Latest / The Accounting Podcast / Unlocking Capacity: The Workflow Revolution (from The Earmark Podcast)
Transcript
- Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding! Kenji Kuramoto: [00:00:00] Our first firm we acquired was kind of a disaster, and I was super excited about doing our first acquisition. I was gung ho about it, and we had incredibly dissimilar ways that we worked. And even though on paper we delivered some of the same services, but the way we did it was so different and we waited. We didn't want to disrupt things. We waited a long time. We didn't want to it. It made it a very an awful transaction for us, largely because we didn't get workflow on the same page. Blake Oliver: [00:00:33] Are you an accountant with a continuing education requirement? You can earn free Nasba approved CPE for listening to this episode. Just visit earmarked app in your web browser, take a short quiz and get your certificate. Hello everyone and welcome back to the Earmark podcast. I'm Blake Oliver, coming to you from Chicago on the Advisory Amplified tour recording in front of a live audience. Oh, that feels so different than usual. Today we're talking about how transforming your workflow can unlock growth for your firm and improve the quality of life for accounting professionals. I'm joined by Mary Delaney, CEO of carbon, and Kenji Kuramoto, co-founder of acuity and a pioneer in client accounting services and remote operations. Mary and Kenji, thanks for being here. Mary Delaney: [00:01:28] Thanks for having us. Kenji Kuramoto: [00:01:29] Thanks, Blake. Blake Oliver: [00:01:31] So I'm so happy that we are recording today, Mary, because the news just dropped this morning that carbon is acquiring ater big deal. Uh, and it's so tied into this workflow discussion that we've been having today at the conference and in general. Um, can you tell us a little bit about this, this partnership that has turned into a combination? Mary Delaney: [00:01:57] Yes. Thank you. It's a very exciting day for Carbonator and the industry. Um, Ader has really we're here talking about advisory, and Ader is all about automating month end and getting you to, uh, insights that you can immediately share back with your customers. And our view of AI and our job is to help you do what only you can do and what gives you energy and adds value to your customers. And to automate what we can. And so with that Ader partnership, we'll be able to do that. Blake Oliver: [00:02:41] So when you talk about workflow and and in particular this phrase workflow revolution, what does that mean inside of a small firm. Mary Delaney: [00:02:52] I think it starts first of all you have to you talked earlier today about early in your career, and it was the Blake art. It was you were an advisor and it was you. There was not a workflow that told you what to do. It was you. That's what they were selling. Um, to me, workflow is turning it into a science. So it's first watching your people, what they do, sitting down and doing chair sides or time studies or a project or, you know, walk through and then defining the steps and then you automate, you eliminate, you delegate, and you come up with a process or a workflow that you lock in. And then you find a partner in technology to automate it in tech. And I think with technology, it's important not only to find the right tech, but to find technology or a company that has a a pointed solution. They have an opinion on how accounting and workflow should work, and they surround you with a community that will help uplift you. Blake Oliver: [00:04:02] So taking accounting from, uh, an art to more of a science, it's kind of funny to think of it that way, but I feel like a lot of the times, a lot of the time, accounting is an art in that it's or a craft, right? It's practiced by the individual kanji. When you started, that was I know from, you know, our discussions in the past that that was very much how you did it, right? You were you were the practitioner. You did everything right. You were the artist. Kenji Kuramoto: [00:04:29] Like you're saying I'm old. Like, which is true. Blake Oliver: [00:04:32] Like me, like me. Um, you know, how did how did you approach building workflow in your firm at acuity? Like, how did you go from from being the guy doing it all to having the firm doing it? Kenji Kuramoto: [00:04:48] Well, it just it's amazing to see where we've gotten to today. And it's such great news with carbon and air coming together. It's a huge congrats on that, Mary and all the team. Um, I remember starting our firm. I was in big four audit back in the day, so I came from the days of where you used to follow a paperwork program of steps and things you did. That was our workflow. And so as we kind of moved into acuity and founded our firm, we started feeling pretty good about the fact that we were kind of like, okay, let's put our workflow into Excel, because, right, that's the native language or place where all of us accountants like to work. So we did it that there we started actually investing in some tools over time that gave us more visibility into the tasks that we were performing