Technological developments continue to drive innovation across professional services. For a growing number of firms, new technology has unlocked opportunities to build more efficient processes and reinvent their offerings to meet the changing needs of their clients and workforce.
Using insights from thought leaders across accounting and professional services, we share key innovation insights to help your firm get ahead of the top workforce and tech trends for 2023 and beyond.
Embracing innovation that is disruptive has its challenges but as Wes Bricker, Vice Chair, U.S. Trust Solutions Co-leader at PwC US explains, “Transformation is today’s work to secure tomorrow’s relevance.” The idea of transformation can be synonymous with acceleration, but they are not one and the same. Innovative transformation can be closer to evolution and usually requires slowing down or putting on the brakes to move forward.
This may feel counterintuitive to those working in industries demanding continuous improvement, working at speed, and delivering to clients before moving swiftly on to the next. But challenging this mindset and workplace culture is necessary for innovation as Katy Bayliss, Chief Innovation Officer at Crowe U.K. explains, “It requires a step back to be able to innovate and really take the time to question what people need to be productive.”
Like any business change, clear and considered communication is crucial to the success of a firm’s innovation journey. Alex Goryachev, Global Innovation Executive and Innovation speaker, shares, “When communication is at its best so is innovation. I believe that the single most critical element that separates innovation success from failure is communication.”
Amanda Squires, Chief Client Officer, at ?What If! Innovation also explains, “I don’t think you can communicate enough about innovation. It’s important to communicate both the vision and the output and make that communication relevant to the individuals and groups it will impact.” She adds, “Communication is also vital even when things don’t go to plan, but don’t celebrate failure, celebrate the learning.”
In today’s rapidly changing landscape “innovate or die” is a phrase those in the industry are seeing brought to life. Ian Pay, the ICAEW’s head of data analytics and technology argues, “We’re rapidly entering an ‘evolve or die’ world when it comes to embracing tech and automation – it’s brutal but it’s true.” Now the expectation is that firms unable or unwilling to act on innovation must accept being left behind the competition.
Russell Gammon, chief solutions officer at Tax Systems, insists, “If you’re taking 20 hours to do a compliance process that takes a rival firm five hours then you can’t compete on price.’ He continues, “The biggest misconception is that AI will magically do away with hundreds of jobs but it’s actually about helping people make the right decisions and do their jobs better.” The message is that if your competitors are utilising AI to automate mundane tasks, they have more time to focus on adding value to their clients, people, and business. By allowing firms to outperform in this way, AI could become the next nightmare competitor and eventually the norm.
Alongside the adoption of new technology and the shift to digitalisation, firms have recognised a critical need to invest in upskilling their people. Given the current skills gap across professional services, the need to upskill, retrain, and embrace digital skills should no longer be seen as a training expense, but as an investment for the future.
Digital apprenticeships are becoming an increasingly important pathway firms for to invest in their people and gain the skills they need. Efforts to close the digital divide will also offer vital avenues for innovation across the industry and is a move backed by its people. A global study by PwC found that 77% were willing to learn new digital skills and 80% are confident they can adapt to new technologies entering their workplace.
As Carole Stubbings, Joint Global Leader, People and Organisations Partner at PwC UK explains, “You can’t protect jobs, but you have a responsibility to protect people and provide them with the right skills and training to enable them to be successful within your organisation. To survive, not thrive, in the future of work, we need to understand and work with technology and that requires digital skills.”
To combat high turnover, staff shortages, and increasing demand for services more firms are looking to plug skills and capabilities gaps through mergers and acquisitions. Alongside acquiring growth, new customers and skills, these firms are also aligning their acquisition approach to capture strategic innovation opportunities.
According to Deloitte, there has been a sharp increase in transactions pursued with the primary purpose of acquiring capabilities or technologies across key disruptive innovation categories, such as automation, artificial intelligence (AI), and robotics.
Innovation can take considerable time, energy, capital, and also carries a high risk of failure. As such an innovation-driven acquisition can be a more appealing option, allowing the firm to benefit from proven innovations and technology faster.
The professional services industry has seen a rise in the number of dedicated roles and teams responsible for delivering innovation objectives. On the need for dedicated innovation teams, Tracey Harrison, Chief Innovation Officer at EY UK & Ireland shares, “We’ve had several goes at innovation over the years and they’ve been modestly successful. One of the key things holding us back? Trying to innovate alongside the day job.” She adds, “Having a group of people within EY, working full time in innovation roles, has been crucial to turning ideas into reality.” However, with the vast majority of firms struggling to recruit the roles they require to meet demand, attaining this additional innovation resource is a challenge for most.
