six barriers to innovation.
by jody padar
the radical cpa
many radicals have already made the shift to pricing by value or a fixed price agreement. yet, they are still tracking time.
more on radicalism: the value of new ideas | our pain points are opportunities | 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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when we value our team on an hour, it leaves almost no time for innovation to occur. an incremental shift could be to allow for a certain number of innovation hours per week. however, once again, this is a huge limit on creating an innovative culture.
depending on who you ask, there are a bazillion ways or categories of innovation. in my first book, i had a very linear way of looking at the outside influences that were happening to my firm, and i outlined them in the four tenets. now i believe innovation can happen in every inch of our practice. it’s gone beyond technology or the cloud, communication or social, pricing, process, or experience. innovation has found its way into our overall business model.
remember anthony’s third model of effort: strategy (changing the essence of a company). its power is going to come from new cultures that create products instead of selling time because they will have continuous innovation and ideas built into their dna. we must move from a culture of delivery to a culture of learning. firms will have a financial data focus, but what we will end up selling will not look like what we sell today.
today i believe the four tenets and the fifth tenet (the business model) aren’t a beginning or an end to innovation. they are principles that need to be applied to specific products within a cpa firm, and consistently improved. those specific products are ones we are more familiar with, and those that we are not, such as blockchain or internet of things (iot).
before we can really dive into the fifth tenet, let’s explore innovation. everybody wants it, but not everybody has it. there are many formulas to create it, but how many are successful?
what are the barriers to innovation?
i don’t have to tell you that you can suck the life out of anything innovative more quickly than you allow it to spring to life. in accounting firms, innovation isn’t usually in our nature. barriers to innovation and inspiration are everywhere and can creep up on you, even when you think your firm is “innovative.” here’s a starting list of how these barriers play out in a typical firm:
- organizational. this includes upholding the status quo no matter what, a lack of strong infrastructure, a lack of insight and comparative data as to what competitors are doing, and blind succession, meaning just following in a former leader’s footsteps, well, just because.
- regulatory. it probably won’t surprise you that ongoing regulation updates are a huge obstacle to innovation. with most of our time being spent deciphering what’s new and what new updates to bring our customers, innovation takes a back seat. outside demands and a compressed, stressful tax season also play a role in decreasing a firm’s innovation.
- market. if you follow the market, you won’t get anywhere. we need to be leaders in our industry and with our clients. if you look to see what your top three competitors are doing, and they are all staying safe in their old-school ways, then believe me, any innovation that may be possible is dying. the market isn’t moving fast enough, but that doesn’t mean you can’t be moving the needle yourself.
- financial. i know why many firms don’t see innovation – they are still billing by the hour! it’s profitable, i realize. but it’s not sustainable. i wrote about this profusely in my first book and i will say it again: billing by the hour is a short-term solution to a major practice management growth issue. you will not grow as fast or as competitive as you want to be when you are still billing for every 15 minutes of your time.
- technological. vendors have been doing an okay job keeping up with our needs. they could be doing better. clunky technology and frustrated employees can be obstacles to innovation. but tech can also inspire people to make things better. the cloud is still slow to catch on among cpas, and that keeps our tools in the middle of the road.
- cultural. cpas often promote themselves as something they’re not. have you looked at the website of any accounting firm lately? the word “innovative” is everywhere. but are they truly? i seriously doubt it. cpas look at the past very well. but when we talk future, it’s a different story. we know the typical personality features of a cpa – risk-averse, detailed and perfectionist to a fault. innovation calls for mistakes. when you innovate, and put yourself out there and start something new or do something differently, you will make mistakes. it comes with the territory. you must be able to pick yourself up, dust yourself off and start over. review points don’t grow innovators. with very little upfront training and lots of negative reinforcement, firms stifle innovation or even a little out-of-the-box risk taking.
but enough about the barriers to innovation. i’m sure you are very familiar with those struggles. for both new and more established firms, there is no reason your firm can’t produce the opportunity to innovate every day.
our radical movement started with small firms. we were nicknamed “the agile firms.” why? because we could move as the market moved. however, things have changed, and bigger firms are getting nimbler.
i don’t believe you have to be small to be innovative in your firm anymore. it’s a mindset and a desire to be radical. we have some powerful large radical firms among us, proving that you don’t have to be small to be innovative.