Elon Musk is going all-in on humanoid robots. He’s planning to roll out thousands of them to keep things moving on assembly lines at Tesla factories. Apparently, the company has been struggling with the same production slowdowns that many of our clients in manufacturing have dealt with due to global labor shortages and supply chain delays. But making factory robots isn’t his grand plan. He intends to put Optimus robots in our homes, to make dinner, take care of elderly parents, you name it.
Whether that actually happens remains to be seen but, regardless, it’s a great time to be an innovator. Middle-market companies are experiencing record year-over-year revenue increases and are seeing employment growth, despite labor shortages, according to a study by the National Center for the Middle Market. And those with strong digital vision and acumen are among the most successful.
We’re certainly seeing this among our clients. Many middle-market companies that were forced to innovate during the pandemic took the ball and ran with it. Now they’re embracing R&D to an extent they never did before—whether they’re in construction, healthcare, real estate, or manufacturing. Half of the respondents to our 2022 National Manufacturing Survey said they are leveraging technology to drive innovation and improve quality. It doesn’t hurt that the R&D tax credit, which became permanent in 2015, offers companies a dollar-for-dollar incentive.
Most owners are also well aware that building a portfolio of intellectual property adds to the value of their companies. Private equity firms and other investors have been in a buying frenzy the past couple of years, and they’ve been snapping up midsize businesses, particularly those with valuable IP. That is opening up many opportunities for entrepreneurs to exit and move onto the next chapter in their lives.
Of course, not all innovation ends up being successful. Ask Mark Zuckerberg, who is licking his wounds after losing $71 billion of his net worth when the stock of Meta (formerly Facebook) tanked, due to lack of interest in the Metaverse. He’s not the only founder to experience an epic face-plant like this. The history of entrepreneurship is filled with good ideas that didn’t quite work out as planned.
That said, there’s nothing more exciting than coming up with a new product or service that fills a gap in the marketplace. Our early adoption of AI and RPA (robotic process automation) was an exciting window into what’s now becoming a new operating standard for businesses. You won’t see any robots roaming Marcum’s offices anytime soon—accounting is, at its heart, a people business. But innovation will be the heart of how we operate, deliver exceptional client experiences, and build for the future. As Elon Musk keeps reminding us, technology slows down for no one.
I write this column this week from a hotel room in Las Vegas, attending an industry conference. If Las Vegas is any indication, the President was right when he declared the Coronavirus pandemic over last week on 60 Minutes, at least that’s the way it looks here in Sin City. The hotels are booked, the casinos are crowded, there’s not a mask in sight (oh well, maybe a handful). And if it isn’t over, I hope what you get in Vegas stays in Vegas.
Sunday night is the start of Rosh Hashana, the Jewish New Year. L’Shana Tova to those of you who observe.