Worried about being “left behind”? Here’s how to stay ahead
Ukraine was never supposed to survive the invasion by the Russian army, considered at the time to be the second strongest in the world. Western military analysts predicted the Ukrainian government would fall within two weeks.
A year later, Ukraine still stands. Why?
Ukraine's success is partly due to the resolve of the Ukrainian people, the weakness of the Russian military, and the strength of Western support, says former Google CEO Eric Schmidt, now the Chair of a thinktank called the Special Competitive Studies Project.
“But it also owes to the defining new force of international politics: innovation power,” Schmidt wrote in Foreign Affairs magazine. “Innovation power is the ability to invent, adopt, and adapt new technologies.”
The ability to innovate faster and better – the foundation on which military, economic, and cultural power now rest, says Schmidt – will also determine the outcome of the great-power competition between the United States and China.
Innovation power is just as important for businesses as it is for armies and nations. Accounting firms don’t talk about innovation power but they definitely feel its absence, especially in times of great change. Such as the times we are living through now, with the introduction of ground-breaking technologies like generative AI tools.
You hear it in the phrase, “We’re worried about being left behind”. It’s a reasonable fear. A firm that falls behind in its use of technology will become less competitive, eventually losing customers and revenue. Here's why.
Technology drives productivity. If you can deliver a service for less money, then you can make bigger margins and expand your sales territory or lower prices and increase demand. Either way you win more customers and can increase revenue and profit.
Technology drives quality. A higher quality service commands a higher price. This is particularly true in advisory. If you can present reports to clients that include operational as well as financial data, the report’s insights will be more valuable, and they will pay more for it.
Technology drives staff attraction and retention. Everyone likes to work with efficient systems that are easy to use. See Xero’s tagline, “Beautiful software”. No-one likes to work with old software that takes more steps to do the same task or is confusing to use. Why do young employees in particular want to work on newer systems? The knowledge required to use newer systems is a bankable skill. Future employers want employees with these skills. The knowledge to use old systems is not a bankable skill. Employers will see these skills as irrelevant and may judge you for it.
So, the fear of being left behind is valid. Technology is intrinsically linked to the prosperity and, ultimately, the survivability of a firm. You would be hard pressed to find a firm that refuses to use cloud accounting software these days.
How do firms avoid being left behind? We need to understand what is behind the fear first.
The fear of being left behind is not about missing out on a particular technology. It doesn’t take too many goes around the block to realise there is no silver bullet.
If it’s not a particular software, what are firms really looking for? Firms – every business – needs a way to consistently test and adopt technology. This is innovation power, and it requires three things.
Process. If you don’t have a process for testing and adopting technology then you are leaving it to individual employees to do it themselves on their own time and initiative. You end up with a piecemeal approach with some teams moving faster than others, inconsistent client experience, and a lack of oversight of client data. This can lead to unhappy customers, frustrated employees, and security breaches.
Culture. Process is necessary but not sufficient. If the firm doesn’t have a culture that values the importance of technology, it won’t commit budget (billable time and money) to ensuring that new technology and processes are rolled out firm wide. It also won’t give employees in all teams the time to experiment with new tools or the tools they already have. The classic case is a firm that buys all the latest software but never invests the time to learn how to use it. Software is not a magic wand; you need to spend time learning how to turn innovation into productivity. Everyone knows when the culture doesn’t support technology and innovation. It leads to frustrated employees (again), low morale and staff turnover.
Leadership. Innovation can’t be left to chance. It needs partners to formulate a vision, to commit to it, and to assign a budget in money and billable hours. Without agreement among the leadership team, a firm will fail to establish a culture of innovation and the momentum to roll out new, better processes. An uncommitted leadership leads to abandoned rollouts, unused software and dissatisfied staff.
The missing link for many firms is understanding the commercial impact of innovation – and especially of its absence. This is why innovation rarely gets its own budget. A partner will typically point to the IT budget, which covers everything from internet bandwidth to laptops and firewalls.
Once a firm has assigned a budget, it needs to become skilled at change management. This will determine the effort and speed with which the firm can roll out each improved process.
Innovation requires political will. Luckily, the power of ChatGPT is undeniable. It is a very useful demonstration of a high-impact technology that firms need to master quickly and then continue adapting. So are the automation technologies that come with Microsoft 365. There are plenty of other practice technologies to add to the list.
Once you have political will, you then need a plan and hire or assign people to make it happen.
Theory and Motion can help with both the plan and its execution. We are experts in helping firms amass and deploy innovation power.
With innovation power in place, you will never worry about being left behind again.
