Innovation in accounting: Why that’s not an oxymoron
Editor’s note: Ross Manson is chief innovation officer at Eide Bailly, the regional accounting and business advisory firm that is 102 years old this year. In this Q&A, he explains how companies can and should encourage innovation – and how doing so has been one of Eide Bailly's keys to success.
Q. Tell us about Eide Bailly.
Manson: Eide Bailly’s roots go back to 1917. Then the modern company was formed in 1998, when two Fargo-based accounting firms – Eide Helmeke & Co., and Charles Bailly & Co. – merged to form Eide Bailly.
Today, it’s one of the 20 largest accounting firms in the country.
Q. And the corporate headquarters still are in Fargo?
Manson: Right. It's a hidden gem in North Dakota, and it’s great to have one of the 20 largest accounting firms in the country be headquartered out of Fargo. Most of the others in the top 20 are on the coasts, in Chicago and so on.
Q. You’re the company’s chief innovation officer. But I find it hard to square that title with my stereotype of accounting, which I still imagine as a stodgy profession involving ledgers and budget books!
Manson: That’s what a lot of people think. There's definitely a stereotype, I think even more so when it comes to doing taxes.
But not only has the field of accounting changed, we also are a much more diversified firm than we used to be. For example, we call our audit and tax services our core, while our non-core is technology consulting, forensics, cybersecurity, business strategy and many other consulting areas, plus advisory services for our clients.
And our Vision 2022 statement is that by 2022, we want to be a $500 million firm with 60 percent core services and 40 percent non-core. This year, we had about $337 million in revenue and were about 30 percent non-core.
So, that tells you that a little over $100 million of our revenue is from non-core services.
Q. So if I ran a company that was interested in cybersecurity, I might turn to Eide Bailly?
Manson: Absolutely. That was an expansion of a service line. And it’s an example of innovation, in that we’re always trying to identify service areas that our clients need. Cybersecurity was one that we addressed about four or five years ago.
Q. Technology is a common thread in the services you’ve listed.
Manson: Right. In particular, our technology consulting area is growing significantly; and as we speak to the “Innovation Frontier” within our industry and others, there are three key technology-related things that we talk about.
First, there is a ton of disruption that is occurring. Second, there is a ton of disintermediation that is occurring.
And third, there is a digital transformation that is happening in virtually every industry and every business, including our own – a change that may be a threat to that business, but also is a great opportunity.
And that's why we see great opportunities in technology consulting, because our expertise in that area lets us work with our clients who are going through those kinds of challenges.
Q. What does the second of those elements – “disintermediation” – mean?
Manson: It means there are competitors who are looking to disintermediate your business model. Think of a Netflix taking over Blockbuster, an Uber disintermediating the taxi business. It’s that type of mindset.
Q. What’s your own history at Eide Bailly? How did you start out?
Manson: I’ve been with the firm for about 22 or 23 years. I started out as an accountant on the audit side; I did some tax work and worked on the consulting side as well. Back then, we newcomers were thrown into a whole bunch of areas, so I got to see a multitude of areas across the company.
Over time and in various practice areas, I had the chance to help build some entirely new service lines. Which also, I think, is an element of innovation and entrepreneurialism – that process of looking at an industry, identifying a need and responding by creating something new.
Later, I had the chance to move into a leadership role here as the partner in charge of the Fargo office. And from there, our CEO and board of directors a few years ago saw that our company talked about innovation, but were we really encouraging it and feeding it fuel?
They sensed that we needed to continue to build out a culture of innovation. And about 19 months ago, they approached me about taking over that role.
When I started, I saw that the initial challenge would be to build awareness about innovation, and about how you can approach it within what was, at that time, a hundred-year-old firm.
Q. How did you go about doing that?
Manson: The first area we identified is that we wanted our people to become more aware of those disintermediation, disruption and digital transformation aspects that I was talking about earlier.
Traditionally, accountants have been very good at looking at today and backwards. But there is a whole landscape and horizon that is changing in the forefront.
We need to be aware of what those changes are, in order to figure out how to mold them into our business model and be ready for the future.
So, we wanted to create an awareness campaign.
Second, we wanted to provide a formal platform for idea creation. In other words, how do we encourage people across the firm to be creative, and really let the crowd help us identify the best ideas?
Before I even came into this role, the firm had invested in a tool called Idea Hub. It has generated more than a thousand ideas that otherwise, in all probability, would never have risen up to be considered by the organization. That's the crowdsourcing aspect.
Q. How does it work?
Manson: Anyone can put an idea out there, and once they do, everybody in the firm can see it and the other ideas that are posted. Then people vote on the ideas with a thumbs up or thumbs down; and once an idea gets to a net-positive 15 thumbs up, action has to be taken by management. Sometimes the idea goes up to the board of directors.
Now we've woven that into our innovation process.
Q. It sounds like formal structures can really encourage innovation.
Manson: Right, and that relates to the third strategy we’re developing: building a framework around innovation. Because again, being a 102-year-old firm and having done business the same way for a number of years, how do we go beyond talking about innovation and ideas to helping people really foster them?
What is our framework for doing so?
Today, we have structures in place to help manage all of this. For example, we’ve launched seven Innovation teams, we’ve hosted two hackathons …
Q. What’s a hackathon?
Manson: A hackathon is where you bring a number of people together, give them a small window of time – 48 hours, generally – and say to them, “Solve this business problem.” Or at least give us the foundation, a minimum viable product or a solution that we can put into motion.
As you know, organizations often will tackle business problems by putting a committee together and having them meet once a month. In this case, you bring people together for 48 hours and say, “Focus exclusively on this problem.”
And when you find the right people and ask them to do that, it's amazing what they can walk out of there with.
So: How do you inject innovation into a 102-year-old firm? You do Idea Hub. You do Innovation Teams. You do hackathons. You build out that culture. That's the momentum we’ve been building on.
Q. What's next?
Manson: We launched our seven Innovation Teams, and we’re seeing some great results. We’re also talking about Eide Bailly’s own digital transformation, which is including such things as robotic process automation or RPA and artificial intelligence.
We’re asking questions such as, what are we doing on cloud-based technologies? What are we doing from a mobile perspective? How are we helping people do work on a mobile technologies, given that we’re seeing more and more capabilities on mobile devices?
Are we taking full advantage of the opportunities in digital marketing?
Along those lines, we just made a major investment in an analytics firm in Utah that we're really excited about. We brought on 23 people with backgrounds in such things as data science, data management and data strategy for an organization.
That'll be useful not only internally but also for our external work with clients.
Q. If you were to address, say, the Fargo Moorhead West Fargo Chamber of Commerce to tell the members about innovation, what would you say?
Manson: The message I’d try to get across is, “Innovation is something that every organization should have in their strategic plan.” It's not just something that happens at Amazon, Apple, Google and those places. Sure, there are transformations happening there; but what about the transformations that are happening in your own industry?
That's the theme of the talk that I’d deliver. And it’s just as true for brand-new startups as it is for 102-year-old companies.