Electric light was not a continuous improvement of the candle.
We've been looking closely into the area of innovation readiness with a number of mid-size Australian Accounting and Advisory firms.
In talking to Partners and staff we are finding some recurring themes.
1. A belief that disruption is coming, but not any time soon
2. A feeling that shifting from compliance to advisory will mitigate the risk
3. A view that employee's are still best measured as a unit of production (in time based billing/ billable hours)
To be candid this complacency is heard most strongly from the top of organisations where traditional accounting has stood the test of time and where consultants have been spruiking imminent disruption for many years. So it's understandable, but that doesn't mean it's right.
Whilst we think the complacency in future disruption is misplaced, we also believe that some of the things that Accounting leaders do agree on are going to have implications that are not yet fully appreciated.
Compliance as a right of passage
Most Partners we speak with agree that compliance is in decline.
They are shifting focus to advisory in response.
What hasn't hit home yet though is that compliance was the training ground where graduate entrants cut their teeth to gain the real world experience that trusted advisers need..
In most firms we've spoken with, the supply chain of talent has not been re-thought to create a funnel of credible future advisers.
When we ask about voice of the customer, we're hearing about what next generation customers don't want, rather than what they do want.
They don't want reams of numbers, they don't want lengthy discussions, they don't want to wait to access the information they need, and they don't want an exclusive lifelong relationship with their accountant like their parents did.
NextGen business owners are tech savvy, they favour consumption today more than wealth in retirement (even better to have both). They fear loss less, dislike long term commitment and value transparency. They research and self-service wherever possible.
For firms with a heavy reliance on commission and fee income this doesn't bode well.
Surprisingly we are not seeing a lot of foresight around new services for this new generation from the mid-market.
Firms are fumbling their way through cloud accounting, a few pie charts to go with the numbers, and perhaps (and this is the good ones) a mobile app and electronic signatures in an attempt to appear digital.
Cybercrime and data breach
It's a fact that cybercrime is increasing in scale and complexity. Online fraud is estimated to have cost Australian businesses between $300m and $3bn. These are large numbers.
It's said that 30% of Australian businesses have been the victim of cybercrime, and yet most Accountants and Advisers have no capability or capacity to help except by pointing to risks through an audit (and this is not a strength) or perhaps by selling an insurance policy.
For savvy Accounitng and Advisory firms we think this is 'the new compliance' and yet the responsibilities are being deferred to tech companies, when in fact the attack vectors are much broader than tech companies are able to address.
When a business loses money due to cybercrime, and especially if this has been going on for some time, we believe Accountants will increasingly be turned upon by owners and insurers in the witchhunt of who is to blame
How can we help?
For the mid-size Accountants that we work with, we help in 3 fundamental ways
1. We create a road map for innovation and reinvention that is quantified and time bound
2. We create a platform for innovation that involves having the right technology as a foundation
3. Through our subsidiary Pay Compliment, we create a culture of innovation with the right people and mindsets required to succeed.
If you're a mid-sized Accountancy or Advisory that is struggling with innovation and business as usual is starting to suffer, give us a call or drop us a line to learn more.