The term “black swans” refers to high-impact, hard-to-predict, rare events that are beyond the realm of normal expectations. It is a theory made popular by Nassim Nicholas Taleb in his book by the same name and is often applied to the market meltdown and Great Recession of 2008 (and '09, and '10).
In accounting, it applies to Ron Baker and his group of “radicals” at the Verasage Institute. I was lucky enough to be invited to their recent meeting in California and came away with what is known as the “Verasage headache.” I was so engaged, I could not even tweet from the conference — it was that good!
Imagine a weekend with a whole flock of black swans!
That was the setting as professional service firms from all over the world convened to talk about the “black swan” concept of value pricing, knowledge work in the 21st century, culture, leadership, and the most heretical of all — trashing the timesheet.
I got to sit down with Ron and talk about his latest book, Implementing Value Pricing: A Radical Business Model for Professional Firms (buy this immediately!) and his continuing mission to change the world of CPAs and professional service firms.
After spending the weekend with the group, I started to think about all of our research into what is now called the “New Normal.”
We have heard from several sources that this new period after the Great Recession of 2008 (the black swan event) will be characterized by turbulence and a real need for business model innovation.
Intuit identified changing business models in its research for small businesses in 2020, and Deloitte identified the need for business model change in its global report on the future in its report titled, The Shift Index: Measuring the Forces of Long-Term Change. Even our strategic planning work with the AICPA's Major Firms Group had “changes in the business model” as the fourth most important trend / issue they felt they were facing. Everybody seems to be saying the same thing: Business as usual won't cut it anymore.
So the question is this: When will we see more CPA firms reinventing their business models? Or are things OK as they are?
I think we need to see more black swans innovating in our ranks. Keep up the great work, Ron!
For more on value pricing, see this article in the Journal of Accountancy.