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Podcast: Innovation in CPA firms: Where it begins and what it looks like

Let’s talk innovation, shall we? Specifically, innovation in CPA firms … which sounds kind of funny when you say it out loud, but it’s not. It’s no joke. It’s happening, believe it or not, and on a pretty serious scale.

And here to talk with me about it is none other than Jonathan Kraftchick. Jonathan is partner of assurance services in the Raleigh office of Cherry Bekaert. More important, he is known, informally, as the firm’s innovation partner. He heads Cherry Bekaert’s Innovation Team, and he has some great insights into what innovation actually looks like in practice within the stereotypically non-innovative environment of a CPA firm.

In this conversation, we cover:

  • Jonathan’s definition of innovation.
  • Whether automation is just a buzzword.
  • The lessons Jonathan has learned in his role as innovation partner.
  • How you can start being more innovative today.
  • The future of the profession.

Listen to our conversation here.

Innovation tips
Our profession is changing, and quickly, so we need to step up our innovation game if we hope to stay ahead of the pace of change.

Luckily, there’s plenty of advice out there.

For example, there’s this from Aiysha Johnson, executive director of the Americas region for BKR International. In a recent Accounting Today article, she offers six tips for how firms can successfully innovate:

“Number 1: Create a think tank. Firm leaders agreed that different voices should be included in innovation discussions. Rather than relying solely on partners or the executive team, they looked for participants at all levels of the firm to suggest improved processes or new services.

“Number 2: Imagine the firm five years from now. To encourage an environment of open ideas, ask forward-thinking team members to propose how the firm will need to change. For example, consider how core services should adapt to meet future client demands.

“Number 3: Automate the commonplace. Rather than worrying about service commoditization, member firms with an innovative approach look for opportunities to embrace, rather than reject, change.

“Number 4: Be willing to change direction midstream. Does innovation involve risk? Of course. By definition, it involves the untried and possibly the untested. Leaders say it’s important to go into the process with eyes wide open to see unexpected possibilities, but also to pivot when necessary.

“Number 5: Constantly monitor risk and measure results. Successful innovation does require checks and balances to monitor progress and results. It’s a dedication of time, energy and resources that can’t be underestimated for any size firm.

“And Number 6: Budget short-term, but seek sustainability. When it comes to funding innovation, approaches vary. Some firms create a line item in the budget while others include it as part of general operating expenses.”

Then there’s this from Amy Vetter. In a recent Journal of Accountancy article, she says innovation is about mindset as much as anything:

“Firms of all types and sizes benefit from approaching innovation with an open mind and willingness to adapt. In the 21st century, businesses that stick their heads in the sand lose — just ask Blockbuster, Toys “R” Us, RadioShack, and any number of former giants that have tumbled in the face of changing times. It’s very hard to grow, especially when clients have more options than ever before, when you rely on outdated technology and service offerings.”

For smaller firms, Vetter says, “One of the most fruitful routes for innovation starts with an investigation of the services you provide and how you provide them. These two avenues are closely intertwined. Rather than trying to create your own software solutions, you can look at which products to adopt to increase your operational efficiency. When you can achieve what you’re already doing faster and with less hassle, you can begin thinking about additional services to provide. The less time you have to spend on data entry, for example, the more time that can be spent providing essential advisory services to your clients.”

So, with so many different opinions, how do we define what innovation really is? And what does it really mean in a CPA firm environment?

My guest this week, Jonathan Kraftchick, has a pretty thought-provoking definition of innovation, and he’s got some pretty insightful ideas about how to get started, what kinds of lessons he’s learned along the way, and what kinds of things you might want to avoid.

Resources:

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