Adrian G. Simmons

Commerce. Hubbub. The noisy marketplace. The tens, hundreds, and thousands of small exchanges. In the store, online, over the phone, from an airplane. It’s like an ecology, the ecology of the economy. The creation and shifting of resources from one area of the ecology to another. All voluntarily. All based on what we value, on what we think is worth the expending and spending of resources. The values, where do they come from?

As entrepreneurs, we design “the value exchanges:” those interactions that bring together buyers, workers, suppliers, owners, and indirectly, their surrounding environments. If we’ve done our job well, each party leaves the exchange with greater value than they brought to it. In a very real sense, they are affirmed in that value through their interactions with the others. The whole process is a way of cooperating to make the imaginary real, the potential actual, the unseen seen. It also transcends the laws of matter: while the physical matter doesn’t increase, paradoxically the whole enchilada just grew, because it grew in a non-material dimension: in the minds and souls of the participating parties.

“The value exchanges” are preceded by a decision, and the savvy entrepreneur is really a decision architect. She’s created the exchange, but the decision is what gets the movement of the exchange activated. Architecting that decision is really a matter of leadership, of presenting the decider with their freedom. The frame of the decision proposes a truth about reality, what makes reality better, and how the exchange brings about that reality.

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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.”

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This post is adapted from a presentation I gave at Xerocon Denver 2015. In it, I talked about the progression our economy has made from agrarian, to industrial, to service, to knowledge, to what I believe is here in some industries, and now surfacing in the accounting industry — the creative economy. See this link if you’d like to read the full text.

If you look at our nation’s history, you’ll notice the progression from survival (agrarian economy), to possessions (industrial economy), to freed up time (services economy), to intellectual pursuits (knowledge economy). Some of you may recognize the parallel to Maslow’s hierarchy of needs. I suggest we as a society, and as an economy, are moving our way up that hierarchy.

So what comes next? I believe there’s a new age brewing — it’s been around for a little in the broader market actually. But I believe our field, accounting, is now entering the creative economy. In this landscape, it’s not acres, it’s not physical capital, it’s not hours, and it’s not even intellectual property that governs the economic paradigm: it’s our ability to tap into the human capacity to imagine and create. That’s what the market will reward the greatest. And that’s why the largest taxi company doesn’t own a single vehicle (Uber), one of the largest lodging companies doesn’t own a single building (Airbnb), and the largest content company doesn’t have any journalists (Facebook).

The next ten years or so, I believe, will be a drama between the characters of Knowledge (we’ll call him Kevin), and Creativity (we’ll call her Cora) — something I call, “The Tale of Two Economies.”

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I’ve suggested before that accounting is not the language of business, but that I do think CPAs bring unique abilities to the conversation of business. In a world of information, perspective is king, and if we can see our finances in their broader context, I think we go a long way to growing stronger.

To that end, I’d like to propose that your (and any other business’) two most important numbers don’t appear on your income statement: (1) customer profit, and (2) opportunity loss. This graphic helps illustrate:

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Systems are so important as enabling mechanisms. Sometimes I like to call them “structures of freedom.” I’m reminded of a quote from Tim Williams at Thriveal’s Deeper Weekend last fall, “Process is the architecture for getting things done.” Even creative processes, like transforming your firm, require some level of scaffolding to help you see it through from concept to realization.

Systems can compete with each other too. The system you know and use now will almost always beat out the one that’s fledgling or undefined. This is why it’s almost always easier to spend hours replying to e-mails than to change your firm. There’s a system for e-mail, but not for transformation.

So our goal is to develop a creative system for our firm, shield it during its fledgling stage, and then let it grow to become part of our way of doing things, that stands its ground and evidences its value as part of our firm’s operations.

Cracking this nut is not easy. But I feel like I took another step earlier this year in my own personal system.

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Over the years, I’ve developed a skepticism of brands, a healthy one I hope. And I would venture to say you have too. One ad after another, all making claims to be the best thing ever. Common sense tells us it can’t actually be — we all want to believe that particular cologne/perfume is going to make us instantly magnetic, but we know better. And then there’s one purchase after another; many don’t live up to the hype, some do, some do to begin with, but don’t last. Each of these experiences eats away at our ability to believe, to trust.

Brands can be so impersonal — marketing messages connect us to the brand, and humans become merely the means to get to the brand. Ads create a desire for Cheerios, and supermarkets and checkout registers are just a delivery mechanism to acquire Cheerios for ourselves. The quicker and easier, the better. Products, not humans, are the end. (Or perhaps more accurately, the emotional state promised by the products.)

