When the Status Quo Is No Longer an Option

This file was generated by Descript Maximize your accounting career by becoming high yield and low maintenance. With The Upstream Leader Podcast, your passport to improved knowledge, skills, and career potential. Stay tuned for insights, expertise, and thought provoking discussion. And now here's your host, Jeremy Clopton.

Welcome to The Upstream Leader Podcast. Glad to be with you here today we are going to be talking about leading through change. When the status quo is no longer an option, and I'm excited for this conversation. I've talked with a lot of great firms over the last few weeks coming off of our Headwaters conference.

It's amazing to see what's going on in the profession. All the excitement, the information sharing, and just everything that comes from gathering over 120 leaders together in person. The enthusiasm, the excitement is. A bit of a continuance on an unintentional series that we've got going here, which is leading the firm forward and trying to figure out first, who do you want to be?

That being the most important question. And then the next most important question, what have we been avoiding? What's hard that we need to do? I've had some firms reach out that have listened to those episodes and we've talked with the leaders about, okay, that's great, but.

What if all of a sudden staying who we are isn't even an option anymore when the status quo, if you will, is taken off the table? And we really have to figure out, well, what if, who we wanted to be is who we are, but who we are isn't an option anymore. So that's the direction that I want to go today is how do you find a process for leading a firm? Through a bit of uncertainty when you now have to make a decision that you really didn't have any desire.

To have to make. You weren't expecting it, you didn't see it coming, and now you're faced with that conversation. So that's where we're at today. That's where we're going to focus.

And right out of the gate, the easiest kind of natural reaction to that is let's get more information. Let's find every option that we've got. Let's figure out how do we get as much detail as possible. And then the human element kind of kicks in and we start comparing.

We start comparing to, well, what are the other firms doing? What have other firms done in the past, and all of that, and trying to guide through all of it. What I want you to do is if you're facing this situation now or if you face it in the future, the very first thing, step back a second. Recognize you can't predict the future.

Your crystal ball is no clearer than anybody else's and nobody else's crystal ball works for you firm. Though they may have made a different choice or for whatever, that's okay. You don't have to make their choice. You're not running their firm, you're leading your firm.

You've gotta step back and figure out, okay, where do we go from here? And as you would expect, the very first thing that I'm gonna ask you to do is go back a few episodes. Who do you want to be? Listen to that episode.

I'm not gonna unpack all of that again here, but once you figure out the answer to the question, who do we want to be as a firm? It becomes the filter now through all of the decision making that you need to do, and you've gotta recognize there are likely several options available to you, even if the status quo isn't one of them. So your objective there, once you know who we want to be is, all right, what are all the options that are on the table? And let's go ahead and figure out what all the options are.

And eliminate any that don't allow you to become who you want to be. You're gonna get all the options anyway. I'm just telling you right now that human nature is, we're gonna look at what's everything that we could do. The sooner you can start eliminating options, the easier the decision making comes.

That's where you use that first filter. Who do we want to be? Any option that does not allow you to become who you want to be, goes off the table. Might it create something awesome, maybe for somebody, but not for you?

And that's our objective here. How do you find the best decision for your firm right now? Once you've got that lens and you've got the options narrowed down a little bit, let's step back again for a second and recognize if you're a managing partner, you're gonna wear three hats. If you are not a managing partner, but you're a partner and you're an owner in the firm, you're gonna wear two hats.

So managing partners wear the hat, that is the managing partner, the CEO hat, I'm leading the firm. As a result, you've got a responsibility when you're wearing that hat to present everything as factually and as I'm gonna say, unbiased and impartial. I'm gonna caveat it here in a minute. How do you present it in a way that gets the information out there so that the other shareholders, equity partners, owners of the firm can make the best possible decision?

