Innovation is more complex than most believe and it requires planning and infrastructure to succeed in any organization, including an accounting firm. The best innovative cultures are those where ideas come from all areas, including clients or customers. We like to refer to this as "The Bubbling Company." Just as a pot boils, ideas and innovation must come from all areas, not just the top. Creating the innovative culture requires the right mindset, skillsets, toolsets and discipline. The complexity and challenges come from how to manage the current company while innovation occurs.
The late Steve Jobs stated that “innovation requires hindsight, insight and foresight.” Innovation is not just an ah-ha moment. In fact, most if not all innovation starts as a bad idea. At least it is a bad idea in the minds of those it will disrupt or require change on their part. There are also the challenges of resource allocation, priorities and duplication of effort within a firm or organization. Some classify this as politics, but it is really more than politics and can be managed with a vision and strong leadership.
Let’s look at the innovation process first and then how to better manage innovation in a firm. We will also look at best practices and how leading firms are addressing innovation. Innovation starts with an idea that has the potential to disrupt or change people within an organization. Take the internet, laser printer, smartphone and blockchain as a few generic examples. The idea can involve technology, processes, people, leadership or growth. Generally, the person who comes up with the idea is not the person who can manage the process, prove the idea works and then scale the concept across the firm or organization. A team approach is generally required for success. Also, the level of trust in the process within the organization determines the time and cost to implement. If the trust level is low, the firm pays a tax in increased time and dollars. If the trust is high, the firm receives a dividend in less time and dollars.
Innovation requires balance. Firms must continue to generate cash flow from existing service lines while introducing new services and developing the required talent.
Leadership and culture are paramount to innovative success. Google and Apple generally come to mind when thinking about innovation because much has been written about their products, services and processes. Yet when we review Forbes 2018 list of top 100 innovative companies, Apple isn’t listed and Google, represented by Alphabet, ranks 79th. ServiceNow, Workday, SalesForce, Tesla and Amazon are the top five. Intuit ranks 51st on the list and is the company that impacts small business and the accounting profession the most. They have their own process named “Design for Delight” to create innovative thinking. I have participated in their process, and it works. It is based upon the principle of intersectional versus directional innovation. They include the customer and diverse thinking in the process. Most accounting firms use directional innovation where they only put accountants in the room, and the results are incremental rather than exponential change and improvement.
Granted, these are large companies, and most accounting firms are small businesses. But some of the same challenges and strategies apply. Here is a list of some of the more important responsibilities of a Chief Innovation Officer as published in the Harvard Business Review (HBR):
- Supports best practices
- Develops skills
- Supports business unit initiatives
- Identifies new market space
- Facilitates idea generation
- Directs resources
- Protects promising projects
According to the HBR article, even well-managed companies can fail at innovation if they don’t address the above responsibilities. The challenge comes from the fact these seven responsibilities change in importance over time. Initially, idea generation may be a high priority, but with time there will often be more ideas than resources, so other areas gain in importance. Our experience, in our own organization and also in larger firms, the development of skills, direction of resources and the protection of promising projects are all important. The CIO or innovation leader’s primary skill may need to be project management.
Innovation requires balance. Firms must continue to generate cash flow from existing service lines while introducing new services and developing the required talent. This requires change management, allocation of resources and education. Some of the lessons I’ve learned over the past few years may help you accelerate the innovation process and increase your success:
- Name a CIO or Innovation Leader (depending upon the size of your organization).
- Accept failures — fail fast.
- Utilize an open office and collaborative team structure.
- Seek ideas from all levels.
- Develop filtering criteria.
- Free up firm leaders and provide time to think (tightly scheduled leaders cannot be innovative).
- Provide funding and resources.
- Develop or acquire new skills.
- Develop your network — with peers and outside innovators.
Creating and developing an innovative culture is both fun and rewarding. Remember there will be failures, but success builds confidence and confidence drives firms to higher levels.
L. Gary Boomer, Visionary & Strategist of Boomer Consulting, Inc., is recognized in the accounting profession as the leading authority on technology and firm management. He consults and speaks around the globe on several topics including strategic and technology planning; mindset, skillsets and toolsets for the future; change management and developing a training and learning culture. He also acts as a planning facilitator and coach to some of the accounting profession's top firms.