Moving Toward the Virtual Firm (Part 1 of 5)

Digital technology removes barriers and excuses

Most professional services organizations are already adopting some form of digital identity. It takes just a bit more to embrace the cloud and reap the benefits of becoming a virtual firm.

Charles Handy, one of the founders of the London Business School, executive, and author of several books on organizational philosophy observes that, “[t]he companies that survive longest are the ones that work out what they uniquely can give to the world not just growth or money but their excellence, their respect for others, or their ability to make people happy.  Some call those things a soul.”  In his book, The Age of Unreason ( Hutchinson Business, 1989( (2nd Ed., Arrow, 1995) Handy coined  the concepts of “the shamrock organization” (which, like the eponymous plant, has three leaves:  (1) management; (2) specialists; and (3) an increasingly flexible labor force) and “portfolio working,”  This refers to the career and/or lifestyle in which the individual holds a number of jobs, clients and types of work all at the same time, rather than the  traditional lifelong career within one organization. 

This transformation was recently further confirmed by Dr. Geoffrey Moore, a business strategist and author of Crossing the Chasm.  Dr,. Moore observed three major trends that are opening opportunities and leveling the playing field for businesses both large and small around the globe.    Consider these “mega trends”, their impact on our businesses, and the tools we need to participate and capitalize on the opportunities in 2013 and beyond. 

Digitalization:  The migration of text to the digital form as a format of preference is here.   In fact, whether you are receiving an email or document, the expectation is not to print it.

Virtualization:  Business is increasingly being conducted online rather than in person.   Sometime in 2000, at the peak of the Internet bubble, Wired magazine foretold that “the Internet changes everything” removing the limitations of physical space and time.  While many dotcoms would not survive a fabulous bust of the bubble, that prediction is worth re-visiting.   Today, we can increasingly limit the face to face, or in-person interaction to those instances that are core to our well-being. Such high touch interaction can be reserved for particular instances, whether they be the closing of a deal or the imparting of a hug, with other delivery platforms used in much of the day–to-day activity. 

Transformation:  Transition from large integrated corporations to enterprises that staff a hybrid network of in-house, as well as remote support personnel, one that can be both local and global who outsource non-core functions to specialty providers while keeping key functions at the center of the enterprise.  Like the shamrock organization, this lowers barriers to entry for small and medium firms worldwide.

Go with the Flow

For those like me, part of the baby boom generation, technology has impacted and sometimes overwhelmed our lives.  I recall years ago when the chairman of our firm assured us that we would never be the first to adapt a new trend, as our clients were not comfortable with that behavior from us.  So as a rule, those of us in the financial disciplines have not been the first to adapt to the new nor are we considered forward thinking, or are we?  By gauging your organization’s progress, you can  forge a path for further adaption to prepare you for the firm/lifestyle of the future.

FUTURE

Moore’s writing for the accounting profession applied the “diffusion of innovations theory” that seeks to explain how, why, and at what rate new ideas and technology spread through cultures.  Dr. Moore’s  research is influenced by  earlier research conducted by Dr. Everett Rogers, a professor of rural sociology.  In his 1962 book Diffusion of Innovations,,  Rogers proposed that adopters of any new development or idea can be categorized as innovators (2.5 percent), early adopters( 13.5 percent), early majority (34 percent), late majority (34 percent), and laggards (16 percent).  Each adopter’s willingness and ability to accept an innovation depends on their awareness, interest, evaluation, and trial.   Moore’s whitepaper entitled, “Accounting Services: Harnessing the Power of the Cloud”, explores three key trends that are changing client accounting services and reflects on Rogers’ diffusion theory.   Regardless of where we fit on the above graph, the confluence of “smart appliances,’ i.e. phones, tablets and “the cloud” have made virtual firms a main street idea.  In fact,  most of us have purposely or unknowingly already begun this transition.  Consider the chart below: E PAST                       

FUTURE

Business is increasingly embracing “the cloud.”  The AICPA, as part of its Trusted Business Advisor solution for smaller firms, has developed apps for smart technology specifically designed for practice management assessment.   Accounting Today magazine chose the Crossing the Chasm Assessment Tool as its winning product in the practice management category.  This app helps organizations determine where they are in terms of technology adoption, and matches strategies with a company’s preferred pace of change.  “This app from CPA2Biz, with insights from business strategist Geoffrey Moore, author of Crossing the Chasm, is one of the more pointed tools on the market to help businesses make a real plan on how to evolve,” Accounting Today reported. The Crossing the Chasm app is designed for general use by organizations.  A related app, the CPA Practice Assessment Tool is geared specifically for CPA firms looking to make the most of the cloud and other innovative technologies.   

