Those darn Beatles and the dramatic change in the accounting profession

Those darn Beatles and the dramatic change in the accounting profession

“Whoever desires constant success must change his conduct with the times.” – Niccolo Machiavelli, Florentine statesman and philosopher

Like Charlie Brown, my father is a barber. One night over dinner, he told me a fascinating story about his profession in the 1960s. I repeat it here because what is happening in the accounting profession is similar, as dramatic change usually takes us by surprise.

The Beatles mania

In the 1960s, something was going on in this country that had a profound impact on barbers: The British Invasion. The American song parodist Allan Sherman wrote a song, “Pop Hates The Beatles,” sung to the tune of “Pop Goes the Weasel”:

When the Beatles come on the stage

They scream and shriek and cheer them

Now I know why they’re such a rage

It’s impossible to hear them

Back in 1776

We fought the British then, folks

Parents of America

It’s time to do it again, folks

When they come back, here’s how we’ll begin

We’ll throw ’em in Boston harbor

But please, before we toss ’em all in

Let’s take ’em to a barber

The problem was, Beatles mania meant longer hair and fewer trips to the barber. In fact, to this day, if you talk to old-time barbers, they still curse the Beatles. The profession that had always done well, both in good economic times and bad, was taking it on the chin, and the barbers didn’t know what to do about it.

Leaders take us where we wouldn’t go ourselves

In the fall of 1969, my father ran for president of the local barber union of Santa Rosa, Calif. At the election meeting, my father and his opponent gave their “campaign” speeches. His opponent went first and he ran on the following three platform items:

  1. Haircut prices would be increased from $2.50 to at least $2.75, if not $3 (as the San Francisco barber union just increased their prices to $3).
  2. Hours of operation would be standardized for all members – 9 a.m. to 6 p.m., Tuesday through Saturday.
  3. The local union would codify the above into a new union contract.

Then, it was my father’s turn. He got to the platform and asked the assembled barbers what was happening to their incomes. They all grumbled, for incomes were dropping precipitously throughout the industry. Even during the Great Depression, barbers didn’t experience the decline they were now suffering.

My father began to exhort the crowd on what they had to do to meet the challenge that was being thrust upon them. And, it had nothing to do with the three items that his opponent was clamoring for. He started talking to them about how barbers had to get into hairstyling, retail sales, chemical services, and even hiring cosmetologists and bringing them into the barber shop to form unisex salons. Understand that this was all very radical in those days – there was no such thing as a unisex salon, and the barbers protested against this change the loudest.

My father won the election, which teaches us that while people may not like change, they will elect leaders that they trust to lead them through it. A leader confronts people with their freedom, and takes them where they wouldn’t go themselves. Under my dad’s presidency, the barbers increased their prices to $2.75, they standardized the hours of operation and they codified all of it in their new union contract.

Changing the business model

Yet, my father was conducting a radical experiment in his shop. He partitioned off a chair in the back and started booking hairstyles in the evenings, by appointment only, for $7.50. He knew that he could sell the men on this new style of haircut and teach them how to blow dry and care for it because it would reduce the frequency with which they had to visit him (from every two to three weeks to every four to six), and, as a result, could command more than two-and-a-half times the price of a clipper cut.

After a few months, my father was astonished to learn that approximately 80 percent of his revenue came from these new hairstyles, and that he was making more in four hours than his fellow barbers were making in eight. He decided he needed to pursue this full-time, so he closed up his traditional barbershop, moved across town and opened the Hairistocrat. This was the first unisex salon north of the Golden Gate Bridge. He started doing permanent waves and hair coloring, and became more actively involved with retail sales.

In 1972, while most of the barbers in the union were still working at $3, my father had increased his haircut prices to $10, and by 1975, he was charging $15. It doesn’t sound like momentous change now, but back then this was radical change for a very staid profession. In fact, visit any town, and you will still find a few traditional barbershops – the last few holdouts that resisted change – that still charge less than $15 for a haircut.

Embracing change

“If we want things to stay as they are, things will have to change.” – Giuseppe Tomasi di Lampedusa, The Leopard, 1958

Struggle is good for us. Evolutionary biologists have proven that the more adapted (i.e., comfortable) you are in your existing environment, the less able you are to adapt to environmental changes.

Rigidity is what organizations manifest when they are faced with either superior competition or outdated business models. They blindly cling to “that is the way we have always done it” in defiance of the evidence that this way is no longer relevant to success.

Creativity and innovation should take us by surprise. This is the history of business. New ideas, inventions and even fads change the world, while rendering obsolete the existing modes of production, infrastructure and business models, in a never-ending “perennial gale of creative destruction,” as described by economist Joseph Schumpeter.

What matters is how we react – either we embrace the possibilities or slide into irrelevancy. How will you embrace the changes happening in the accounting profession?