The 5 Secrets of Hidden Innovation - Secret #2

The second secret is - The Changing Demographic

This secret is best explained by a real life example:

When Henry Ford started his motor car business, he made the least expensive automobile so he could sell it to the mass market. Up until that time cars were made by hand and were expensive, but Henry Ford made it possible for those who weren't rich to own a car too.

But all of a sudden his model T, for awhile a runaway success, was now not selling anywhere near the levels previously and market share was being lost to car makers who were adding new colours and giving buyers more choice.

In the end, Ford had to close his factory and retool it to offer a new type of car, the Model A, which met the new market need. All of which was estimated to have cost $100m (though Ford would never confirm this figure).

So what happened? The demographic changed as income for the masses increased and people had sufficient disposable income to pay more for a customised car rather than the Model T which was one size fits all.

The challenge of this type of innovation is to look at the cultural trends occurring and considering what services could be developed or enhanced to take advantage of these changes.

If you think this is not applicable to accounting, consider the front page of Accountingweb which has an article on the accounting profession not doing enough to attract graduates. Could this be because the next generation has different needs? What kinds of things will accounting, as a profession, need to do to attract what some people call 'Generation Y'? If the profession is unable to attract the best candidates, it may have repercussions in the future.

The idea of the changing demographic can be extended by asking yourself, "where will accounting will be in 10 years?" Why do you see these changes happening? What can you do to make sure you are taking advantage of them?

In fact, an interesting book called 'The Second Bounce of the Ball' by Ronald Coleman takes up this theme to say most people can tell where the first bounce of the ball will happen (what the most immediate change will be) but the challenge for the business owner is to predict where the second bounce (the next change occurring because of the first bounce) will happen and try to target your service to make the most of it.

So be aware of the rule and consider what changes the market in general is facing, and whether your practice can take advantage of it.