PracticeAccounting FirmsInnovation: Leap into the unknown

Innovation: Leap into the unknown

'If you've got someone who isn't making mistakes, fire them - because they are obviously not trying anything!' I have always liked management guru Peter Drucker's sentiment - but most professional firms feel distinctly uncomfortable around such notions.

After all, accountants are trained to be risk averse. Even if they don’t think that way innately, the scale of potential negligence claims and the consequent professional indemnity cover militate strongly in that direction.

But then is that such a bad thing? As a client, I don’t relish the possibility that my advisers are experimenting with the advice they give me.

The reality is that every profession finds itself in an increasingly competitive place, where clients are looking for ways to distinguish between firms. Competing players have to find a means of differentiation – and that demands innovation.

Of course, a sense of caution is not wholly misplaced. In any field of endeavour, innovation tends to be characterised more by failure than success. It is estimated that 80% of all new products launched, fail. Firms are in a bind: in order to compete, they must innovate, but every element of professional training strains in the opposite direction.

Faced with similar challenges, their peers in industry employ the full gamut of risk minimisation strategies. It is not incidental that most firms’ clients spend 10 times or even 100 times more as a proportion of their turnover on research. It must be one of the great paradoxes that, by contrast, risk-averse accountancy firms often fight shy of any research before embarking on costly innovations.

And why do partners choose to fly blind in committing their firms to major investment and commercial risk? Perhaps the most obvious explanation is that this is the way the firm has always approached innovation and decision taking: a great deal of debate, not very much useful information, and ultimately a screwing up of courage before the jump.

Another reason is that partners rightly feel they know their own firm and market better than others – certainly better than their clients or any third-party agency or consultants.

A conventional, sequential approach to researching new business ideas does not work in accountancy firms. Such projects are usually characterised by a vanguard of one or two advocates of the research process. Somehow they beg, borrow or steal a budget. They brief an agency that subsequently disappears for some months and produces ‘the answer’. The results are presented to an unsuspecting group of partners who are not engaged and mutter darkly about the cost.

A twin-track process is more likely to produce a better return. Once an issue has been identified, or an idea mooted, you should convene a workshop comprising the senior opinion formers and stakeholders in the firm.

The workshop should be a facilitated, creative session that has several core aims. It’s key to get early buy-in and a sense of ownership from those who will ultimately have to take things forward. The workshop should capture in an organised way all the existing organisational thinking around the issue in question (if only to be disproved, or contrasted later with the views from outside). Posing ‘what if ?’ questions are a good way to test the firm’s ability.

Whatever the findings, they will need some apparatus to act upon them, but this takes time to put into place, so start at the outset. Ultimately the success of the project relies as much on the internal groundwork done than on the interviewing and analysis. By the time the full findings are presented, it should be to an engaged and committed group who have already started work on the implications and are eager to get the pilots up and running.

Being engaged and committed is an important facet of the success of Deloitte’s UK technical division. Far from being an ivory-tower establishment churning out dry manuals on accounting policy changes, this group has an enviable record of turning regulatory changes into new product ideas. And those vital but often fairly tedious policy changes are brought alive for their colleagues by providing visually creative internal communications.

How do they foster this innovative streak? Andy Simmonds, a partner in the group, puts it down to chocolate and lots of it. ‘We have a tradition of everyone bringing chocolate back from any trips we make. It’s part of fostering the tremendous team spirit we’ve built by recruiting the best people and encouraging even the most junior one to participate at our regular team sessions.’

The division takes secondees (usually from the pick of the one-to-three year qualifieds) to work alongside – and complement – the grey-haired experts for six to 12 month periods. It’s a really popular assignment as the work is challenging and the junior staff get to develop their communication and negotiation skills. Who said chocolate wasn’t good for you?

  • Steve Blundell is a founding director of Gracechurch Consulting.


The tension between the need to innovate and the requirement to avoid unnecessary risk is not the only balancing act facing organisations.

Amid concerns that companies were focusing too much on conformance and not enough on performance, CIMA coined the term ‘enterprise governance’ to describe a framework covering corporate governance and business management aspects of an organisation.

The institute’s proposed strategic scorecard plugs the gap by looking at four aspects of an organisation’s strategy: position, implementation, options and risks.

According to CIMA, the scorecard assists the board in the oversight of that process. It deals with strategic choice and transformational change, and gives a true and fair view of a company’s strategic position. It also highlights the decision points when the board needs to be involved.

For more see

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