“our cultures eat the opportunity to innovate.”
by jody padar
the radical cpa
opportunities are everywhere. as a successful business owner, you already know this. but when you look at your firm’s biggest challenges, do you see opportunities?
more on radicalism: dear midsized firms: yes, you can change | the radical road to (business) transformation | transitioning to a radical firm: bringing a legacy customer along | the four tenets of radical firms: a brief review | the radical cpa: always changing
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opportunities are always openings for innovation or change. as a firm owner, you have a choice: you can address your challenges about the changing market head on or you can just hide your head in the sand and leave them for the next generation to tackle.
my question to you is this: why aren’t firms adapting to the issues of today? why does it feel like everything is so doom and gloom?
has the profession always felt this way? i don’t remember the despair and fear that seems to have taken over the profession. it feels like a bunch of grumpy old men, no pun intended. but i think the solution is attainable, with just a little strategy and effort.
innovation needs to happen every day. my firm is moving into the wealth management space, where i plan to radicalize how personal financial planning is done. maybe your firm wants to add another specialty or change up the way audits are delivered. innovation must be part of your dna, and you need to keep reinventing your firm and your offerings. it’s all about incremental innovation, friends. say it with me: every day innovation!
ok, but really, what is innovation? we all know it’s a heavily overused buzzword. still, i like to say it because it perfectly captures what is happening to our profession. according to merriam-webster, innovation can be defined simply as a “new idea, method, or device.” however, innovation is often also viewed as the application of better solutions that meet new requirements, unarticulated needs or existing market needs. this is accomplished through more effective products, processes, services, technologies or business models that are readily available to markets, governments and society.
innovation is inspired by speed and experimentation. let’s be real: many cpa firms rely on safe, tried and tested processes. the system is built to protect the status quo and reject anything that may disrupt those secure processes. so, innovation in most cpa firms is an oxymoron.
another reason why some cpa firms tend to reject innovation is because it often reduces billable hours. and we all know how much cpas tend to love their billable hours. innovation causes you to do things more quickly and cheaply, which is less expensive for the customer and in turn makes less money for you if you bill by the hour.
that’s why pricing is a key factor in innovation.
innovation can potentially cannibalize your existing business. however, it is far better for that to happen by you than by another firm. i see this happening every day as the midsized firms lose customers to small firms that utilize technology better and are creating digital transformations for these new customers. those legacy relationships with the firm suddenly (and, yes, painfully) become immaterial, as the innovation is more important.
but this is the case for most cpa firms. there are some firms that are knocking it out of the park.
activating innovation
ideas are a dime a dozen, but very few accountants have the insight or time to carry out the steps of translating their idea into a workable solution. cpas are exposed daily to opportunities to innovate, yet because our firm cultures don’t necessarily celebrate or even acknowledge them, they get lost. ideas can come in many forms for many things – but many of us want our ideas to translate into revenue.
many of us have no idea what to do with our ideas. my first hire, alex, who is now a principal in my firm, would ask me to come into her office in the morning and have me shake my ideas (so to speak) out on her desk. we used to just write them down on a yellow legal pad. she is the executer in our firm, a coo of sorts. i needed that. i was getting carried away with ideas, and she helped me bring them to earth. we would write them down, some never to be seen again. i’ve always had more ideas than time. however, via trial and error, we figured out a way to capture those ideas to build on them. our whole team was involved. that is what today’s firm must do.
is that happening in midsized firms? who has the time? everybody is either trying to bill hours or trying to prove their value to the partnership group. or they are in meetings.
we cannot just innovate on process. it’s not enough. we need to innovate around what it is we sell, how we create products and how we market those products. we need more than a new business model. we need a new set of ingredients that we bake into the culture of our firm. organic is better.
translating our ideas into workable solutions requires a desire to embrace entrepreneurship.
it means the firm is open and willing to listen to new ideas so they are shared openly and embraced, or at least acknowledged and prioritized. the team has the transparency and a solid understanding of the why. they have a crystallized vision of the environmental business landscape as well as access to a roadmap that covers team and client expectations, their individual roles and the strategy that illustrates the holistic goals of the firm.
i know what you’re thinking: but my firm is entrepreneurial! we live and breathe entrepreneurial!
really? i tend to disagree.
innovation takes time and space to think. it’s hard to think when firms are focused on production-based hours. these hours billed produce firm revenue from efficiency that was born in the industrial revolution era, when factory-like ideals and production hours were celebrated. firms act like factories today, producing billable hour after billable hour. teams are managed like factory workers and given little time to “get out of the production line” to work on something else. and employees are measured on production. think realization rates. innovation gets halted dead in its tracks.
our cultures eat the opportunity to innovate.
thinking like an entrepreneur is not always easy for us. in fact, sometimes it feels very uncomfortable. to put it gently, cpas by nature are somewhat risk-averse. however, i believe that with our deep knowledge of the market, our unique set of technical skills and a little entrepreneurial training, we can be masters of this domain.
i’ve seen incredibly smart cpas do phenomenal work brainstorming at roundtables. the problem is when they “go home” to their firms, the innovation switch turns off. why? because their cultures eat innovation via billable hours and regulatory compliance seasons.
if there’s one thing you walk away with in reading this, let it be this: cpas, it’s up to you to lead in your firms. it’s up to you to illustrate what innovation means in the context of practice management.
the economy is increasingly motivated by innovation that is led by business. as a business owner’s most trusted advisor, we do a shockingly poor job at creating ongoing consistent opportunities for innovations in our firms. how are we modeling our cutting-edge knowledge and insight? many cpas aren’t, and instead are getting blown away by the competition. and sorry, just adopting cloud technologies isn’t innovating. it’s reaching for low-hanging fruit.