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Tax Tech & Innovation

Who owns innovation within tax & accounting firms?

Samantha Mansfield  Consultant & Leadership Coach / ConvergenceCoaching, LLC

· 6 minute read

Samantha Mansfield  Consultant & Leadership Coach / ConvergenceCoaching, LLC

· 6 minute read

“If you want something new, you have to stop doing something old.” — Peter Drucker, management consultant, educator & author

Tax & accounting firms across the nation are facing several opportunities and threats, many of which have been long-standing issues that the events of the last few years have exacerbated, many firm leaders acknowledge.

Clearly, it is well past time to innovate in the tax & accounting industry, but the question immediately arises: Who is responsible for developing innovative ideas and driving innovation within a tax & accounting firm?

People within many organizations often can feel like innovation is someone else’s job. They hesitate to share ideas, believing they aren’t creative enough or that there must be a good reason why those ideas haven’t been tried. Or they get so bogged down in the details of the work, they can’t see the problem or even view it from a different perspective. And unfortunately, most tax & accounting professionals don’t believe they have the time or skills to innovate.

First, the good news is that innovation is not as complicated as we make it. Innovation is simply a “new idea, method or device”; so, one way to innovate then, is to make something new out of items that already exist. Take, for example, the smartphone. All the pieces of the smartphone had been invented previously, but it took someone, or a group of people, to reimagine how the components could be put together to improve how we communicate, work, and live. This means that anyone can innovate by tapping into their knowledge, experience, perspective, and awareness of a problem or a need that people have.

Specifically, in the tax & accounting profession, firms have several problems and needs to be resolved, including:

      • getting more work done in a more efficient manner;
      • staying current on regulatory changes;
      • providing services that are relevant and appealing to new generations of clients;
      • building a profession that attracts talent; and
      • establishing a sustainable work/life integration.

No one person within a firm can solve all these challenges, of course. Yet, through collaboration and piloting ideas, answers can, and are, being found.

The role of leaders

It is not the role of leaders to generate all the ideas. In fact, as leaders advance in their careers, they get further away from many of the day-to-day tasks, making it harder for them to innovate around daily process improvements. Nevertheless, leadership strongly impacts innovation within the firm. As leaders share more openly and gather feedback from their team on the vision and direction of the firm, the firm’s talent is more likely to develop ideas that are relevant and timely.

To build a culture of innovation, leaders must first adopt the mindset of innovation, which is often described as a growth mindset. When operating from a growth mindset, leaders recognize failures will happen and accept them as valuable learning moments. If the reaction is punitive, rather than accepting, the professionals and staff within the firm will be more reluctant to vulnerably share ideas or attempt to try something different in the future. Leaders need to recognize successful innovation will include initiatives that won’t succeed; therefore, they should encourage their teams to learn from the misses and refocus on the desired result.

Leaders also enable innovation by clearly defining resources — such as budget, personnel involved, time allotted, and the timeline — when project ideas are approved. When resources are clear, team members have the confidence to experiment, test, and pilot within the boundaries that leaders have set.

Any innovation includes some risk of additional costs. To sustain the trust extended to the team that’s innovating, leaders should establish expectations about how frequently they want status updates on the initiative. There should be agreement about what success looks like and how it will be measured. Achieving the project as it was initially envisioned at first should not be the measure of success, since any good innovation process will be iterative and incorporate feedback along the way. Instead, measure success by how well the initiative solves the problem or fills the identified need.

The role of talent

Talent within the firm has various perspectives on processes, clients’ needs, effectiveness of technology, training, and much more. They should break the routines of SALY (same as last year) and ask themselves how things can be improved going forward.

When talent brings ideas to leadership, they should communicate the benefits of the innovation, not just what it is. Too often we assume the listener understands the benefits of the idea, but that is not always the case. When proposing the idea, talent needs to describe how the firm, clients, and the team will be better off as a result of making the investment in the idea.

In a culture where innovation is especially encouraged, many people may have ideas, so not all of them can be implemented at once. If an idea is not initially accepted as something to investigate, this does not mean the idea is worthless. The person bringing the idea to the table should ask for additional feedback to gain insights into how to adjust it or how to re-propose the idea at a later time. The key is to not get discouraged, but rather to keep watching for opportunities to contribute innovate solutions.

The innovation process should be looked at as a symphony with everyone in the firm playing in concert. This process also takes everyone being receptive to change. To accomplish this, leaders and talent must share with their colleagues the benefits of making a change by communicating how employing the innovation affects their workflow and processes. The key is to not leave them wondering what will be required of them if this innovation comes to fruition, so it may be wise to over-communicate at first.

Innovators also should recognize that innovation is exciting for some and nerve-racking for others, and they may need to adjust their message to address the concerns of a particular audience. Yet when these steps are followed, this process toward innovation can put your firm on the path to finding new solutions to the old problems the entire tax & accounting industry is facing.

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