From small to large, accounting practices of all types can be effectively thinking ahead.
We live in a climate of constant business innovation. The exponential rise of technology creates an environment where there is a premium on finding new and better ways of doing things. Even age-old conventional wisdom about our profession is being put to the test. When you can find articles speculating that blockchain-based technologies have the ability to replace double-entry accounting, a system in place since the Renaissance, nothing is off limits.
However, there is a big difference between talking about innovation and implementing at your practice. Most accounting professionals want to be forward-thinking and provide services their customers will value for years to come. Figuring out how to do that in a way that isn't overly risky or time-consuming is another concern entirely. Fact is, no firm can overhaul itself overnight, nor can it close up shop and throw all its resources at innovating its operations and services. The size and resources of your firm will go a long way in dictating what prudent, effective approaches to innovation might look like. Everyone can stand to innovate, but there's no one-size-fits-all approach for how to do that.
The Big Four begin to disrupt
Before "disruption" became a buzzword across all industries, it was largely the purview of upstart companies looking to take on the big boys. In fact, Clayton Christensen, the author and professor who originally coined the term "disruptive innovation," defined it as actions taken by emerging businesses to challenge industry players.
How things have changed. No longer willing to wait for a challenger to disrupt an industry, huge players now attempt to preempt that disruption by making it happen themselves. Perhaps no sector illustrates this change more than the accounting profession. The Big Four firms are leading the way in investigating what the future of accounting may look like, and they have dumped massive amounts of money into the effort.
In a 2018 article for Forbes, Peter Bendor-Samuel examined the way Big Four firms are challenging established patterns in both IT and advisory services. "The leader in the disruption is Deloitte, the most mature and largest of the consulting and services practices," he wrote. "Over the past two years, the firm went through a significant exercise in globalizing its practices, creating an 'As One' Deloitte marketplace rather than having regional fiefdoms. In the digital space, Deloitte built out formidable capability, ranging from some of the leading talent in digital transformation to offshore talent factories to support that. Building digital capability included creating innovative new service offerings, where the firm often sells services on a sole-source basis through Deloitte's incredible network."
With huge teams solely dedicated to figuring out every avenue for potential innovation, it's hard for even larger firms to mount a challenge in the IT creation space. What they can do is follow what the Big Four are doing. What starts at the top usually becomes pervasive over time. When a Deloitte or EY begins adopting a practice in a widespread manner, it's time to take notice.
Innovation on a smaller scale
A small firm typically does not have the investment dollars to be able to build out an innovation team full of developers and other tech professionals. In most cases, it's not a great idea to devote your energy to developing in-house IT solutions, unless that is a business you want to go into. But there's more than one way to innovate and the impetus to do so should be universal across firms of all sizes.
One of the most fruitful routes for innovation starts with an investigation of the services you provide and how you provide them. These two avenues are closely intertwined. Rather than trying to create your own software solutions, you can look at which products to adopt to increase your operational efficiency. When you can achieve what you're already doing faster and with less hassle, you can begin thinking about additional services to provide. The less time you have to spend on data entry, for example, the more time that can be spent providing essential advisory services to your clients.
In general, when you have a limited budget, you don't have the latitude to gamble on possibly game-changing but relatively far-off solutions. You need innovation that can work today, which is a lot different from innovation that might work years down the road. A great way to find that is to look at software that your peers are using. Take part in online forums to ask questions, get involved in networking groups with firms of similar sizes, and when you have downtime in the summer, take advantage of it and attend conferences where you can hear from other practitioners about their experiences and ask vendors questions face-to-face in the exhibit hall.
Companies situated in between small firms and the Big Four can adopt a middle ground. Medium-size firms may be able to focus small teams on testing the viability of innovative options for their practice. As such, you can dip your toes in the water before committing to sweeping change. It's a great way to ensure that the way you choose to innovate internally will be actionable. Hiring consultants outside of your firm that focus on artificial intelligence, machine learning, and blockchain technology can also help guide you to success, as well as lead you away from pitfalls they have experienced in the past.
No matter your firm's size, testing these products yourself internally with your own books and transactions is always a great way to learn. When you see how your transactions flow, you also get more familiar with the customer support and training options that these technology companies provide. It will allow you to experience it yourself so you can better educate your customers on the pros and cons of an application so you know it's the right fit.
The mindset of innovation
Firms of all types and sizes benefit from approaching innovation with an open mind and willingness to adapt. In the 21st century, businesses that stick their heads in the sand lose — just ask Blockbuster, Toys "R" Us, RadioShack, and any number of former giants that have tumbled in the face of changing times. It's very hard to grow, especially when clients have more options than ever before, when you rely on outdated technology and service offerings.
Innovation looks different in varying corners of our profession, but everyone should be looking to innovate. It is not just for the largest firms. Understanding how and when to innovate can separate you from a crowded field and lay out a path for continued success.