The 5 Key Skills of Innovation | CPA Trendlines

Your firm needs them now more than ever.

By Gary Bolinger

Peter Drucker once said, “Every organization, not just businesses, needs one core competency: innovation.”

One core competency. That is powerful. In today’s pandemic environment and, as we prepare for the post-pandemic environment, it is more important than ever in businesses of all kinds, including CPA firms. CPA firms need to prepare to assist clients for the world ahead. There won’t be a return to “normal” as we remember it for some time. And that means CPA firms must innovate in client service to add value in this new environment.

Innovation sounds big. Innovation sounds big because we tend to think about historic innovations, and they were big. You know … the wheel, the printing press, railroads, mass production, airplanes, the electric light bulb, television, the internet and cellular phones.

But not all innovation is big. Think about two types of innovation.

Sustaining innovation is something that perhaps isn’t even consciously thought about. It is just something that good businesses do to improve process and/or product. Business owners are required to engage in sustaining innovation every day to remain competitive. But we don’t think about that as innovation.

Disruptive innovation is different. There could be something big there. You ask yourself, what can we do to differentiate our firm? And the answer is that there is plenty that can be done to differentiate your firm. But not in respect to compliance services. All CPA firms are selling the same basic product.

You need to think about how next-generation CPA firms will create value. Some firms are, but they all seem to be thinking the same thing. Wealth management is a popular choice. Information technology is as well. But if many firms are moving to wealth management and IT, and that is the direction you decide to go, you are still competing in the same market. You are continuing to compete with those “established competitors.”

So, what is innovation?

If that is what innovation is, how do you do it? Well, there are five key skills.

Talk to your firms’ partners and professional staff about this process. Partners aren’t the only ones with innovative ideas. Also ask your clients for ideas on how client service could be improved, what services could be a part of your offerings. Ask provocative questions about what your firm can do to help in this new “normal.” PwC did a study a few years back and learned that:

So, plan a few meetings with select clients to learn how your firm can be different in the future. Ask those questions, the provocative ones. Perhaps ask what your firm could do that would create more value and insight for the future of their business. Don’t discount their responses. Observe how they create value (you might gain a few insights there). Their thoughts and actions can lead you to new ways of value creation and distinguish you in the marketplace. And at all costs, avoid the status quo.