To create an organization that’s ready to innovate, accountants need to divide their firms into teams with specific roles in the process, according to noted author and innovation expert Geoffrey Moore.
In his keynote address at the CCH Connections 2015 User Conference, held here, Moore suggested that attendees break their firm (or any organization) down into as many as four zones:
1. The Performance Zone. This zone is permanent, and is responsible for delivering material revenue in the current year – it’s the firm’s “everyday” business.
2. The Productivity Zone. This group delivers material support to the Performance Zone. “You want people who are team-focused,” said Moore – employees who are willing to put the company ahead of their own individual or group needs. And on those occasions when the firm is engaged in a major transformation, this zone will switch its support to the Transformation Zone, even at the cost of short-term losses.
3. The Incubation Zone. This is where innovation starts – this group is tasked with creating viable options for the firm to catch new waves of change in the foreseeable future, possibly with new products or operational models. “Put new tools and technologies – the cloud, say, or analytics – in your Incubation Zone and play with them,” Moore suggested. Once an innovation is ready, it can be moved to the Performance Zone to become part of regular practice.
4. The Transformation Zone. This zone comes into play when you are committed to a major re-engineering of your business or operating model. It is often best led by the chief executive or managing partner “You need to be committed in this zone,” Moore warned. “There will come a time in transformation where it’s darkest before the dawn. A lot of companies quit just before the crest of the hill,” and get all the pain of the change, but none of the reward.
“Never do more than one major innovation at a time,” Moore warned, “because it’s too much to implement. But in any big change, enlist everyone.”
He also noted that in any firm with a partner group of six to eight people, major transformations are almost impossible to achieve: “Someone needs to take the firm by the throat,” he said, citing examples like Steve Jobs at Apple.
AREAS TO EXPLORE
Moore explained that disruptive innovation was most likely in areas where marginal costs approached zero. He identified several:
- In the cloud, the marginal cost to deploy another application is approaching zero.
- With mobile/smart phones, the marginal cost to connect with clients in real time is approaching zero.
- In social networks, the marginal cost to add a member to your team is approaching zero.
- In analytics, the marginal cost to add value to client data is approaching zero.
“Business owners are saying, ‘You can help me understand my own balance sheet and my own business, but at the end of the day I only know about me. What would be really valuable would be to compare me to 10 other companies.’” Moore said. “Every business person wants that kind of information.”
TWO PARTING THOUGHTS
Moore left the attendees with two other key takeaways.
First, speaking of the Millennial Generation that the profession is trying so hard to attract, he stressed the importance of technology: “When you’re born with a technology, it’s not a technology – it’s the world. If you’re not using that technology then you’re disenfranchising their world,” he said. “The Millennials are asking, ‘How long are you going to cling to your stupid stuff?’”
Second, he noted the opportunities that the cloud and mobile technologies were making available. “It’s easy to be virtual with not just your staff, but also with your clients. You don’t need to co-locate with them,” he said. “You should transform your firms from horizontal, geographic practices to vertical, virtual practices.”
“If you don’t catch the next wave, the next wave will catch you,” he warned.
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