or the team members, but it still is pretty amazing, and it still only became, I'd look at it like it kind of digitized checklist like that's where workflow kind of went. Even today, I will say at some place that felt like you get to where you know, you have a better digitized work tool. And so I thought for a long time that the epitome of what an ideal workflow would look like would be when you completed some task, somehow the tool just knew it and it checked it off so you didn't have to go back and check off that. Kenji Kuramoto: [00:06:06] I did this piece of work, which I think looking at what's happened today is even shortsighted, considering that like now the workflow tool is actually doing the work. I don't think I ever even imagined it taking that leap forward. I was just going to be, man, it'd be so nice if we created these digitized checklists that knew when the work was actually done and didn't require people to go in and check things off. So it's been unbelievable to see how fast things have grown. And it was very important along that path for us to scale and grow as a firm, because we did for the first few years, we had a lot of people working kind of freestyle who were doing their own thing, especially when we were an advisory firm. And I will say that's one of the risks of doing advisory, is people tend to have their own flavor or style, and that can be great. But in terms of a work product, we did want to have consistency and it took us a while to get there. And until we started getting consistent, we were going to have a natural, limiting force on really how big we could grow or how much how many clients we could serve. Blake Oliver: [00:07:03] So you took me to my next question, which was going to be about what the biggest challenge was for you when you started your firm and you started establishing workflow. It sounds like advisory. Building workflow around advisory was the the hard thing. Kenji Kuramoto: [00:07:17] Oh for sure. I mean, if anybody has CFO A CFO practice, I heard Twyla talk about early fractional CFOs. One of the challenge and again, I was I was one of them. Um, they are least receptive people to sometimes wanting to be told, here's a certain way to do things. And so advisory was very difficult to get. Um, and again, I was fairly I was a lot younger now than I am now, but young when I found that our firm and we had a number of CFOs who were quite senior to me, who were working with us. And so Kenji coming in and telling them what to do or saying, hey, have we thought about maybe creating a process for how we want to work with clients? Didn't always land very well, so it was very difficult and it always felt like, I think to them initially that it was more of an accountability tool. It was more Kenji telling them how to work and making sure they were doing the right thing versus letting them feel like they had ownership of the work. Right. And I think that's one of the challenges that sometimes workflow faces is where it feels like an accountability tool and not an empowerment tool of where you do better work. And I think we got stuck there for a while. Blake Oliver: [00:08:20] An empowerment tool, not an accountability tool, not micromanaging these high level folks, these CFO level people. Interesting. Mary, you have led many organizations, a number of them before carbon in leadership positions. Uh, how do you react to that? Like this idea of workflow? I can see how workflow would would feel limiting to me as an advisor. How do how do you approach that? Like how do we get how do we get our team on board with workflow and standardization of this advisory service? Mary Delaney: [00:08:59] It's a great question. And I think the key in in any of when you're bringing your people along, there has to be a what's in it for me voice. Um, and a key part of workflow is to be able to show them if we map it out, we can automate some of it. And the part that we automate is the energy draining low value. And so all of a sudden they get to do more of what they love, more of high impact areas that make a meaningful difference for their clients, and they do less of what's really draining. The other thing we find is, you know, in in your world, it is a roller coaster depending on the season and I love getting those calls from clients or customers who say, this is the first year where we didn't have any crazy day during tax season, that at 25 years and it's the first year and it took two years, we had to kind of work through workflow and work through automation, but that's the power. So you have to begin with the end in mind. Show them what we're going to be able to automate or relieve them of and, and help them envision that they can have more time to do what they love. Blake Oliver: [00:10:20] Help me envision that. Help us envision that. The, uh, know what did you say about tax in tax season? Mary Delaney: [00:10:28] Tax season? They had. Blake Oliver: [00:10:29] No. Mary Delaney: [00:10:29] No, um, no stressful days. Blake Oliver: [00:10:32] How? Mary Delaney: [00:10:33] Um, actually, I mean, one of our customers is here that called me this year and said