It’s been 10 years since Steve Jobs announced the iPhone, the little gadget that changed the world, bringing the Internet to people’s pockets and connecting them to the world 24/7. It changed the way people work, shop, take photos, get their news, watch TV, and more, and paved the way for the new leaders in technology, including Uber, Snapchat, Twitter, and Instagram. Oh, and the iPhone also made Apple the world’s most valuable company.
Looking back now, the iPhone seems like a no-brainer for Apple, but that was not the way it was received at the time. The iPhone was a big risk for Apple. Many people believed it would fail. Steve Ballmer, then CEO of Microsoft, said at the time, “There’s no chance that the iPhone is going to get any significant market share. No chance.” Apple was already extremely profitable at the time: it was making 40% of its revenue off of the iPod, and the iPhone threatened to directly cannibalize that best-selling product. Pundits thought that the phone market was already saturated, with Nokia and Blackberry (remember them?) holding a large market share. John C. Dvorak, then of MarketWatch, summed up the conventional wisdom: “What Apple risks here is its reputation as a hot company that can do no wrong. If it’s smart, it will call the iPhone a ‘reference design’ and pass it to some suckers to build with someone else’s marketing budget. Then it can wash its hands of any marketplace failures … Otherwise I’d advise people to cover their eyes. You are not going to like what you’ll see.”
Jobs, however, had the foresight to understand the future, to see that having the Internet literally in the palm of one’s hands was where the world was going, and he was willing to risk his company’s reputation and viability to stay ahead of the curve. Complacency was not an option for Jobs or Apple.
The World Is Changing
The accounting world today is in a similar place. The industry as a whole is making a lot of money by performing the same tax and auditing compliance–based services as it has for the last 50 years. But things are changing. Automation and technology are starting to replace a lot of the write-up and bookkeeping work that was traditionally done on spreadsheets or ledger paper. Tax returns are beginning to be scanned automatically and imported directly from brokerage firms and payroll services. Auditing tasks will soon be done by computer programs instead of humans. It’s hard to even imagine all the changes that will come with artificial intelligence and machine learning. One thing is for sure: the world is changing, and the way accountants have traditionally done work is not going to be sufficient for the CPA firms of the future.
No firm wants to look back in five years and realize that it is a Blackberry. Firms should instead strive to become an Apple. The first step is looking hard at the service lines that the firm is offering. If it’s mostly or all compliance work—tax returns, compilations, reviews, and audits—then now is the time to start looking for new service lines that involve more advisory services, like advanced financial planning, technology consulting, and cybersecurity risk evaluations. Now is the time to start thinking about where the firm should be positioned five years from now and what service offerings it will need to be competitive in the future market. This will probably involve some hard decisions, like raising prices and firing clients, but it’s better than going out of business or having to sell the practice for pennies on the dollar.
Change is hard, but it is also inevitable. Long gone are the days where CPA firms could safely be five or ten years behind on technology; clients and team members just won’t tolerate it anymore. The firms that embrace change as part of their culture, never become complacent, and stay ahead of the trend lines of the accounting profession are the firms, like Apple, that are going to be successful for decades to come.