Innovation requires hindsight, insight and foresight, yet too often we only focus on the disruption caused by the new technology, process or thinking.
Steven Johnson, in his recent book, How We Got to Now: Six Innovations That Made the Modern World, provides a long-zoom historical perspective to look at “the bigger picture.” The tendency is to look in the short-term based upon one’s perspective and life span. Johnson starts by explaining how, during the Cretaceous Age, 145 million years ago, hummingbirds were attracted to the flowers’ nectar, but to drink the nectar, they had to learn to hover. Their wings evolved to a shape where lift was created with each upward and downward stroke. This evolution is known as the “hummingbird effect.”
The Renaissance of the 14th through 17th centuries saw what is described as intersectional innovation, rather than directional. Today, intersectional innovation can be described as the convergence of multiple technologies — e.g., sensors, networking, artificial intelligence and robotics. During the Renaissance, it was what is now described as interdisciplinary, where agriculture, medicine, architecture, law and technology interacted. Exponential, rather than incremental, change occurs when there is convergence or interdisciplinary interaction.
Innovations generally start as an attempt to solve a specific problem, but once they get into circulation, they trigger other changes that are more difficult to predict. These unplanned results can be referred to as strategic byproducts. Johnson refers to six areas that have profoundly impacted civilization over the past 500 to 1,000 years: glass, cold, sound, clean, time and light. One must think well beyond one’s own lifetime to understand the impact he is referring to when he talks about the long zoom of the bigger picture.
Glass is an example that ranges over millions of years: At first it was for ornamental purposes, then the monks found it useful to correct farsightedness, resulting in the birth of spectacles during the 1300s. Then in the late 1500s, Hans and Zacharias Janssen invented the first microscope, with the telescope coming shortly thereafter. Mirrors changed the world, not only from an artistic viewpoint, but also with Isaac Newton’s invention of the reflecting telescope in 1668.
Innovation and you
What does this mean to the accounting profession regarding innovation? How and when should we change? Why change when the profession is extremely profitable?
These are valid questions and there is no shortage of opinions. As a CPA with a background in both economics and technology, along with an interest in history and psychology, I believe each person will react in their own way. The old saying that those with the strongest opinions generally have the least amount of knowledge may be valid in some cases. Waiting too long with technology, new thinking and new processes can result in technical debt, where ultimately you will have to invest and pay back the debt.
From the historical long-zoom perspective, we have witnessed the mini-computer, personal computer, spreadsheet, word processing, laser printer, networking, the Internet, mobile, the cloud and related applications, to name just a few disruptive technologies over the past 50 years. But my question is this: Has this really changed accounting and tax-related services, or has the profession just automated the process while retaining its antiquated value system in an effort-based economy?
These questions should cause one to think and develop a system and tools to increase focus, establish priorities, and reduce emotion. The system and tools are based upon a few basic questions. Here are five to start you thinking and talking within your firm.
1. Do you want to be a game-changer, sustain success and be future-ready, or are you satisfied with conventional success and maximizing current earnings? Neither answer is right or wrong, but it is difficult when partners put their personal interests in front of the firm’s interest. The strategies are also different.
2. Are you meeting the wants and needs of your market (clients)? Wants are different from needs, and too often firms lack the time and resources to provide higher-margin advisory services such as CFO services, or strategic and succession planning services. Advisory services require different mindsets, skill sets and tool sets than compliance-based services. As you answer this question, think about Dan Burrus’ quote, “Clients today don’t know what they want, because the things they most want are things they don’t yet know are possible. Give your clients the ability to do what they can’t currently do, but would want to, if they only knew it was possible.”
3. Do you have the right unique-ability team? Often firms are comprised of too many “Mini-Me’s,” where the skillsets are similar and they don’t have the skills to provide advisory services. In other words, they have been trained to comply and report, not consult. Growth in larger firms is coming from performance and strategic advisory services. They are also hiring an increasing number of non-accounting majors to join their teams.
4. Do you want to grow both personally and as a firm? Growth is key to both continued success and relevancy. Without growth, it is difficult to attract and retain quality people and clients.
5. Are you a lifelong learner who reads? Charlie “Tremendous” Jones is known for his quote, “You will be the same in five years as you are today, except for the people you meet and the books you read.” Learning and training are a two-way street.
Short-term innovation can happen rapidly and firms are developing the necessary culture, leadership and environment for success. Don’t be afraid to test or experiment with your ideas. Start an internal “idea factory,” where you reward and recognize people for ideas. Try the five-day “Sprint” method that was developed at Google.
Failure is part of innovation, so fail quickly and fail forward! Michael Jordan states, “I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games, but 26 times I’ve been trusted to take the game-winning shot and missed. I’ve failed over and over again in my life and that is why I succeed.” This is about progress and not perfection!