Moving Up the Economic Value Chain

The increasing complexities of the global environment and the commodity characteristics of traditional services mandate that the CPA profession migrate up the economic value chain. Commodification and technology are challenging the economic viability of the profession. Information-based products and services are losing value in the marketplace and are rapidly being replaced with knowledge-based products and services that command higher fees.

The Economic Platforms model describes the distribution of knowledge and effect along the economic value chain. The most successful future for the profession lies in moving from information services on Platforms 1-2 to services in the emerging knowledge industry on Platforms 3-5 and beyond.

The more a product or service is refined and defined, the less market value it will have. For example: tax preparation services have been commodified and automated to the point that they can largely be prepared electronically. Tax form preparation is a Platform 1 service - a foundation service. The higher economic value of this information lies in understanding what the foundation service implies-the "where do we go from here" and the "so whats" of business and finance. Higher Platform services, such as estate and financial planning are where higher economic benefits exist for the future of the profession. Higher Platform services are, and will increasingly be, the most valued services and functions, and therefore will command higher fees and salaries. Traditional services are the foundation from which CPAs can leverage to higher value services.

If your work falls lower on the economic value chain, revenue will be lower. The higher your work is on the economic value chain, the higher the revenue. This is the imperative for the profession to thrive in the knowledge-based, global economy.