It's an age-old question: Can you teach an old dog a new trick?We've all heard, ad nauseam, how CPAs despise change. Yet this is not exactly true. The CPA profession has undergone and adapted to constant change since its establishment in the late 19th century. There is nothing surprising about this, since people have always been willing to change if it brings hope of a better future.
Consequently, old dogs can learn new tricks, as they find more effective ways to adapt and leverage new technology, methods, processes, ideas and social networks in order to increase the return on their human capital.
Bet on youth
That said, there is another version to the new trick/old dog question, which is this: Can we expect an old dog to create a new trick? This is a totally different question, one of innovation and creativity rather than incremental improvements to the status quo, and the historical evidence is overwhelming in giving an answer: It's not likely.
The remaining analysis will, no doubt, cause discomfiture for a great many of you, but facts are stubborn things, and the fact is that most of us simply live and die within the same paradigm. The reality is, if we are in our late 40s or 50s, the chances are very low of creating a groundbreaking innovation. People who hear this for the first time challenge it or deny it; some even get offended by it. We are all entitled to our opinions, but not our facts. Consider a modest sampling of the historical evidence:
* In 1905, Albert Einstein introduced the Special Theory of Relativity, at the age of 26.
* The average age of the scientists on the Manhattan Project was 25.
* In 1881, William Halsted conducted the first known human blood transfusion, at the age of 29.
* In 1764, James Watt invented the steam engine at the age of 28.
* The average age of the signers of the Declaration of Independence was 45, the oldest being Benjamin Franklin - skewing the average at 70 - and the youngest being Thomas Lynch Jr. of South Carolina, at 27.
* The average age of the delegates to the Constitutional Convention was 43, the oldest being Franklin again, at 81, and the youngest Jonathan Dayton, at 26.
Charles Murray, Bradley Fellow at the American Enterprise Institute, wrote an absolutely fascinating book, Human Accomplishment: The Pursuit of Excellence in the Arts and Sciences, 800 B.C. to 1950, wherein he identified 4,002 individuals who basically invented, developed or proved the most consequential ideas and technologies in the history of the world, from 800 B.C. to 1950. The average age of these individuals was 40.
Implications for accounting
The last truly new service offering produced from the ground up in the CPA profession was the Statement on Standards for Accounting and Review Services, effective in 1978. All of the other new services that the profession has offered to the marketplace since then are merely extensions of services offered by others, such as consulting and financial services, or regulatory requirements from Congress, the Securities and Exchange Commission, the Public Company Accounting Oversight Board, the Internal Revenue Service and other government agencies. The profession has a 27-year - and counting - innovation curve.
According to the American Institute of CPAs' PCPS, 60 percent of firms have principals in the 55-62 age bracket. I recently spoke at a partner conference that was eerily reminiscent of an AARP assembly. The participants were bemoaning the same old issues of attracting and retaining talent, leadership, billable hours, productivity, and profitability, while the speakers offered the same stale solutions, most of which date back to the Eisenhower administration - such as increasing billable hours, leverage and productivity, completely ignoring the new realities of a knowledge organization.
If firms, not to mention the profession as a whole, want innovation and dynamism in tandem with attracting the best and brightest talent, they will have to give more authority and responsibilities to their youthful team members. Organizations, like arteries, tend to calcify with age, and young team members - far more prone to adventure and risk-taking - can keep the blood pumping at an extra-vigorous pace.
No doubt they will make more mistakes and incur more failure, yet risk is where profits come from. The alternative is the continued irrelevance of a once-proud profession, more and more dependent on regulatory revenue rather than wealth-creating innovations that add value to its customers. Ossification is not an option.
As Apple Computer's Steve Jobs once said: "It doesn't make sense to hire smart people and then tell them what to do. We hire smart people so they can tell us what to do."
Still, in far too many firms today, the old dogs are stifling the young ones by remaining hysterically historical; they are clinging to obsolete dogmas of a business model based on an industrial-era command-and-control hierarchy that is no longer relevant in an intellectual capital economy.
How we've always done it
A 30-year-old junior economist working at the Treasury in the 1940s suggested that taxes be withheld directly from employees' paychecks, a pay-as-you-go system, as opposed to a once-a-year payment, as was then traditional.
The biggest opponent of this new idea was the IRS, validating the first law of bureaucracy - the only feasible way of doing anything is the way it is being done. The agency believed that it was simply not possible, even though the young economist had brought evidence of other countries that had successfully adopted this system. Today, when economists suggest the elimination of tax withholding as part of major tax reform proposals, the IRS is their biggest opponent, claiming that it is not practicable to have taxpayers voluntarily comply any other way.
The young economist? Milton Friedman, who to this day regrets being part of implementing this new scheme in the brashness of his youth.
The question for firm leaders is whether they will allow their young team members the opportunity to create path-breaking services and experiment with new approaches for the benefit of the firm and the profession as a whole, or continue to reject too much and adventure too little, remaining satisfied with a settled mediocrity of success and the illusion of security. The posterity of our profession depends on letting the new dogs create new tricks.
History proves that no one else will.