it happened. It was the first year. It's because they have the process down, they have capacity planning down, they work ahead. They have all the insights to manage every minute wisely. So it's not putting out fires. And that's, you know, having having workflow, being able to measure and understand. It's not only technology, it's people. When you when you have workflow, you can see some people are rock stars, but instead of saying they're just incredible, you start to study what they do and you can train that to others. And all of a sudden you're you're lifting your C players to be in your B to A, and you have the technology. Blake Oliver: [00:11:22] One thing that I've found is that working in a, in a more traditional firm that didn't have workflow is that in order to be an a player, you had to be really good at putting out fires, juggling a bunch of things, like you had to be so organized Yourself. There was no support system underneath you, so I could see how. I mean, I couldn't do that for very long. I burned out very quickly in that environment. But if I'd had that layer, managing my capacity, helping so that I could just focus on doing the work, then, you know, I could be, I could I wasn't an A player. That's the thing. That's why I didn't last. Right. Mary Delaney: [00:12:06] We think you are. Blake Oliver: [00:12:07] I mean, it was like it was it was that you have to be everything, right? When you're an individual contributor who's also doing managing your own workflow, does that make sense? Kenji Kuramoto: [00:12:17] I think it makes great sense because. Blake Oliver: [00:12:19] We talk about this a lot. You also consider yourself to have not been the greatest accountant. Kenji Kuramoto: [00:12:23] Oh for sure. Oh my gosh, for sure. Um, and I think that I definitely was not. Blake Oliver: [00:12:28] But I talk more about that. Kenji Kuramoto: [00:12:29] Oh, yeah. I was bad again. Blake Oliver: [00:12:31] What what was what were you what were you terrible at as an accountant? Yeah. Kenji Kuramoto: [00:12:36] Well, honestly, sometimes it was the consistency. It Consistency was the the technicals. I was a moderately technical CFO and accountants. Um, luckily I have a little bit of a quirky personality and I'm pretty outgoing, so clients liked me. But you know, I, I was not the most technical I was. And so I used to be concerned about that. And one thing I liked about when we started putting more workflow in place, and it gave us better just optics and visuals into how our team was working, it allowed us to identify some of those challenges of where, in maybe some case, someone was a B or C player, but it started understanding why were we missing out on training where we overwhelming their schedule, where we are. They stuck on tough clients, and that brought to light a lot of areas that we could help jump in as a firm and help out. And in many cases, again, it was not their fault when everyone's working in silos and you hear about someone burning out, but you can't figure out, well what's going on, why is it and they can't articulate it. Having good data behind. It was like, oh, I see what we're doing. We've got to make some changes in your schedule or we have to get this client following, you know, the deliverables that were agreed upon in our in our sales process. And so it was very helpful for us, even though again, at times, like we mentioned, some of our team resisted. Workflow is always one. People are like, oh, you're going to you're playing Big Brother on me and things. But it helps for me. It helped me tremendously because when we had other really technical CFOs who did things, I could say, hey, can I please take a look at your process for how you run a board meeting or raise capital, or how you build a proforma model? And I could learn so much quicker by just saying they're like, sure, let me show you my playbook for how I get there. And that's getting dispersed across the organization really lifts, kind of raises everyone else up. And I certainly needed that. Blake Oliver: [00:14:25] That's a good point. It's if everybody is having to make it up on their own, they're all doing it in different ways. It might not be the best way. And and and so when you standardize that like workflow, like you said, for running a board meeting, what was another you gave another great example uh. Kenji Kuramoto: [00:14:43] Financial modeling pro formas capital raises. Yeah. Blake Oliver: [00:14:46] How to do that. Um, if you have that standardized in your firm, then somebody like me who maybe has never done one of those can figure it out or get help. Kenji Kuramoto: [00:14:55] Yeah. And in fact, it was became, um, again, I was a pretty young CFO, and so I think I'd maybe been a CFO, like maybe a little bit on a job. And I was calling myself a CFO, but I was thinking, I really don't have a lot of this skill set. And so a lot of our more senior CFOs could really lend and mentor me better when they it wasn't just like they couldn't be on my engagements with me all the time, but I certainly could follow their work product and the way that they worked. And we became actually we