The caveat that I'm gonna put to that is if in your role as managing partner, you evaluate an option. It does not meet the standard of a good business decision, which is your responsibility as managing partner is to lead the firm forward, making the best possible business decisions to help the firm execute its strategy and achieve its vision. If you determine that an option does not meet that threshold, it doesn't meet the threshold of a good business decision, you do have a responsibility to present it as such as as not a good decision.

That is in your role as managing partner. That is not an opinion based role, per se, that is an evaluation outcome through the lens of a good business decision. That's hat one. Hat two is you're a partner, you're an owner, which means that your responsibility is to be a good steward of the firm, the resources in it, and make the best possible decisions for all the stakeholders involved.

So for the partners, the employees, their families, the clients. The community as a whole, how it's impacted in that context. You are evaluating the decision and each of the options through the lens of, is this in the firm's best interest? If it is, it's an option you continue to pursue.

If it's not, you don't. The third hat is your individual opinion. This is where it becomes incredibly challenging to be an owner because you may see an option that is arguably in the best interest of the firm, but it's not the one that you would pick. It's not the one that is in your best interest individually as a person.

It is important that throughout the decision making process, the evaluation process, as you're looking through all the options, you have clarity as to what hat you're wearing. And I use this example, and I use this metaphor a little bit in coaching. I coach all three of my kids, or I should say I've coached all three of my kids. I'm now coaching my youngest in softball, and when I coach, I literally wear a hat.

And this is not metaphorical. It's not anything like I literally have a hat on when I coach. So I make it very clear that when I'm not coaching, I take the hat off. My youngest daughter's nine.

It's very clear to her when coach is talking to her versus when dad is talking to her. Is it perfect? Maybe not. We're still trying, you know, blur those lines a little bit, but it allows that segmentation of my role.

Also great to communicate to parents. What version of me is showing up? Is it the coach or is it the dad? Because.

I am still her father, so I'm still going to be dad from time to time. The same is true for you when you're trying to figure out how do I show up in this discussion? Maybe you don't wear a literal hat, it's metaphorical, but you're, you are letting people know, Hey, I am presenting information as the managing partner. This is in my evaluation from the business standpoint, what I've learned, what I know, where we need to go.

Then there may come a time where you say, I'm taking that hat off and I am going to participate in this discussion now as a partner. So I'm stepping out of that managing partner lens, and I'm gonna show up as a partner. You may on the behind closed doors, or maybe from time to time, even in those meetings, say, all right, as I step back and I look at it as to what it means for me, I don't like it. Yes.

It's what's in the firm's best interest. Yes, it's the best business decision. I don't personally like the decision. Having that differentiation allows you to have more meaningful conversations.

It's incredibly difficult to do. It sounds simple when you describe it. It's incredibly difficult to do because it's easy to get the lines blurred between all of those roles. Having the awareness that you need to show up in different ways will allow you to be as effective as possible as you evaluate the options.

Then you can engage back in those conversations, then you can engage back in those discussions as productively as possible. Once you get back in there and you're evaluating the options, you've gotta recognize that the status quo has been taken off the table. Every option is hard because it's going to require a change, and it's gonna require a change that nobody necessarily wanted. So we're gonna acknowledge it.

We're gonna say, look, yes, the optionality has been taken off the table. We do have to do something. How do we get in control of it? What are we willing to actually do?

What are the hard things that we're gonna have to face? What are we going to have to give up under each option? Are we gonna have to be more accountable? Are we gonna have to give up authority?

Are we gonna have to give up autonomy? Are we going to have to address things that we've been avoiding? What level of difficult are we dealing with here? Each option is going to have a slightly different level of difficult.

In the evaluation process, you're figuring out what level accompanies each option and what are we actually willing to do. You may find that every option shares, maybe some commonalities. That accountability is going to change, it's going to increase perhaps, and you're gonna be held accountable by some outside force other than yourselves. That's gonna be hard no matter what we do, so we can stop complaining about that and just get on board with.

It looks the same under all options, so that's not our differentiator. We don't like it maybe, but we're gonna deal with it regardless. Then you can start to evaluate, all right, we know everything. That's gonna be hard.