But brands are real, right? I mean, after all, there’s Coca-Cola, Apple, Southwest, and Rolls Royce. They must truly exist. Or do they? Maybe they’re just made up. Maybe they only exist simply because we all agree they exist. Sorta like language — we all agree this scrawled shape on a piece of paper constitutes a letter, “d” we’ll call it. And we agree that it makes a particular, recognizable sound formed by our mouths and tongues. And when combined with the two other scrawled shapes “o” and “g,” signifies those panting, four-legged furry creatures in our homes.

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It’s right before tax season, and I’m sitting here at a table in my office’s front room, typing away on my laptop. This moment has significance.

We moved into this office space in February 2012, right as tax season started that year. It came after an unexpected offer to change suites at our office park to a ground floor spot. It’s not a big space, 1100 square feet +/­. But I got to design the floor plan and had been working with the contractors on build­out, colors, flooring, network placement, etc. There was a concept then for how we wanted to decorate the front room, but we had to settle for the basics at the time so we could go full swing into tax season.

And now it’s three years later. And we’ve decorated the front room to welcome our customers into a relaxing coffee shop style feel that was its original plan. And I’m sitting at a pub­-style table here.

The future takes time.

This quote from Reid Hoffman I think is critical for those of us out there trying to do something new:

“Innovation comes from long term thinking and iterative execution.”

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I met Ron Baker in person for the first time in 2011. Before that, I had read his articles online and attended a webinar he presented. But in 2011, I attended the first Thriveal Deeper Weekend, which was a “Firm of the Future” seminar offered by Ron Baker and Ed Kless. That was two days of brain-crushing, mind-altering, future-shifting learning and dialogue.

I immediately started to change things: first with a handful of customers with whom we had strong relationships, then with certain service types, etc. I remember a year later, I’d hardly made the progress I wanted to, and was feeling down wondering if it was ever going to happen. I remember chatting with Ron around that time, and he mentioned in passing that firms usually take three years to fully transition to value pricing. Whew – I was much relieved: I still had time.

Three years later, I look back, and boy, there has been such a change between then and now. I’m happy to say, we’re now completely value priced — I’m still learning (and doubt I’ll ever stop), but I feel so much more freed as a business owner having gone through this process. I was recently reflecting on some of the realizations I’ve had along the way and wanted to share them with you:

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Great things can be accomplished by teams. And the best teams are made up of players who have unique roles that mesh and multiply their teammates.

What is the unique role of the CPA? The thing we bring to the table of business?

I propose that CPAs should own the “profit equation” – that it be our domain.

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As a small business owner, you have one foot in the future and one foot in the the present: building your firm for the future, while serving the needs of the present. The difference between the two worlds is the gap: the space between where you are and where you’ll be. If you let that gap grow too big while your feet are straddling it…well, I think you get the picture. 😉

In some ways, that gap is what defines an entrepreneur. They see the difference between the world how it is and how it can be. It’s an internal cognitive dissonance, a type of itch, that they reach out to scratch.

What can happen nowadays, though, is that so much innovation comes at us, that the volume of cognitive dissonance grows too loud (anyone out there felt it?). There’s a difference between a music level that’s motivating, and a music level that’s inhibiting, or even downright crushing.

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When I’m reading for content, I’m all about the marginalia: underlines, questions in the borders, even one­ sided hand­written debates with the author. Which is why I was much relieved that the Kindle allows you to digitally underline text and add notes too — you can even export them to a PDF to save and search, a way cool feature that I’ve taken advantage of many a time.

But what if the text in a book went from edge to edge? No spaces between the lines, no space on either side of the page, none at the top, none at the bottom: a page littered with letters. Hard to read, cramped with lines blurring, and eyes crossing…

Now imagine if that book is our firm’s story: tasks and activities wedged end­to­end, no space in­between, no real breaks, no room in the borders. When all the space is filled, there’s no place to make edit markings. When all our resources are committed, there’s no capacity for change. When the entire page is full, there’s no space to doodle in the margins.

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There’s a balance line somewhere between having everything planned out and having no idea what’s going on.

And the ideal is not ‘having it all figured out.’ There’s no reason to feel bad or punish yourself for not being fully organized. Chaos is a natural part of the picture — you can’t pull order from chaos without a little chaos. Which is why it’s okay to deliberately mess things up now and then. Or as we say in Thriveal parlance: blow things up.

When asked the question, “What does your firm want to be when it grows up,” it’s okay to say, “I don’t know.” Discovery really best happens from the side rather than head-on. You really can’t plan “a-ha” moments, or else it’s not really a discovery. Discovery is, by nature, unexpected. All you can do is put yourself in different places or situations where it might occur and remain open to it happening, without compulsion. A little trust in Providence doesn’t hurt either.

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