Episode 115:

Hey folks. Justin Grant here, the producer of The Upstream Leader. We had originally planned to release this episode right at the end of tax season, but you know how scheduling can get! You’re an accountant! Or at least you do something in accounting. So anyway, that happened to us—we’re releasing it a little early. If you feel like it doesn’t make a lot of sense that we’re talking about the end of tax season, that’s why. But the point of this episode? That’s still the same. We hope you enjoy it.

Hello everyone and welcome to The Upstream Leader Podcast. My name’s Jeremy Clopton. Excited to be with you here today. I’ve got back with me. Justin Grant, our producer, Justin. Great to have you.

Great to be here, Jeremy. Although I am speaking with foreknowledge of when we’re recording this and when it’s releasing, “ahh,” everybody can breathe. We finally made it.

That’s right. We are releasing this episode at the end of April, so hopefully everyone that’s dealing with the end of year stuff, everyone dealing with tax season, hopefully this is the time where you’re thinking, okay, I can catch my breath at least for a moment. And then we’re going to dive into what we’re talking about here, which is actually that this is a great time to get really, you know, get started on doing the hard work, which in hindsight, maybe taking a breath isn’t exactly what I’m advocating for here, Justin. I don’t really know that it is.

But I do want to recognize, hey, you made it through another tax season. That’s the great thing about tax seasons. They come and go. I know for a lot of firms, some of you are listening to this thinking, oh Jeremy, we don’t think in terms of tax season anymore, it’s all year and all of that. And I commend it, but I also recognize there are many of you that are very grateful that May is upon us and that it is time to get into whatever the summer may bring, whether it’s rest, rejuvenation, maybe it’s getting into your next form of busy season. I’m going to advocate, perhaps it’s time to start thinking about strategy and making some changes in the firm, and that’s really what we’re here to talk about today. Justin, I don’t know about you, but it seems like the conversation about changes and strategy and all the things we want to improve often feels very resolution type based, and more of a, hey, let’s talk about this at the end of the year and the start of the year type of thing, which means for a lot of people, we’re at least three months on from even thinking about what we’re going to change. We’ve already accepted that we’re not, and we’re moving on about the day. What do you think?

Well, I think that, again, not to be too cruel, but it suits that accountant’s mindset, doesn’t it? That, well, I’ve got all this work, I need to get it done, I need to get it out of the way. It was nice to think about how we can make these changes, but boy, the amount of time it’s going to take me to make them, I just got out of the busy season and just got out of 80 hour work weeks and even worse. So actually this suits me just fine, ’cause I can make it be, you know, something that we’re striving for but never actually quite put in that little bit of effort that’s going to save me a lot of pain later because I’ve found my balance, my equilibrium, so we’ll just keep it like this.

Keep on keeping on, that’s right. So I’m going to just call it as I see it, and I recognize some of you listening may say, Jeremy, I don’t see it that way. And if that’s the case, I fully respect it. Unfortunately though, I think a lot of leaders use this as an opportunity to say, you know what, we’re already four months into the year, we’ll make the changes next year. We’ll get to the heavy lifting next year, because we’ve already lost a third of this year. By the time we all get back from thinking about vacations and recovering and from tax season and all of that will be five months through the year. Oh, then by the way, I’ve got a couple other things that I need to do.

Conferences.

Yeah, conferences are through June. It’s too late to make changes, so maybe next year. And I’m just going to say I think it’s a bit of bs. It’s a great excuse to not make changes. So what I’m going to advocate for in our conversation here is May 1st starts Q1. And I realize all the accountants push back and they said, no, no, no, no, no, that is not how the calendar works. It’s not how the fiscal years work, that is not how any of this works. But if we think about it from a change management standpoint, for a firm that’s looking to do something great, what if we said that April 30th is the end of the year, and May 1st is the beginning of our change year ahead. Why doesn’t that change the complete mindset on what we have ahead of us as an opportunity? Because if May 1st is now the beginning of Q1, we’ve not lost anything. We’re not a third of the way through the year, we’re not a quarter of the way through the year, we are at square one, and it’s time to start thinking about, based on everything we just learned, everything that may have frustrated us—yes, I’m a realist, there were things that frustrated you the last several months. Now you have the ability to say, what do we want to improve next year, and you’ve got at least three months to start making those changes. Does that help us a little bit. I mean, to me that feels a bit more empowering, wouldn’t you think?