Let's start to evaluate the extremes a little bit. And I know typically I'm not a huge fan of evaluating the extremes because the reality is typically somewhere in the middle when you're evaluating a bunch of different options. Though it's nice to know if everything goes off the rails and is the worst outcome, what does that look like? And if everything goes so beautifully that it was better than we ever could have dreamt, what would that look like?

Because now we have kind of a continuum of worst case to best case scenario, and we can stack those. Next to each other and evaluate. All right, well, if we're looking at option B, even the best case scenario there isn't even close to the middle of the road scenario, uh, of any of the other options. So maybe we don't want to go there because the total upside isn't really great.

You don't get there if you don't start to understand the extreme. Now, this is where you may have some partners that thrive. Take that person that likes to look at it as the glass is half full and catastrophize every possible thing that could go wrong. Engage them.

This is their time to shine. If this goes off the rails, what's it look like? Oh, let me tell you the ways I have been waiting for this moment, and they paint you this picture and then go to the person that tends to be way more positive and say, Hey. This thing goes as well as we could expect.

What are we looking at now? You've got the continuum of extremes to look at, knowing that the reality, it's probably closer to the midpoint. If you look at all the possible outcomes. It's probably more of a bell curve than it is the extremes.

But what it does is it allows you to start to identify what is the most important information that we need. What is it that we have to have so that we can make the best possible decision? We're never gonna have all the information, so we've gotta start to define what's enough. What is it that we must know before we can decide?

What is it that we would really like to know before we could decide? And what is it that if we never find it out until we get there, we'll accept that because you're not going to have perfect information. Before you make a decision, especially if the status quos off the table. Yes, we know who we want to be.

Yes, we know the hard things that we've been avoiding that we're gonna have to do. We understand how those relate to every option. We understand the upside and the downside of every option. We're starting to get a picture, and there's probably something there that you starting to say, but if only we knew this, then we would be able to make the decision.

Make the list of what that information is that you need to have to make the decision. But then what I'm gonna ask you to do is stress. Test it a little bit. Is it even possible to get that information?

Will you get that information without some type of an action that leads to it? Maybe it's asking for it. Great. If that's the case, ask for it.

But there may be some information that you don't get until you take a step. Once you take that step, you get some more information, maybe that's, uh, signing an NDA or it's making some level of decision that moves the firm in a certain direction. You've gotta figure out what do you need? Is it even possible to get it?

And if it isn't, how do you get comfortable without it? If you're looking for a resource on this, I would highly encourage you to read the book Thinking In Bets by Annie Duke. One of my all time favorite books. It's all about decision making when you don't have all the information.

I would argue that even if the status quo is an option, we don't ever have all the information because we don't know what the future holds. So we try to figure out, okay, what do we need to get comfortable? What is enough? What does that look like?

And then we get to where we can start to move forward. We know who we want to be. We know the options that could get us there. We know what's really hard that we're gonna have to do under all options.

We've eliminated anything that we're not willing to do. The remaining options, we know the upside, the downside, and we're comfortable with all of the options that no matter the outcome, we feel like it gives us the best possible path forward. Now we've gotta figure out what's the information necessary to make the decision, and what are the actions that are gonna be required to get there from a leadership standpoint. If you are leading this process, I want you to keep in mind that unless you have an operating agreement that stipulates it.

You're not looking for agreement, you're looking for alignment, and the alignment comes through that lens of what's in the firm's best interest, not what do I want, not what's in my best interest, not what would I do if I were given the keys to the kingdom? What's in the firm's best interest? That's where you're looking for alignment. If you're the managing partner, you have the responsibility very likely.

Unless there's a chair of the group, you are responsible for leading to that alignment, which means you've gotta have productive dialogue. You've gotta keep coming back to here's who we want to be, here's what gets us there. You've gotta help people understand when they are sharing perspectives based on personal impact, not firm wide impact. It is entirely likely that when you make a tough decision for the firm that it may not be in everyone individually, in in their best interest, and they may eventually opt for a different decision.