Advice for those in the majority is a reminder that innovation pathways can be just as vital as innovation teams. In place of a dedicated team, firms should carefully consider the pathways that allow people to come forward with their ideas. Equally important is a process which allows the firm to research, prioritise, invest, and openly communicate the decisions made.
Joe Adams, Managing Partner and CEO, supports this approach stating, “At RSM, we believe innovation may emerge from anyone at any level within the company, even in the most improbable places.” He adds, “We have been seeing great results not only from our national programs but also from the individual efforts and innovation mindset among all of our people.”
Whether dedicated teams or individuals, those responsible for innovation can walk a fine line when it comes to measurement. To succeed innovation needs the right culture. According to Deloitte’s Innovation Study 2021, organisations with leading innovation maturity are more likely to consider failures as positive and celebrate lessons learned (78% vs. 54%).
To support an innovative culture, firms must create an environment where staff are empowered to experiment with technology, and where they are constantly encouraged to share their success stories and insights.
On creating this environment Maisie Poskitt, shares BHP’s people-first approach, “It’s about putting the staff first, rather than the tools. The fear of failure and the new is real, so we need people to feel valued and listened to in order for them to feel they can contribute and pick up the technology. She adds, “Encouraging people to push themselves forwards and develop outside of what’s being asked day to day is also key for driving innovation.“
Diversity and inclusion also have an important role to play in driving innovation. Grant Thornton UK's "great minds, nothing alike” diversity message echoes this, emphasising that innovation is best when it’s a result of collaboration across inclusive, diverse, cross-functional teams.
A recent BCG study suggests that diverse companies have 19% higher revenue from innovations than non-diverse organisations, and display better financial performance overall. This demonstrates that diversity is not just a metric to be strived for, diverse thoughts and ideas not only increase the odds of innovation success but create a clear path to a more innovative organisation.
Given the accelerating speed of change and the pressure to “innovate or die” across professional services, it’s worth a reminder that innovation doesn’t need to be radical or aggressive to be transformative.
Innovation should lead with need as Adam Grainger, CIO at Baker Tilly International explains, “Start with small projects and focus on the data and the people. Then ask what is going to make a difference to our business, clients, or people. Spend time looking at their most common headaches and then what solutions could make a 1 or 2% difference. Those innovations make a huge impact.” On starting small, he adds, “Often we can do a lot with what we’ve already got. So my advice would be to start there. Don’t boil the ocean.”
Jen Hartsock, CIO at Baker Hughes, differentiates between capital ‘I’ innovation, which uses formal business practices, and lowercase ‘i’ innovation, which is something that anyone can do by finding improvement areas they can contribute to. Both types of innovation programs can prove to have a big impact on the firm.
As the professional services industry becomes more data-driven, a growing area of differentiation has been the ability to turn data into immediately actionable insight. Real-time reporting is allowing firms across the industry to close data gaps which previously cost them time, money, and energy.
Experts from Wolters Kluwer explain, “Real-time reporting has been transformative for many practices.” Adding, “In a business landscape where speed and transparency have become key competitive differentiators, real-time, centralised reporting is set to take the reins from the manual processes of days past.” Elsewhere, Nick Wright, Global Head of Digital Solutions, CBRE Property Management, also predicts, “Real-time data will be the biggest innovator in real estate.”
Bernard Marr, business and technology thought leader, concludes “If you want to compete in today’s digitally enabled world, you can no longer afford to ignore real-time analytics. Companies know that most data has a short shelf life, so the faster they can turn information into insight, the more valuable all that data will be.”
To continue to solve problems, increase predictability, and effectively innovate, firms need financial and performance information on a real-time basis. Real-time reporting also provides opportunities to provide value to clients with the ability to create highly personalised dashboards representing custom KPIs, visual charts, and graphs that tell a client’s story.
Concluding thoughts
While it's difficult to predict how technology trends will develop, it’s clear that firms should embrace emerging channels of innovation, and embrace them quickly.
Automation, AI, digital skills, and culture shifts are just some of the key trends that innovation leaders across the professional services industry will need to consider to stay competitive in their field. Firms should continue to look forward, feel inspired, and commit to innovation to stay ahead of industry developments, future competitors, and changing employee and client needs.
Special thanks to the industry experts and thought leaders quoted for contributing their valuable insights to this article.
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