Yeah, I agree. Of course, you know, our calendar is as arbitrary as it can be anyway. The new year being in the dead of winter and things like that. So, hey, even just from a non-accounting standpoint, have May 1st be the first day of the year, you’re right in the midst of spring, you’re looking forward to the summer. But yes, I feel like any excuse we can give accounting firms partners, CEOs, whoever, the ability to look at this a little bit differently than they look at it now, if that’s going to be what helps them to go over that hump of, oh, but there’s so much prep I have to do to change these things—because the rewards are worth it at the end of the day.

Yeah. Well, and so often the way that we’re thinking about the year, especially for firms that tend to be a little bit more tax heavy. And I know there are still lots of firms in the profession that the deadlines do still drive a lot of it, is we’ve got the spring tax deadlines, and then for US firms, we’ve got the fall extension deadlines. And I know Canadian firms, there are deadlines at various points throughout the year for various different reporting and all the regulatory items. But if we think, well, we’re coming out of spring tax season, recover and then try to get ready so that we can do another one in the fall, like you said, we’re focused so much on the work that it puts off having any energy to do anything and to improve the firm. But my belief is if we start thinking about May through July as Q1, and that’s now “Change Season,” anything that we want to do, significant initiatives, so for firms that have a vision and a strategic plan, which y’all I know advocate for that, you’re attacking those initiatives head on May through July, because that’s the time where you’ve got the most availability to tackle them. The great thing is, if you don’t have a vision and a strategic plan, but you know there are things you want to improve in your firm, if you view May through July as the time to go attack them, you now have freedom in a way to go make changes without the pressure of a deadline looming on the horizon.

Yeah, so what you’re saying is the mindset now is okay, we just need to decompress and get away from our latest, endless cycle of tax season overwhelm. So we’re taking May through July, even into August, before we then have in the US the autumn deadline, and we’re just going to rest and we’re going to kick back and we’re going to do what we need to do here and there. For you it’s, no no, this is the start of everything, like tax season is everything you’ve been preparing for all year, and then when it’s done, you need to start preparing for the next one.

Absolutely. And the great thing about the autumn deadline season. What a great way to test drive the changes that you’ve put into place. Policies, procedures, processes, so often we want to make these changes and we have this fear of, but if tax season, the big one, the spring one is the time that we first experience it, what if it goes wrong? And that fear, that concern, makes a lot of firms, in my experience, a bit more change averse, or they’re just more incremental when they know that they need to be transformational. If you do transformational change May through July, you get August, September and October, the new Q2, as a test drive quarter, knowing that you’ll then have November, December, January to make any changes or tweaks before you actually get to Q1.

And I realize it’s a bit counterintuitive knowing that spring is the original deadline, autumn is the extension, and I’m asking you to flip that from a change management standpoint and say, autumn is the test drive, and then spring is the full execution. But in what other scenario, whether it’s performing arts, sports, or anything else, would the most important time of the year not be Q4? Playoffs come at the end of the season, the biggest performances come at the end of the season, the encore comes at the end of a show. So why on Earth is our most important time of the year the beginning of our mindset around change, when it realistically should be the culmination of everything that we’re doing, meaning that February, March, and April is the end of the year from a change management standpoint?

Yeah, what you touched on as far as firm reticence to implement anything major, because their first go at it isn’t going to be, let’s use another sports analogy, the pre-season, which we might view the autumn season to be, it’s not as intense as the spring season. So no, they’re just going to have to dive in with all of these new things when suddenly everything’s flying at you a million miles an hour. No, that’s great to be able to say, well, no, let’s do it on kind of our having our backups in, not that’s anybody that I’m referring to as a person, but just it’s the backups kind of scenario of which tax season is more, well, “taxing.”

Yeah. I love a good pun. I really do.

I wasn’t even going to say it and then I was like ah, alright.

Oh, you’ve got to love it. My kids would be disappointed that I wasn’t the one that said it, so hopefully they don’t listen to this episode. But it’s so true, because if you really think about the cadence of the year, the other pushback, so let’s just keep going backward from the pushback: We can’t make the change at the start of the year because the big spring season is upon us, which again, I would liken that to the playoffs, the encore, the final performance, the curtain call, the whatever. Well before that though, was the holidays. And it’s like, oh, we don’t have enough time to do that because we’ve got to give people time, and you do. You have to give people time for the holidays and spending time with family and connecting and all the things. So we go back then to the autumn. That’s not a great time again, because that’s, again, I would liken that to the beginning of the season, if you will. It’s not preseason anymore, you’re in it.