That's okay. As a leadership group, you're trying to figure out what's in the firm's best interest and align around that. Once you make that decision, you'll realize that you immediately get more information. Okay.

We think this is the direction we want to go. We're down to these two options. Let's go get more information. Okay?

Now all of a sudden, the floodgates open up. More information is coming. Okay? At some point, we have to make a decision.

What's our threshold for information there? All along the way, if you're leading this effort, you need to be addressing a few things. What are the rest of the partners afraid of? What are they avoiding?

What do they need to let go of? What are they clinging to? That may not even be a possibility in the future when all of a sudden you have to start making decisions and perhaps your preferred option isn't even one that's on the table status quo. For instance, staying exactly as you are who you are, let's not miss the fact that that is a great opportunity to drive the change that you've very likely been trying to drive for a long time.

Perhaps it's the opportunity to expedite becoming who you want to be. It may look a little bit different, it may feel a little bit different, but if we can start to shift the mindset that this isn't happening to us, but we still have some agency and we still have some control, and ultimately how this occurs, man, it puts the leadership in such a better position. Like I said at the beginning of the episode, I didn't really intend for this to be a series. But what I've seen and what I've heard talking with firms is this is the reality that a lot of firms are facing right now.

They're being presented so many options, so many choices, so many different paths that they could take. And for some firms, they figure out who they want to be, the hard things they've been avoiding. They start down this path, and then all of a sudden it's like the path disappears, but three new ones open up. Then they're faced with an immediate change, an immediate choice, and a decision making process that seems a bit forced and not what they would've chosen.

That's okay. Let's acknowledge it for what it is. It's a choice. Generally speaking, the choices that I see firms facing are not inherently good or bad.

They're not inherently right or wrong. What I would encourage you as a leader. Good or bad, or right or wrong, only relates to your firm. What's best for your firm right now?

What's good for your firm? It doesn't have to be right for everybody else. Doesn't matter what everybody else would've done. It doesn't matter what the firm down the street is doing necessarily.

What matters is how do you help lead your group partners, owners, however you want to think about it, shareholders. How do you lead them to the best possible path forward given all of the options that are out there. And I guarantee you, if you start looking, there's a lot more options than you probably would expect. It doesn't mean there are options that'll get you where you want to be, and that's why I encourage you, eliminate as many as you can upfront.

No point in going down a rabbit hole that doesn't ultimately get you back to where you want to be. So we build on it. We ask the most important question we ask the next most important question. We recognize we're gonna have mixed feelings.

You're gonna have input, you're gonna have thoughts as a partner, you're gonna have thoughts as the individual that's impacted by it. It's okay if those don't match, but don't lose sight of your responsibility as a leader. What's in the firm's best interest? How do you move the firm forward?

And how do you make the best possible decision? 'cause then you're gonna get more information. Maybe then you make another decision. Every time you do, you're going to get clarity because action creates clarity.

If you don't have the information you need, figure out the action that will get you there. I hope that if your firm is facing a situation like this, that this has been valuable to you, I'd love to hear about it. Shoot me an email. You can connect with me on LinkedIn.

I'd love to hear if this is helpful to you, and if there are other questions that you're facing that you think would be valuable for the podcast, definitely reach out. I'd love to talk with you. It's been great hearing that these last few. Episodes that have evaluated and discussed these questions have been valuable to firms.

I know it's an interesting time in the profession, as Justin and I talked about recently on the show. It's an exciting time. Doesn't necessarily mean that it's easy, but man, there's a lot of opportunity out there I hope. This allows you to go forward and, uh, take advantage of those opportunities and have a positive impact as a leader.

While you do, thanks again for listening. We'll talk to you soon. Thanks for joining us on The Upstream Leader Podcast. We hope today's episode has enriched your understanding of what it takes to become a high performing leader in the accounting profession.

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