The 2010, the ABA Commission on Ethics 20/20 and the Issues Paper, “Concerning Client Confidentiality and Lawyers’ Use of Technology”, resulted in the formation of the Legal Cloud Computing Alliance, http://www.legalcloudcomputingassociation.org.  This group will cooperate with state bar associations and other policy-forming bodies to release guidelines, standards, best practices, and educational resources relating to the use of cloud computing in the legal services sector, so as to facilitate the rapid adoption of the technology across the profession.

The traditional bricks and mortar organization has been on its way out since at least the early 1980s.  Today, the concept of “hoteling” is a common practice in both large and small enterprises not only as a cost savings, but to accommodate an increasingly flexible and mobile labor force, whether you are a Booze Allen Hamilton-type of firm or  a newly minted entrepreneur.    Regardless of your stage in this evolution, key processes in your organization will need a closer look as you begin or continue the transition to a virtual business model and  frequent usage of “the cloud.”

Streamline your workflow processes to be location-independent.  This means exclusively online and digital. Think of it as more of a journey than a destination, as there will inevitably be situations that qualify as exception.  Examine your workflow with the goal of identifying the 20 percent of your process that is creating the 80 percent low-value, resource-trapping, busy work, and then focus digital tools at those functions.

Reengineer your internal communications and collaboration practices to support a virtual organization.   If you are part of your firm’s management team, know that this effort will be enhanced by the addition of a younger team member.  The hard part: actually going along with that team’s recommendations.  The gains can be transformative. A web-based workflow system is one of the keys to success, as well as a willingness to make mistakes.  Expect challenges, some of them significant, in adaption and execution.

Engage Clients & Migrate Interactions Online

Client relationships in businesses are becoming  increasingly collaborative.  This will mean that going forward, collaboration will require improved communication channels to provide the client a higher rate of satisfaction or value.  Different clients will adopt the new communications methods at different rates, but for those who are ready, bringing them into your digital life can make for better outcomes at lower cost.  That’s something everyone can relate to.

At the heart of this change is migrating the workforce to a broadband network of one kind or another, be that DSL, cable, or even 4G wireless.  These networks support voice, data, and video traffic streams, and are the fundamental message carriers of the digital workplace.  Once you have moved to broadband, you can immediately pursue these core applications if they are not already part of your toolbox.

Unified Messaging:  This service allows the integration of all electronic communications technologies (email, SMS, Fax, voicemail, video messaging, etc.) into a single interface, accessible from any device, anytime, anywhere. This is accomplished through VOIP (Voice Over Internet Protocol).

Web Conferencing:  These combinations of a conference call with a PC session, effectively a private version of a webinar, have proven particularly useful in a number of recurrent situations. It’s most helpful when walking a client through a complicated piece of documentation or software, or training a new associate on some firm-specific technology or procedure.

Video Conferencing with PC Webcams:  For firms with a digital preference, this has proved surprisingly useful and become the de facto way team members connect with one another whenever they are not present. Virtually all laptops today come equipped with webcams, and many web conferencing solutions support a digital video interface. 

Mobile:  Finally, it would be impossible to leave his topic without referencing mobile. The challenge here is that mobile technology has come to span a broad swath of capability from cell phone to smart phone to tablet, each of which puts its own twist on collaboration.

Simone Velasquez Hoover, CPA/CVA is President of Simone Velasquez Hoover, PA.  The firm provides comprehensive financial, development and management support to nonprofit, membership organizations and high net worth individuals.  In addition, the firm provides forensic accounting, litigation support and dispute resolution services to individuals, families and business clients.  Ms. Hoover served as Executive Director, NACVA State Chapter Foundation Chapter President from 2005 through March 2013.  Currently, she is also Executive Director of Operation Homefront – Florida, a 501(c)(3) that serves the families of deployed and wounded service members throughout the state with emergency financial and other support. Simone can be reached at hoovercocpa.com.