Yeah, you’re in a “less” full swing, but it’s still a pretty full swing.

It’s still a full swing. So that means if we’re going to make changes in prep and get people ready that leaves May through July, just working backwards logically, that is the best time to build for the future. We don’t build for the future in peak time, we galvanize what we’ve built.

So would you also say, once you’ve laid groundwork over a year or two, serious groundwork, May through July, it’s still going to serve the same purpose in subsequent years, but it’s not going to be nearly as intensive of a process anymore, because you’ve already made those major steps you need. So from then on, everything is going to be a lot less impactful immediately after you’ve just come out of the heavy duty, spring tax season.

I would say so. You get two or three years in, it’s less disruptive. It may still be intense. Obviously, Lord knows what three to five years in the profession will bring, there’s significant change and evolution happening. It may still be intense, but it would be less disruptive. And when you were describing that, Justin, the James Clear quote comes to mind that “we do not rise to the level of our goals, we fall to the level of our systems, and our systems are our daily habits and our practices.” I would argue that if you have a dedicated change season, that becomes a practice, that becomes a system, that becomes a habit to where, you know, as a leadership group, by the way, your staff, your seniors, your managers, they are probably rejuvenating, recovering a little bit, coming out of tax season.

Oh yeah.

But as a leadership team, you’re putting in motion all of the changes that need to be taking place. This is your, I would argue from a leader standpoint, this is your busiest season from running the business, because now you get into that as a system and it’s okay, we’re going to make the changes in the summer so that we can figure out what does and doesn’t work in the autumn, fix it if we need to in the winter, and then we’re firing on all cylinders come the spring, which benefits everybody in the firm and then the leaders get back together again, May, June, July. And it does change the mindset. You’re right: It gets easier from a practice standpoint. I think anytime we put systems, practices, habits in place that require leaders to focus on the business, rather than just staying in the comfort zone of doing the work of the business, everything gets easier from a leadership standpoint.

Right. So we have this device of shifting the calendar a bit, and I really like it. I like how it forces someone to think about each roughly three months and how it applies: not to your clients, not to outside forces, but to you as the firm, as the business. All that said, it is still just a device. So how do we get people over this hump, and actually, whether they adopt the calendar change or not, to just do it?

I would say the first thing is you’ve got to get leadership to recognize there are different cycles in the business that are important and we have to separate them from what they are. The fiscal year is a financial cycle. I’m not advocating we change that. Some firms are going to say, hey Jeremy, we don’t actually do that much tax work, so April isn’t our thing. So if that’s you, by the way, you figure out what is your busiest period. When it culminates, that’s the end of your Q4.

Rework around that, yeah.

So your Q1 starts right after that. And that’s really the argument here, isn’t it? Is find your peak moment and that becomes the end of your year, not the beginning. So to get people there, you’ve got to get people to recognize, as leaders, we have to recognize what is our peak moment when we need to perform at the best? And recognize that performance and change management likely follow a completely different cycle than a calendar or a fiscal year, and you know what? That’s okay. That’s not inherently right or wrong. It gets back to, we have to run the firm like a business, and we’ve got to get that recognition that if we’re going to run the business, we have to modify the business processes, procedures, approaches in a way that fits the cycle of the business. It’s like a retail store. They’re not going to go in between Thanksgiving and Christmas and try something brand new they’ve never tried before.

They prep for that for months.

Yeah, exactly. So why would we do that? And here’s the thing: From my perspective, what it does, the real big benefit of this, Justin, it eliminates the excuse of, we’ve already lost a third of the year, so we can’t make the changes that we want to make. That to me, is the biggest thing. It’s getting out of our own way and recognizing we actually still have 12 months ahead of us. Arguably, we have a whole lot more than 12 months, hopefully. If you’ve got 20 years left in your career, you’ve got 240 months. The calendar is an arbitrary device that really has no bearing on the business other than it provides us data as to when something happens. It’s not actually a constraint or an end time per se.

Funny how we make it one though.

We do! If we were in a business that had 18 month or 36 month cycles, we’d look at it completely differently. Luckily, it does fit in a 12 month cadence because there is a new deadline every year, whether it’s audit or tax or consulting, what have you. But to get people over it, it’s a mindset shift. It’s not a knowledge shift in my mind, because most firms know what they want to do, they know the constraints, they just struggle to get out of the old mindset of, but we’ve already lost a third of the year, what now?

