Recently, I had lunch with a mentor and we were talking about a mutual client. He was telling me how he recently recommended to them to start an “innovation fund” to fuel growth in consulting services. Then, a week later, I was at a conference and a Top 25 managing partner talked about his firms’ innovation fund which amounted to 1% of top line revenues. A few hours later I read a news release about yet another CPA firm acquiring a technology practice.
Firms are innovating their practices and diversifying their service offerings more than ever for many reasons. Whether these are to guard against the commoditization of compliance services, bring more high-value services to current clients, remain competitive with peer firms, or drive greater profitability, it’s clear that many firms are actively involved in practice innovation today.
But what kind of resources are they dedicating to practice innovation? Is there a budget? Is there an internal champion driving the initiative? Are there ROI projections being made? What’s the timeline for profitability? And, who decides when an innovation isn’t working and it’s time to pull the plug?
These are all great questions you should ask yourself, and if you are truly dedicated to innovating your firm and practice, you should probably appoint a champion to this initiative and formalize it.
Remember that innovation isn’t a risk-free endeavor and so you should be prepared that some of your innovations won’t ultimately pan out. After all, Edison failed 1,000 times before he came up with a working prototype of the light bulb. With the knowledge and intel available to us at our firms today we should not expect to fail 1,000 times before one of our innovations is successful! A better gauge for our success would be that 1 in 3 innovations flat out fails – we need to pull the plug. 1 in 3 is moderately successful – perhaps some tweaks will boost success. And 1 in 3 is very successful – we should continue our investment in this innovation.
Ultimately, innovation is a long-term strategy, needs a long-term focus, and so someone needs to officially take the reins for you to achieve success. Ultimately as our profession continues to evolve, innovation is less and less an option — and more and more a requirement for success to keep our firms viable and achieving their full potential.