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It May Be Too Late for Innov​ation​​

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The 2018 North American Pulse of Internal Audit came out last month. If you haven’t gotten your copy, you should run right out and do so. Here’s the link. Note that, if you’re a member of the Audit Executive Center, you can just get to it. If not, but you’re a member of The IIA, then you can get it by filling out a little information. And, if you’re not a member of either, then you can’t get it. And, if you’re not a member … well, why not??!!!​

The Audit Executive Center puts out this report every year, and it is always interesting and enlightening, giving us all a perspective on where the profession is and where it needs to go. This year’s edition lived up to the high standards set by its predecessors. It focused on agility, data analytics, talent, the board, and innovation. 

That last one (titled “Innovation: Pursue Quantum Leaps”) really caught my attention.

If you have read almost anything I have ever written, then you know this is right in my wheelhouse. I have been an advocate/supporter/evangelist/preacher/ ​proselytizer/persuader/nagger/nudzh/constant-pain-in-the-neck about the need for innovation and creativity in internal auditing for most of my career. Seeing it as a major topic in this report made me feel warm and fuzzy all over.

I read the report and the warm and fuzzy began to turn to tepid and smooth. It seems that, surprise, surprise, innovation is not something we internal auditors do well.  And the report provided ample evidence of our shortcomings.

Now, I could go on forever about the low percentage of internal audit departments using “Innovation Activities in the Internal Audit Function,” the shortsighted ways internal auditors believe they have implemented innovation, or the lousy excuses — I’m sorry — “Roadblocks to Internal Audit Innovation” that are included in the report, because the responses reveal internal audit departments may not even understand the concepts of the issue, let alone its magnitude.

But there is a bigger problem here, one that caused my warm and fuzzy to eventually became chilling and prickly.

My biggest concern — my biggest fear — is that it may be too late.

You see, innovation does not just happen — it is not just a switch that can be turned on and, poof, innovative ideas spill like coins from a hacked slot machine. No, innovation arrives from a culture of creativity, trust, and acceptance

And I’m not sure there are a lot of internal audit departments who have laid that kind of foundation. Creativity does not reside in the DNA of most internal audit departments. And, when internal auditors are suddenly asked to be innovative, they do not have any reserves, training, or even an understanding of what it all means to be creative and innovative. They have no resources for coming up with the new, different, and valuable.

If I overstate the situation, I apologize. But my experience is that most internal audit shops are so mired in tradition; so mired in verbatim interpretations of policies, procedures, and standards; and so mired in the need to get the work done (not necessarily a bad thing) that the concept of allowing time for creativity — allowing people to actually think about how to make internal audit better — has never been considered.

Innovation does not spring like Athena from the head of Zeus, fully formed and ready to be embraced and incorporated.

No, innovation comes from an incubator of creativity. It comes from the audit shops that have always allowed and embraced creativity, the ones who have recognized that the time spent on learning and experimenting and being creative just for creativity’s sake, while not having an impact on the immediate bottom line, will pay dividends in future new and innovative ideas.

And that is why internal audit may be in trouble. Because I think most of us are catching on to the idea that we must be innovative to survive. But we are catching on at a time when that innovation needs to already be happening,

I’m not saying give up. We have too much at stake. (And we have too much value, talent, and opportunity.) But I am saying it is going to take something special; it is going to take a devotion to more than just innovation. It will take a devotion to wasting time on creativity, a devotion to accepting failures when it is in the glorious pursuit of originality, and a devotion to constantly trying.

John Cleese once said “Creativity is not a talent, it is a way of operating.” And if we do not accept creativity as part of our operating model, then innovation will not occur.

And, without innovation, we will suffer some rather nasty consequences.​

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