Well, and speaking of that theme and of getting out of your own way, how much of this is also down to leaders that are still doing too much work as if they’re first years? They’re not putting their time where they need to be putting their time because they still have that connection to the way they used to do things, even as they grew in their careers.

Yeah, absolutely. I think a lot of it is that. It’s not a lack of knowledge, it’s not a lack of desire in a way, it’s comfort. It’s what we’ve always known.

Yeah, good pointing to that word. It’s insidious, isn’t it? Insidious comfort.

Yeah, it is! Well, and when you pair comfort with success, man, change gets really hard. Because now I don’t have a need to change. I may have a want, but I don’t have a need. I’m comfortable and I’m successful as a business. Why do I need to change anything?

It’s also funny what we can convince ourselves what comfort actually is when so many of these tax seasons for so many of these firms are just absolutely wild.

Yeah. There’s a desire, but it’s not a need, and change is so easy when there’s a need. We don’t have another option. If it’s fix it or go bankrupt, most firms fix it. When your back’s against the wall, the pain of not changing is so much greater than the pain of changing that we do it, because it’s actually the more comfortable option. The great firms, the great leaders, figure out how to change when they’re comfortable and successful, but they recognize they will be more successful on the other side of discomfort.

Good, I like that. Boy, there’s an awful lot of discomfort that gets taken for granted when you add the change element to it suddenly that discomfort is front and center and it makes such a psychological difference.

It really does, and it’s personal discomfort because change—I tell leaders in firms a lot, the firm exists on paper or in a Secretary of State’s database somewhere online, as an entity. It can’t change because it isn’t a person. The people within the firm can change, which means all discomfort is personal discomfort, which means it’s my discomfort. It’s your discomfort, it’s another leader’s discomfort. And as human beings, we aren’t necessarily wired to choose discomfort.

I think “not necessarily” is underselling that sentiment by a long shot!

Yeah! If you look at the most successful individuals, likely across all domains, they are the ones that have become accepting of discomfort. They are willing to go through the discomfort because they know that greatness lives on the other side of it. You don’t see anybody that’s the best in the world at anything that didn’t push through some discomfort, some personal discomfort to get there. They didn’t want to, it wasn’t easy, whatever it may have been, and they said, I know, but I want to be better, so I’m going to get through it.

Yeah. Not going to breeze through this.

No. And look, if somebody’s listening and thinking I’m attacking leaders, I’m not. Human nature is comfort. I don’t know that that’s inherently, there’s no ill intent, and I’m not claiming that somebody is doing this because they don’t want to be better. I’m just saying, if we want to be better, we have to choose to be uncomfortable for a period to get to it. Now that starts with changing how we view the calendar and when we do the work. We have much more time available to it than we’ve ever imagined.

Well, and I was just going to say, sometimes committing to an extended period of being uncomfortable, but it will be worth it in the end.

Absolutely. So we’ve agreed to it then. Is that fair? We’re going to change the calendar.

I like it, yeah.

We’re going to find what is our peak moment: That becomes the end of Q4. And then from there, we’re going to reorient things. The first three months after that, we lay the groundwork. The next three months, we test it. The next three months, we refine it. The last three months of the 12 month cycle we just go and execute it an incredibly high level and find even greater success than ever before.

And to clarify, I don’t think you’re saying on day one after the end of that absolutely manic tax season period, you need to now be making change decisions. Give yourself a couple weeks, but get to it sooner rather than later.

Absolutely. Rest and rejuvenation recovery, absolutely critical. But let’s not do it for six months and now say that we’ve lost the whole year. Let’s get after it and go make a difference in the firm.

There it is.

I love it. Well, Justin, thank you for the conversation. It has been a lot of fun, as always.

It certainly has. Thanks for having me on to discuss it. I’m always enjoying when you’re having me on these days because it’s often something like this where it’s “Firm leaders, you haven’t thought about it this way and here’s why you should. So let’s talk about it.” Enjoyed it.

I appreciate it. And thanks for joining me and for anybody listening, if you are interested in getting together and talking about topics like this in person, we are having our HeadWaters Conference this July. It’s up in Chicago. We’d love to see you there. You can find information on our website, UpstreamAcademy.com/HeadWaters, and we’ll continue the conversation. But have a great day, and thanks again, Justin.

Thank you, Jeremy.