The McKinsey Newsletter for April 2015 offers “The eight essentials of innovation.”
Can or should financial advisors lead innovation or follow? The answer, of course, is an unqualified maybe.
It begins with what you mean by innovation. Is it the methods, or the products, or the engagement with clients that you wish to change? As a practice grows and matures innovation will become harder unless it is a fundamental part of the fabric. Hear McKinsey,
It’s no secret: innovation is difficult for well-established companies. By and large, they are better executors than innovators, and most succeed less through game-changing creativity than by optimizing their existing businesses.
This is one of the fundamental problems that all businesses must endure. Consider Peter Drucker’s idea.
Doing the right thing is more important than doing the thing right.
Not always easy, but effective is a goal that matters. Innovation is a necessary step in the search for effectiveness, or doing the right things. Efficiency is doing things right. Changing what you do, no matter how little, is error prone. The new theme may not be righter and it will certainly reduce efficiency. People often fall into the despair slide here.
There are defenses.
- Be sure your business model encourages the hunt for better methods, products, concepts, and methods of engagement. Notice and reject the idea that we always do it that way.
- Look for changes that others have made or are making. Assess their validity for you. Attend industry wide meetings and conferences to find new ideas. Be a little cautious about being a pioneer. As we know, a pioneer was often a guy with an arrow in his belly.
- Ask suppliers for help. Most financial institutions are a little backward about innovation, but some have or will round up information for you. How many business owners have a succession plan? According to CIBC, 52% have none and 38% more have informal arrangements, (translation – none that will work.)
- Check the obvious. According to Mark Halpern, of Canadians with $1.5 million or more of assets, just 40% have a will and of those 80% are not current. That leaves 8% with a valid and current will. The power of attorney question is likely even weaker.
People have a tendency to become efficient by narrowing their field of endeavour. In a world changing as quickly as ours, this can hardly be argued to be efficient. Efficiency must also include the question of doing what should be done.
No fear. Not everything we do is valuable and not everything we are not doing is difficult.
Perhaps the best advice on the efficiency/effectiveness trade off is from management specialist W. Edwards Deming.
“Learning is not compulsory, but then neither is survival.”
No one is ever finished learning. Today, clients can easily discover who is in the effective zone and who is not.
Given the choice, be prepared to give up a little efficiency to gain a bit of effectiveness.
Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.