started targeting other CFOs to come to acuity. We said, hey, um, I see those who aspired to be CFOs. Maybe they're they're a controller at their last job or they're a VP of finance. They were trying to get that experience as a CFO. We're like, hey, come here. You can learn from some others. We've got some good playbooks you can follow, and we can give you some small clients to start with and kind of get you fast tracked into that next role. So workflow is pretty essential for helping us get people kind of toward that goal they ultimately had of wherever it might be in their career. Blake Oliver: [00:15:51] It also helps you productize services better, right, because you can deliver them in a standardized way. Um, Mary, let me ask you this. Let's say that, uh, you get dropped into a small firm and you're the CEO. You're in charge. Now. You need to free up capacity in 30 days. Where do you focus? What would you what would you work on first? When it comes. Mary Delaney: [00:16:17] To workflow, I would do a few things. First of all, I would make sure I understood and everyone else was clear on what is their job, how are they measured? And um, and what's the definition of success and how will they be compensated and recognize, because I do think if people understand clearly their job and expectations and they have something they're chasing in recognition and promotion and comp, you will get 20, 30% more out of them. So I do that. I look at our customers and see if there's any we should let go or just increase the price. Um, and then I would, uh, ensure that we, I would do the time studies as I shared or the chair sides. I just think there's magic. Before I worked in your field, I worked in a service enabled or tech enabled service field, and we grew from 100 to 1700 employees. And you have to have process for that. It was a very, um, compliance driven industry. And so sitting there and watching people work, you'd watch eight people do the same, and we would break one unit of work into sometimes 30, 40, 50 units. Some of them are only three seconds long, some are 60s long. But all of a sudden we could build bots and automate some of it. We could remove and that is magic. So much magic happens from that. Blake Oliver: [00:17:46] You called it a time study? Mary Delaney: [00:17:48] Yes. Blake Oliver: [00:17:49] So can you give us an example of that? Mary Delaney: [00:17:51] Sure. I actually, I do it now. I'll go with a team of 2 or 3 in our customers and do an on site for a day, but literally sitting and watching our customers work. So I'll watch three people do their tax work for 20 minutes, or three people do advisory, and you're watching what they do on the screen or their multiple screens. You'll see they pull up a report. You'll see they write something down. Why are you writing that down? You know, what are you doing with that? Wait, what's that report? What did you create? Why did you. You know, what are you doing with that? And all of a sudden you can see all the areas of waste. What can we automate? You also see where there's training gaps. Um, and you see process. Blake Oliver: [00:18:38] And you're documenting it in detail the whole time. Mary Delaney: [00:18:41] Yes. Blake Oliver: [00:18:42] Yeah. That that takes a lot of time itself to do. Right. I think that's one of the problems, is that when you're busy running a firm, Kenji, as you know, like you don't feel like you have time to sit there and watch your people work because you're working too. How did you do that? Or did somebody else do that? Did Matthew do that? Like, how did you guys actually do that? I probably Matthew is Kenji's partner. Partner? Um, he does all the real work, right? Kenji Kuramoto: [00:19:10] Yeah. That's true. No. He does. Blake Oliver: [00:19:11] Yeah, for sure, Matthew. Kenji Kuramoto: [00:19:13] For sure he does. You know, actually, it was, um, I, I loved being kind of a initiator of things or coming up with ideas, so I actually love to actually be. I was our first bookkeeper technically at acuity. I remember when we launched our bookkeeping practice after we had our CFO practice, and a lot of our even our CFO is like, why are we getting into bookkeeping? Why aren't we these aren't we these fancy CFOs? And we just kept seeing opportunity there. And so for me, I'm I am not very creative in terms of being abstract, like I kind of. But if I can get my hands around something, whether it's sitting by someone or doing it myself, I can start figuring it out. And so that was my way of like, I really liked sitting with team members and working alongside them, and I always felt it was important to, as the founder, like the show that I, I will put any hat on, I will do anything that needs to be done. And that also was a better way for me to learn a bit about things and kind of start breaking it down. So I actually struggled more when it was things like when we finally built the tax practice, and since I was an audit, I did not know tax. I still do not know tax very well. And that was really hard for me. Um, I had to spend more time sitting with our tax team because I just hadn't done it. I couldn't I