This is the first in a blog series where we will explore strategies and insights I have gained in the last few months with other Top 100 CPA firm managing partners and COOs. We are attempting to “pull back the curtain” for strategies that might help propel our profession and firms to remain relevant and become future ready.
We do not need to pull that curtain back very far to know that innovation is a key strategy for almost all firms as well as competitors outside our profession. It’s that competitor that doesn’t carry any legacy baggage that scares me the most when I am thinking about innovation. They have no respect for our existing business model, client relationships or services. Their objective is to become relevant advisors for our clients at the expense of our relationships. Scary, but if we are aware, predict and adapt — they are toast. There are also lots of advantages to being the legacy provider as long as we do not cling to the status quo or take our role for granted. Let’s heat the oven with some innovation.
Innovation is a hot topic everywhere and it is certainly a key topic for most firms. Are we truly innovating or are we trying to be more #efficient? Focusing on being efficient is very dangerous during a period of transformation. Getting better at doing something that is quickly becoming irrelevant is very scary. Consider getting new expertise to install desktop or home phones, how secure is that future?
Let’s think about innovation like this: Innovation is better defined as doing different things, not just doing things differently. We must innovate and develop new services and tools even if we haven’t in the past. How do we add new services? How do we change our business model? Do we need an innovation officer? How do we create cultures of innovation? We have shared insights on building cultures of innovation and common success factors for innovation in these blogs.
When we reflect on innovation and look behind the curtain of Top 100 Firms, scan their websites and read their announcements of new services, firms are making big investments in five distinct areas of innovation in hopes of being relevant for our clients’ needs.
As Cybersecurity is quickly evolving into the number one business risk, there’s lots of opportunity for our profession and firms to play a relevant role. We have a new frontier of assurance services and new guidelines and SOC reports. Internal control and system control reviews will present opportunities for those who provide the knowledge, best practices and insights. Incident response services are in high demand. You will see some firms push forward into penetration testing which might include advanced “Red Team” level penetration testing. Overall cybersecurity and related monitoring services provide us a field of opportunity and we simply need to find the role that matches our strategic vision. Cybersecurity is here to stay and it brings our profession lots of opportunity to make a difference.
With wireless connections approaching unheard of speed and accessing exponential processing power, the birth of a multitude of highly integrated and powerful business applications are on the horizon. Firms are investing in developing, purchasing and partnering on these industry-focused business applications. Some applications might focus on real-time updates for regulatory changes with suggested strategies. Others will actually be the platform for transactions which most likely will also adapt some blockchain capabilities as part of the platform. Certainly, firms will be using business applications that drive KPIs to the clients mobile phone with the ability to initiate action from those dashboards. Firms and our profession will be innovating in these applications to provide a better client ecosystem to meet evolving needs.
With more data being created daily than the world has ever experienced, it’s a no-brainer that any relevant firm will be providing data analytics to assist clients in connecting the dots. The tools for this will rapidly develop into tools where data citizens (Gartner) will outnumber data scientists in the next two to three years. This bodes well for our profession as it plays to our inherent analytical strengths and our in-depth knowledge of how businesses work. The gap our profession will need to fill quickly is the ability to escalate to predictive analytics that help clients shape their future. All major firms are growing these capabilities and knowledge resources as quickly as possible.
AUDIT OF THE FUTURE
Audits of financial statements which have been a core service of our profession will see significant automation and new methodologies which address the new technology, real-time reporting and blockchain verification of transactions. Audits will evolve even more as risk-based assessments and firms, as well as our profession, must be at the forefront of innovating how audits are conducted.
An interesting new frontier to anticipate significant innovation and new technology tools will be in the client experience and transparency. Client portals as an easy button for client interactions and information exchanges. Better CRM tools to capture client and prospect interactions for collaboration as a team. Project management transparency on progress and anticipated completion dates. Think about the experience of tracking that Domino’s pizza except your client is empowered to interact with the Chef.
FIVE DISTINCT AREAS to be Aware, Predict and Adapt
The progress and priorities of these five areas of innovation vary significantly from firm to firm. Distinctiveness will be determined by success in innovation and most firms will find a sweet spot somewhere in these five areas.
What surprises are here? What areas are we behind our competition? What are we overlooking? What should we be investing in to make our firm more distinctive? Do we have our priorities right for our firm’s future? As Daniel Burrus has stated, “If it can be done, and you don’t do it, someone else will.” The start of being future ready is to be aware. How will these hard trends affect your firm? Let’s predict and adapt our strategies to seize opportunities and avoid future challenges. This is how we move beyond agile to being anticipatory. Innovation is in the windshield view of major firms and it should be part of our daily journey.