September 21, 2007

Use Insight and Add Value to Attain Success.

Success is the small change of genius, and both depend largely on the ability to see early what later becomes obvious to others.

In 1991, Brint Ryan was 27 years old, slogging away in a Big Six accounting firm's transaction tax practice (i.e., motor fuels tax, severance tax, and sales and use tax). Hewing to time-honored tradition, the accounting firm provided expert and expensive hourly tax recovery advice to its clients, then swiftly migrated to the next assignment, depending on the clients to follow through. Some clients would use the advice to recoup tax refunds. Others wouldn't track the data well enough to support a valid claim. Either way, the accounting firm was richly compensated.

This tradition-laden advice delivery system – in which clients were ultimately left to fend for themselves – was standard in the industry, and therefore, neither criticized nor questioned by Mr. Ryan's superiors.

But Mr. Ryan feared that the hourly fee arrangement was keeping organizations from pursuing their rightful tax refunds. As someone once said, paying taxes is all fine and good, but no one should leave the government a tip.

So Mr. Ryan and his weary credit card set out to revolutionize the delivery of tax transaction services. Ryan & Co. was formed.

At the time, the Big Six accounting firms were the only major players in the state and local tax recovery business.

Mr. Ryan's initial challenge was almost unfathomable: to build a market-leading business from scratch in a sector dominated by global, billion-dollar consulting firms with prodigious brand recognition.

In the subsequent 16 years, Ryan & Co. has become North America's largest state and local tax consulting firm.

Headquartered in Dallas' Galleria complex, the firm's 725 professionals and associates today manage state and local tax liabilities for clients in every state in the United States and throughout Canada.

Here's how Mr. Ryan met the daunting challenge.

Redefine the product to match users' needs. The old advisory model was user-unfriendly – it was expensive and required self-help by clients. Hourly fees were often an unbudgeted hurdle for clients, and advisers failed to shepherd their clients across the finish line. Mr. Ryan broke ranks with the traditional antiseptic advice approach, offering instead a turnkey, fee-driven model based on the client's success.

Because Ryan & Co.'s fortunes rise and fall with its clients', it's in the firm's best interests to maximize each client's tax recovery.

Ryan & Co.'s tax professionals also live or perish by the success fee and are paid based on a percentage of the client's contingent fee payment.

Commoditize your competition. Value is a function of price multiplied by results multiplied by perceived pain transfer. Results-oriented turnkey solutions, performed with a sense of urgency and client devotion, constitute the summit of customer service. At such lofty peaks, clients expect to pay a higher fee – a premium fee for a premium service.

As Mr. Ryan points out, "Lower pricing tends to indicate a fungible commodity." By contrast, Ryan & Co. commands the highest percentage success fees in the industry, with a strong track record of client pain transfer and results to back them up.

Ryan & Co.'s quality assurance team audits a higher percentage of projects than do its competitors and then publishes the audit results on the firm's Intranet site. Competitor peer reviews are conducted, of course, but on a smaller scale.

Client surveys rank Ryan & Co. above the 90th percentile in client service, technical expertise, disruption avoidance, developing professional relationships and accurate tax advice.

Capitalize on opportunities. In 1999, Ryan & Co. brought in John Sharp, former Texas comptroller of public accounts, appreciably boosting the firm's standing in Texas. Other credibility-enhancing hires have followed.

In 2002, Congress passed Sarbanes-Oxley and other regulatory requirements that limited the then Big Four accounting firms. The rules made it tougher for national accounting firms to charge for consulting advice, including local and state tax advice.

As a result, Ryan & Co.'s biggest competitors started dropping work in Ryan & Co.'s expanding lap.

Just as it takes advantage of welcome legislation, Ryan & Co. guards against unwanted regulatory changes. Its large public affairs team involves itself in pertinent statutory and regulatory swings throughout the country.

If you can't be first in your field of focus, narrow the field's focus. Like Starbucks, Mr. Ryan took an ordinary product and refashioned it in such a way that he could sell the refreshed product almost monopolistically. Ryan & Co. became the leader in its field by redefining the field.

Today's challenge for Mr. Ryan is simple – achieving total world domination. Ryan & Co. has grown considerably of late through out-of-state and Canadian acquisitions. Mr. Ryan, however, admits that assimilation and different processes have made acquisitions more taxing than anticipated.

Mr. Ryan is now several tax seasons past his 27th birthday. But he still has the same drive and insight that pushed his firm from renegade upstart to market leader.

Pauline Graivier is president of Dallas-based Verbal Communications Inc. Rob Hoffman is a partner with Gardere Wynne Sewell LLP. (Belo Corp., which owns The Dallas Morning News, is one of Ryan & Co.'s clients.)