didn't have the technical capability. And so I love sitting with team members and like either doing it myself with them or being right alongside them. Um, that's that was the way we kind of built a lot of our practices. Blake Oliver: [00:20:37] So you you did the bookkeeping work? Kenji Kuramoto: [00:20:39] I did, yeah, I did. Blake Oliver: [00:20:40] And that's how you that's how you figured it out. Kenji Kuramoto: [00:20:42] Well, and we we had a we had a theory around that because we, we did realize that we had an advantage of being a bunch of CFOs. We were an advisory firm first, and we kept getting blocked. We couldn't get to good advisory engagements because sometimes the underlying data was so bad. All of us have probably had that. And we kept trying to think of, well, what if we were to reimagine the way that we did compliance or transactional bookkeeping work? And we were really fortunate. This is right at the time when cloud accounting was starting to emerge, we started thinking about it differently. Because what I really didn't at the time want to run was just a an hourly based bookkeeping firm. We thought, let's think about it differently. So technology was changing. Let's think about it in terms of if we, the CFOs, were the end client, what do we need to do our jobs? And so we kind of got a chance to kind of reimagine it a bit. But it did take us, me getting my hands on it and like doing it myself. And sure enough, we found a lot of places that were like this. We can find much better tools to do this work or save a lot of time, which is why we kind of built a whole value based pricing model. And ours was all around, you know, um, we wanted to completely break away from the time based model of kind of billing. And so that was, you know, almost 15 years ago, I was pretty different back in the day. Blake Oliver: [00:21:58] At the time. That was rare. Yeah, extremely rare for an advisory first firm to be doing fixed fees. And you were doing were you doing fixed fees on the advisory work too, or was it. Kenji Kuramoto: [00:22:08] In some cases, not as much. Um, we started doing some fixed fee work on the advisory side, and we ran into some issues. Again, we were I mentioned in my when I was talking earlier, we were very experimental. So trying things, we were running a bunch of experiments of saying, let's do advisory, you know, on a fixed price basis without probably doing enough time studies and probably doing enough work there. And so our clients came back and gave us feedback and said, you know, Kenji, um, on some of the advisory work we do, we value your flexibility. We kind of said, what do you mean by that? They said, well, we value the fact that we have a board meeting or we have a lot coming up. We need more time for you, but we also need to ratchet it down at times. Whereas on the compliance side, what they value was consistency. And so that was a big learning for us of where we were trying to shove a lot of fixed price things on our clients face, and they were like almost resisting. We thought they'd love it. In that case, they're like, no, we value is flexibility. So we had to do a better job of listening really first in that kind of basically informed us about a better way to take our product to market. So we did a little bit of both depending on what the clients really valued. Blake Oliver: [00:23:15] I'm hearing that you were good at listening to your clients and figuring out what they valued. But also you were listening to your team. You were sitting there with them. You were with them getting your hands dirty for sure. And that's that. That's the I guess that's the secret here is like, right, like Mary, what do you think getting your hands dirty as a CEO? Mary Delaney: [00:23:36] I, I definitely think it is if you are the right person. Um, some CEOs, it's probably not the right role for you. And looking at many of our customers, they say the one thing they never regretted was hiring a non-billable person to start really moving on quality and scaling and operations and, um, that maybe they would have done it sooner, whether you're a ten person or 15 or 20 somewhere in that range, the gift you give yourself is having someone who spends 100% of their time looking at how to make the firm better, um, Versus how to make the how to bill dollars today. Blake Oliver: [00:24:24] Yes, I, I agree. Actually thinking back to my own, you know, minor success with my firm. It was I got that person who their their job was just to work on workflows and that was me. Previously, I feel like that's most of the time it's the founder who ends up doing that. But then you once you get that role and you free yourself up. Um, really? Yes. Right. You know what I'm talking about. Speaker4: [00:24:51] I see, it's like it's. Blake Oliver: [00:24:53] Yes, exactly. It's the light. Um, yeah. Where do we find that person? Where are those magical people? Right. Um. Kenji, let's talk about your merger. Right. The the big 14 firm merger that, uh, acuity is now a part of. Kenji Kuramoto: [00:25:15] Correct? Correct. Yep. Blake Oliver: [00:25:16] Uh, so what what role did workflow play