to do that for you instead?’ OR ‘You’re really struggling to get those debts in and that causes a real problem when we trying to reconcile your account, would you like us to chase those debts for you?’
Some of those bad clients that you may want to get rid off might move to another accounting firm, pay five times as much, but not be a bad client at all.
This is because they’re now being served to the right level, because that accounting firm is managing that complexity, and charging the right amount to deliver the level of service they require.
I guarantee they will appreciate and thank them for managing that complexity even if they have to pay for it.
Let me know which of these tactics you’re going to implement first in the discussion on Linkedin >>
The 1-3-12 Method
How to guarantee you’re never doing more for your client than you’re getting paid for.
- Payroll fee reviews, how to do them every single month
- Bookkeeping fee reviews, how to do them every quarter
- How to review everything else, a logical framework for a 12 month fee review