Stephen J. Lusch, University of Kansas
Robert F. Lusch, University of Arizona

Since the emergence of the modern accounting period over 500 years ago Accounting has a proud tradition of developing new accounting techniques and procedures and developing many sub-disciplines. However, accounting is now at the point where it is entering a post-modern era where it is questioning its fundamental assumptions, purpose and role that were largely built around industrial economies and the firms that propelled them.  Today, the accounting institution may have reached the point in which pivoting the current model and developing additional sub-disciplines is not enough to meet the demands presented by the economy and society in the 21st century. SEC Commissioner Steven M.H. Wallman emphasized the need for the profession to keep pace with the quickly changing business environment (Wallman 1995). Though progress has been made, one could argue that Wallman’s call for drastic change to accounting has been left largely unanswered. When posed with the question of “What is the most important issue currently facing the accounting profession?”, Mark Weinberger, Chairman and CEO of Ernst & Young, LLP responded as follows:

“I would say adapting to change. The business environment has become increasingly complex and dynamic – – and that’s something that our profession has had to adapt to in the way we serve our clients and our own operating models. The dynamism is driven by trends that include globalization, demographic shifts, technological advances, and regulatory change. In terms of the pace of change, the last decade has been particularly challenging. We’re still seeing the after-effects of the banking crisis, which became an economic crisis and then a sovereign debt crisis, ripple around the world – – through a patchy global economic recovery and regulatory adjustment, and the uncertainty that brings. But the best organizations use change to challenge themselves, to start a conversation with their stakeholders and to re-affirm their sense of purpose” (Accounting Today 2013).

This sentiment of Weinberger’s quote echoes ever louder today as the shift toward service-centric business models in the economy is rampant, even among industries that were traditionally viewed as very product-centric (Spohrer and Maglio 2008, Normann 1988, 2001, Lusch & Nambisan 2015). A service-centric orientation views service as the application of knowledge and skills to provide benefits to another (the beneficiary of the service). This perspective views any type of tangible output such as a consumer good or an accounting statement as not what the beneficiary (customer) desires; what they desire is the service the good or accounting statement offers. In this vein beneficiaries (customers) hire a product to get a job done (Bettencourt, Lusch and Vargo 2014). The value is not in the good or the accounting statement but in its value-in-use or what may also be thought of value-in-achievement. Stated alternatively a fundamental question the accounting profession needs to address is what is the value-in-achievement offered by financial statements (or information)? Thus a service-centric perspective is inherently beneficiary focused and not accounting firm focused.  Not surprisingly this represents a dramatic shift in the way in which accountants and the accounting profession view themselves and the value propositions in which they offer.


This is a working paper.