the 5 key skills of innovation

your firm needs them now more than ever.

by gary bolinger

peter drucker once said, “every organization, not just businesses, needs one core competency: innovation.”

one core competency. that is powerful. in today’s pandemic environment and, as we prepare for the post-pandemic environment, it is more important than ever in businesses of all kinds, including cpa firms. cpa firms need to prepare to assist clients for the world ahead. there won’t be a return to “normal” as we remember it for some time. and that means cpa firms must innovate in client service to add value in this new environment.

more: advisory vs. low-value clients | what + who leads firms to better service | how accountants are profiting in disruption | ask the right question(s) | seven elements of engagement for cpas | true advisory work isn’t just consulting
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innovation sounds big. innovation sounds big because we tend to think about historic innovations, and they were big. you know … the wheel, the printing press, railroads, mass production, airplanes, the electric light bulb, television, the internet and cellular phones.

but not all innovation is big. think about two types of innovation.

• sustaining innovation:
  • improves existing products and services
  • develops existing markets with better value
• disruptive innovation:
  • helps create a new market and value network
  • does not take place with established competitors

sustaining innovation is something that perhaps isn’t even consciously thought about. it is just something that good businesses do to improve process and/or product. business owners are required to engage in sustaining innovation every day to remain competitive. but we don’t think about that as innovation.

disruptive innovation is different. there could be something big there. you ask yourself, what can we do to differentiate our firm? and the answer is that there is plenty that can be done to differentiate your firm. but not in respect to compliance services. all cpa firms are selling the same basic product.

you need to think about how next-generation cpa firms will create value. some firms are, but they all seem to be thinking the same thing. wealth management is a popular choice. information technology is as well. but if many firms are moving to wealth management and it, and that is the direction you decide to go, you are still competing in the same market. you are continuing to compete with those “established competitors.”

so, what is innovation?

• the introduction of something new (absent innovation, there is nothing new and, as a result, no progress)
• if an organization isn’t making progress, it is difficult to stay relevant in competitive markets
• change is inevitable, and in most cases, innovation creates positive change

if that is what innovation is, how do you do it? well, there are five key skills.

• question (and make sure that you ask provocative questions)
  • challenge the status quo and consider new possibilities
• observe small details
  • behaviors and activities of customers, suppliers and other companies that might suggest new ways of doing things
• network
  • gain radically different perspectives from diverse backgrounds
  • talk to people not like you, people who think differently, people with different perspectives on value creation
• experiment
  • relentlessly try out new experiences, take things apart and test new ideas
• associative thinking
  • connect previously unconnected ideas
    • draw connections from questions, problems or ideas from unrelated fields triggered by questioning, observing, networking and experimenting
  • see your firm and your client’s business in new ways
  • imagine innovative new business models, products and services.

talk to your firms’ partners and professional staff about this process. partners aren’t the only ones with innovative ideas. also ask your clients for ideas on how client service could be improved, what services could be a part of your offerings. ask provocative questions about what your firm can do to help in this new “normal.” pwc did a study a few years back and learned that:

• 54 percent of companies said that customer engagement strategy helps define innovation from early ideation, and
• 35 percent of companies said customers are their most important innovation partners

so, plan a few meetings with select clients to learn how your firm can be different in the future. ask those questions, the provocative ones. perhaps ask what your firm could do that would create more value and insight for the future of their business. don’t discount their responses. observe how they create value (you might gain a few insights there). their thoughts and actions can lead you to new ways of value creation and distinguish you in the marketplace. and at all costs, avoid the status quo.

posted on may 27, 2021