The world is a wild and wooly place. Grappling order out of chaos, or introducing chaos into order, is a messy business. Which is why neatness is not the aim of business, even though we may sometimes consider it the aim of accounting.
In our efforts to come to terms with our reality, mental models can be very helpful. The concept of business as a ship, navigating uncharted waters, in search of undiscovered lands. Or that of climbing a mountain, catching glimpses of the peak, pressing on, but enjoying the journey. Or as we like talk about in Thriveal, cliff-jumping, blowing stuff up, and lab experiments on our way to making a new firm. These can help give us the clarity and impetus to act because we have a way to understand our movements in the broader story.
Conversely, mental models can also be very harmful. The idea of time as money. That monetary profits are the sole purpose of business. That perfection of the system is the goal (thus people become cogs in the machine). That leaders are all-knowing and inerrant. These are among the models that can increase our friction as they under-equip us to deal with the realities we face.
Our ability to evolve and change is usually the result of adopting a new mental model and/or letting go of an old mental model. They’re the brain pathways that sit just underneath the surface, often out of view to us. They’re the pattern molds we’re subconsciously using to make sense of and interpret the experiences we have each day. You can see how powerful they are to our life. It’s why I take issue with the phrase “perception is reality” and prefer to replace it with “perception shapes our experience of reality.”
For me, value pricing was one of those moments where I let go of an old mental model and adopted a new one. And as I went about working on my firm, I developed the Accounting Firm Process model to help me visualize the various operational flows that helps our team accomplish its day-to-day tasks.
And just recently, a group of accounting advisors I was in was asked, “what critical software does an accounting firm need?” It caused me to stop and think further about my theory of how an accounting firm creates value, and what would help to accomplish that. Here’s what I came up with, and it’s become the new mental model I carry around in my head for accounting firm value creation:
We sell access to intellectual, creative, and emotional capacity. As a result, we need three main systems:
—Capacity planning and yield management platform. This allows us to gauge and dynamically adapt our team’s future capacity to customer needs, as well as plan and evaluate the yield on that capacity.
—Team and customer collaboration platform. This would allow our customers and team to seamlessly interact among each other in the process of creating value together.
—Knowledge management platform. This would allow us to develop, store, and evolve the intellectual capital that fuels our creation of value.
The theory is that if our firm has a way to accomplish these three things well, we would be enhancing, rather than stifling, the creation of new value.
I offer this as one idea, but my challenge to you is really two-fold: (1) discover for yourself mental models you unknowingly have that are shaping your experience and outlook of reality, and (2) develop or adopt for yourself a new model that will help you work through that next change in your firm. As you boil down and distill your accounting firm, you’ll be able to remove the impurities, as well as discover and add those ingredients, which will make it a potent solution in the marketplace.
Bonus material: Listen to Ed Catmull, President of Pixar and Disney Animation, share insights and habits which have helped fuel their string of success over the last twenty years. See if you can identify some of their mental models.
(Side caveat about models: Models are necessarily simplifications of reality, and will therefore always fail to account for all variables. As I like to say, there is a name for the model which factors in all variables: “reality.” 😉 They key, then, is to always hold your models loosely with a recognition of their incompleteness, and an openness to revisions as you learn and grow.)
(As originally posted on the Thriveal blog.)