Innovation Needs Leaders, Not Managers

Managers Execute, Leaders Explore … and the Difference is Crucial to Transforming Tax

Tax professionals are skilled in the art of tax, but when it comes to working within their companies, they turn to the management profession for methods & tools. Historically this has worked well, but now that tax folk must innovate to stay ahead of the digitalization of tax, major cracks are starting to appear.

It’s no secret that large corporations are resistant to innovation, and this is reflected in the way they think, operate, and measure success. This is hurting tax at a time when the pressure to adapt & change is at fever pitch.

It all comes down to how people see the way forward. In general, business managers are hard-wired to start any effort with, “Tell us what you want and we’ll implement it for you.“. What they’re looking for is a clear specification so they can plan, ramp up, measure, and deliver against a well-defined destination.

That’s fine, except that in the digital realm tax managers cannot yet supply that level of clarity. They lack sufficient connection with that world to provide such information, so the knee-jerk reaction is to default to a form of automation called business process automation (BPA).

There’s no doubt it has a place in the world, but the premise behind BPA is not very innovative. In simple terms, it’s based on the blinkered stance that everything is a process and the manual pieces must be mechanized – in other words, the best way forward is machines replacing humans.

But today’s enterprise technology is not very good at replacing humans, nor is it an “IT” problem. Instead, today’s tools are far better at complementing upskilled humans! – a form ideal for the tax profession, and the origin of the phrase people, process & technology.

Even more concerning, however, is that the BPA mental mousetrap is shut off from the greatest prize of all – ‘data’ as a core strategic asset, the true motherlode for modern day tax. Taxologists put it like this:

“As oil was to the energy industry in the 20th century,
so data is to the tax industry in the 21st century.“

To cut a long story short, any “future of tax” plan must be built on a bedrock of ‘data’ and a platform of digitally upskilled humans! Anything else is the pre-digital mindset kidding itself that a firm grasp of ‘data’ is not required in a tax world where tax authorities are now highly data-driven.

Crossing the Digital Divide

Unfortunately, managers and their incremental approach are ill-suited to the radical recalibration of tax, so this is where true leadership & vision must step in.

The key differentiator here is that leaders do not assume they know the destination. How can they? – they’ve never been there before! But this is an anathema to managers who – rightly in their world – see straying too far from home as too risky, so they predicate their toolset on a well-understood destination. Examples of such tools are:

Requirements
Process maps
RACIs
Gap analysis or fit-gap
MS Project
SOPs or standard operating procedures

And more controversially:

KPIs
ROIs.

Now, these techniques & methods have been stock-in-trade across traditional businesses for decades, but when it comes to breaking the mold or responding to digital disruption, they are simply not the right tools for the job. Good leaders will sense this and know when the time is right to break from the pack and chart a new course.

Fortunately for them, help is at hand, because taxologists are not the first to discover these shortcomings (as tax is a latecomer to this game). In fact, the appropriate ways & means has been around for a while and most managers have heard of them or even tried them. To name just a few:

User stories
Scrum masters
Explore, discover & learn workshops
Wiki-style knowledge management
Jira & Confluence
Data catalogues
Pulse surveys

But the target use case for these tools is a leader’s journey, not a manager’s destination – so when managers try them, they fail to get good outcomes or sufficient value as they see it. The problem is that this toolset is out-of-kilter with their pre-defined, process-driven cultural imprint. After that, they typically give up and keep trying to use old-fashioned road equipment to breach the new digital superhighway. Needless to say, results are underwhelming and cause frustration all round.

Bringing it All Together

In summary, managers are good for getting from A to B, but leaders are needed when B sits in strange new lands – and the truth is there’s room for both. However, it has never been more important to use the right devices for the right challenge in a world where digital innovation is not an option. Transformation is achievable, and helping you navigate this is exactly what we do!

But just at the moment we’re currently away recharging our batteries, so next week’s article will be short & social to make up for this longer one. Also, no call to action this week – all that we ask is that you keep watching these articles for the exciting, breakthrough autumn we have in store for you.

Enjoy your summer …