6 ways accounting firms can innovate successfully
As part of a year-long focus on trends and tactics that support the independent public accounting “firm of the future,” BKR International recently asked firm members about their approach to innovation.
Questions included how to identify innovative opportunities, budget considerations, risk management and lessons learned. Overall, firm leaders said they are approaching innovation with a “plan ahead or get left behind” mindset. They are also promoting cultures of continuous improvement with dedicated resources, but they emphasize that any changes must still align with the firm’s larger vision.
Here are six guidelines that BKR member firms recommend for pursuing innovation both inside and outside their firms.
1. Create a think tank. Firm leaders agreed that different voices should be included in innovation discussions. Rather than relying solely on partners or the executive team, they looked for participants at all levels of the firm to suggest improved processes or new services.
At Anchin, Block & Anchin, New York, the firm’s Emerging Technologies Think Tank has representation from most of the firm’s service lines, including individuals at the managerial level through the executive committee. The group keeps a pulse on industry changes and different technologies to identify what platforms and approaches should be evaluated to achieve the firm’s goals.
“Other service or industry leaders are involved as appropriate when an initiative applies to their group’s service delivery model,” said Russell Shinsky, a member of Anchin’s executive committee and a leader of the Anchin Services industries group.
2. Imagine the firm five years from now. To encourage an environment of open ideas, ask forward-thinking team members to propose how the firm will need to change. For example, consider how core services should adapt to meet future client demands.
“What do we think we will be asked to do in five years, or where is the demand building?” said Jeremy Vokt, managing shareholder at Bland & Associates in Omaha, Nebraska. A few years ago when Bland’s executive team asked these questions, it led to launching Client Accounting Services (CAS). The firm became an early adopter for what is now a high-growth emerging service, but Bland’s early adoption has provided nearly 400 percent growth in CAS for the firm over three years.
“We saw that not too many firms were embracing the technology at that time, so we came together with a plan, with dedicated resources and a commitment among all team members from top to bottom,” Vokt added.
3. Automate the commonplace. Rather than worrying about service commoditization, member firms with an innovative approach look for opportunities to embrace, rather than reject, change.
As part of continuous service improvements at Anchin, leaders ask their teams to seek efficiencies that clients expect, and then add automation where it makes the most sense. The firm is in the process of rolling out Robotic Process Automation to handle a process within its tax department. By automating repetitive tasks, the chance for error is significantly reduced, efficiency is greatly increased, and the team can focus on more high-value tasks.
“Continuous monitoring of the practice and available technologies is crucial in enabling us to implement efficient internal processes, as well as provide unparalleled client service delivery,” Shinsky said.
4. Be willing to change direction midstream. Does innovation involve risk? Of course. By definition, it involves the untried and possibly the untested. Some BKR member firms talked about mistakes and learning experiences along the way. Leaders say it’s important to go into the process with eyes wide open to see unexpected possibilities, but also to pivot when necessary.
“The risk is not taking the time to innovate and think about where you and your firm will be in five years,” said Vokt of Bland & Associates. “We are not as afraid to shoot and miss because those misses may turn out to be an even better opportunity or learning experience.”
5. Constantly monitor risk and measure results. Successful innovation does require checks and balances to monitor progress and results. It’s a dedication of time, energy and resources that can’t be underestimated for any size firm.
Anchin’s Shinsky recommends controls to identify risks along the way, but also implements measures to see if efforts are leading to the vision for success established at the beginning of a project.
“Launching any new service or innovation requires ownership — the project leader should have accountability for driving it forward and reporting on it,” Shinsky said. “They should also be comfortable recommending when a project can be stopped or re-directed quickly. Are the original goals still being met?”
6. Budget short-term, but seek sustainability. When it comes to funding innovation, approaches vary. Some firms create a line item in the budget while others include it as part of general operating expenses.
“Prioritizing innovation and where we allocate our funds has been and will continue to be a focus for Anchin,” Shinsky added. Anchin has dedicated funds in its overall budget for innovation and for undertaking new initiatives. Project leads must justify the projects by outlining their specific goals and objectives in an innovation project proposal, which is reviewed and approved by the executive committee.
At Bland, the approach is tied to existing resources of people and software. The firm determines how current investments can be fully optimized and leaders give project teams dedicated time to flesh out and implement changes.
“When I think about all the innovation we’ve done in our firm over just the past two years, I can honestly say money was not spoken about as much as the justification for pursuing the change as a sustainable benefit to clients and the firm,” Vokt said. “Either you spend the money or you get left behind. It’s sometimes that simple.”
However firms choose to innovate their processes and services, leaders of future-focused, independent accounting firms are constantly on the lookout for ideas that make sense and the planning required to succeed in the long run.