in making that happen for you and acuity? Kenji Kuramoto: [00:25:24] Well, when you're integrating, uh, whether it's even one firm which we had acquired a couple firms before, um, or you're smashing together 14 or 15 of them, I think there's probably many who have gone through some version of an acquisition. Um, I think we we know now that most acquisitions don't fail because the deal isn't good. It's the integration doesn't work. And so the integration is critically important. You've either seen this yourself or with clients. And so the workflow was essential. Um I can remember and I'll go back before this merger, um, we our first firm we acquired was kind of a disaster. And I was super excited about doing our first acquisition. I was gung ho about it, and we had incredibly dissimilar ways that we worked. And even though on paper we delivered some of the same services, but the way we did it was so different and we waited. We didn't want to disrupt things. We waited a long time. We didn't want to. It made it a very an awful transaction for us, largely because we didn't get workflow on the same page. And so, um, I think there's some nice concepts and thoughts about you want to, you know, in a merger, you still want to maintain your identity as much as you can. But we found that and your values for certain. Kenji Kuramoto: [00:26:46] But no matter if you're the maybe you're the big platform that you're being rolled up into or you're a smaller bolt on acquisition, in every case, there's something of value that you can learn from any size of firm, and you should look for those opportunities to bring them in and improve. And if you don't do that, you're really missing out on the whole point of the acquisition. I mean, there's probably more effective ways to add clients in revenue than just merging firms. So the workflow, the way that you work, The interesting things that you figured out, or the acquisition you figured out is, is essential. If you don't do that, I think you're just really leaving a tremendous amount of enterprise value completely off the table if you're not taking the time to use that workflow. So I can tell you, when we went through due diligence and all these meetings we had, we went to market and looked at lots of different transactions. They looked heavily in diligence and in our meetings at our workflow. What were we doing? How are we putting it together? And we did too. We were looking at who we were going to merge with, because if those if those were really misaligned, you're looking for a tough go of it. So incredibly important the workflow. Blake Oliver: [00:27:52] So it's not just for your operational sanity, it's also for your future exit. That's the workflow is is critical in all aspects. Um, Mary, moving full circle back to the acquisition, uh, one of my questions that I had prepared to ask you was about AI and AI workflows and what's Carbon's approach? So now I guess we know carbon's approach is to acquire, but also like can you expand on that? Like how do you see AI fitting into the workflow that firms are building with carbon? Mary Delaney: [00:28:29] Yeah, a great question. To me. Ai is, um, it helps you build great product. It's not the product itself. And the key ingredient in building AI enabled product is to know your customers truly, intimately. And so that's where you do have to sit. Chairside you do have to understand what's draining and what's high value, and then work to remove all that friction or automated. Um, the challenge with AI is it's highly imperfect. We read stories every day and very sad stories that show that AI has a long way to go. And so what we believe right now is it has to be highly transparent and it has to be hybrid. And what I mean by that is, uh, we're building agents to do the work. Um, do the work in our system. And also we believe in, uh, an open ecosystem where you integrate with partners, and those partners believe in the same thing. How do we automate and make it easy for our customers? Um, but you have to show all the work that the agent did, and you have to give it a step for a human to check it and sign off. Uh, because in accounting, you have to be perfect. Uh, that's what you know. You are risk averse. Rightfully so. People put their trust and faith in you. So that's what we're building. Um, many partners, integrations, agents that you get to assign and define work, transparency and what they did and the ability to check it off. Blake Oliver: [00:30:14] And that's the the vision. Kenji, that that you, uh, painted earlier, which is we checked the box and the task gets done for us someday. I mean, that's happening now. Kenji Kuramoto: [00:30:26] Yeah, it's starting to happen now. Blake Oliver: [00:30:28] Can you imagine when you started out as a as a CFO advisor, that that someday we'd have little AI agents running around doing work? Kenji Kuramoto: [00:30:36] Exciting times. Blake Oliver: [00:30:39] Um, thank you so much for joining me and sharing your insights with us and the audience here in Chicago and listening to the podcast. Kenji. Mary, great to have you on the show. Let's give him a hand, everyone.