If you're like me and clicked on "Who will be the Edison of accounting innovation" in Accounting Today, there's a good chance you missed the most transformative idea. Author Daniel Hood buried it in a single sentence in a middle paragraph.
That's too bad as the accounting industry could gain massively from innovation that has little to do with developing new products and services.
Hood's article notes "[Accounting] is one of the few professions where having the word 'creative' attached to your products is a bad thing, where SALY (Same As Last Year) is a sought-after situation." His prescription is the very conventional growth-via-expanded-product-and-service-offerings approach because "the audit, the financial statement and the tax return remain much the same as when they were first introduced."
While Deloitte's new blockchain laboratory and KPMG's work with IBM's Watson on cognitive computers will have big impacts on accounting, true innovation is less about new products than about creating new value for clients.
(Meanwhile, there are plenty of opportunities for growth by better understanding your current value.)
Value From Innovation
To clients, value takes the form of either efficiency or effectiveness. Efficiency is doing something better than the client can -- e.g. close the books in one day rather than seven. Effectiveness is doing something the client can't do for themselves -- e.g. share wisdom and insights gained from work spanning many clients and situations.
Experts deliver products and answer questions. Advisors provide insight and guidance.
Most accountants--along with fellow professionals like lawyers and consultants--think of themselves as experts selling access to specific skills and experience. Their websites broadcast expertise by describing their practice in terms of bullet points and credentials. Expertise is a fancy way to demonstrate you're competent. While competence is a prerequisite, it's not a compelling reason to hire your firm. There are lots of competent options.
Become a Compelling Choice for Your Clients
Becoming a compelling choice in a sea of competent competitors requires innovative thinking for most professionals. The innovation isn't a cleanly packaged new offering as imagined by Daniel Hood, but rather adopting your client's perspective and understanding how your firm benefits the client's business. Easy to say, but harder to do at firms which see their value in narrow terms of products and services. That's why it amounts to innovative thinking.
Consider two views of the standard audit. You can focus on making the obligatory audit process a pleasant one. Alternatively, you can focus on the many ways audited financial statements enable the client's business. Think way beyond the audit to shape how you communicate, deliver, hire, and bill. Seen from your clients' perspective, that's innovation.
Your client's job is to make decisions and create business opportunities nfor their business. How can your firm's experience, perspective, and expertise boost the success of your client's overall business? The real user of your audit isn't your client; it's the banker or investor looking to do business with your client. The audit becomes something you do, but your value as a trusted advisor in guiding your client is greater. Lots of CPAs can perform an audit, but when you're an invaluable advisor, the relationship becomes something much more special.
This change of perspective counts as innovative thinking because it's hard and firms don't know where to start. I use in-depth interviews with a firm's best clients to paint a vivid picture of why their best clients select them over other, other excellent, options. Hearing their clients in this way is a gateway to seeing their practice in a more valuable way.
