by Jan Roar Beckstrom, Chief Data Scientist, Office of the Auditor General of Norway
Potential useful data is piling up everywhere. Scientific and Technological (S&T) advances are happening quickly and are, just as quickly, becoming difficult to follow. Discussions on topics—such as audit automation, Machine Learning, Artificial Intelligence and Blockchain—abound, as does advice to move everything to the infamous cloud, and these trends are certainly impacting audit work.
The International Organization of Supreme Audit Institutions (INTOSAI) recently established the Working Group on Impact of Science and Technology on Auditing (WGISTA) to focus on key S&T developments, and Supreme Audit Institutions (SAIs) also feel the need to do something—but what and why?
In 2019, the Office of the Auditor General (OAG) of Norway established an Innovation Lab, which, much like a chemistry experiment, involved a hefty amount of trial and error to find the right formula for success. The OAG pulled together three technologically capable people (who also had creative minds, some coding skills, a touch of audit knowledge and a hint of quantitative methods comprehension) and added a heaping spoonful of freedom
An Innovation Lab—one that truly cultivates a creative, entrepreneurial spirit—is at the very heart of modernization and improvement. Though a bit risky (as outcomes are uncertain), innovation is a necessity for SAIs to transform into first-class audit offices, and the OAG shares its experience, along with some best practices, in establishing and operating an Innovation Lab.
Focus on Concrete Problems
Armed with empathy and flexibility, an effective Innovation Lab detects (and solves) concrete problems with which auditors struggle. As an Innovation Lab for a public audit organization, working with, and understanding, auditors helps generate pioneering solutions to emerging S&T trends affecting the audit community. The prime target: make the real audit work more efficient and easier.
Provide Exploratory Freedom
Putting three wiz-kids in the same room with an expensive espresso machine does not necessarily lead to magic. The team must understand the organization’s mission and be positioned to promote creativity. OAG Norway’s Innovation Lab, which resides in the Support and Development Department, interacts daily with auditors and receives minimal supervision.
All ideas are not necessarily good ones. Thus, potential Innovation Lab initiatives requiring additional resources should include cost/benefit analyses. These analyses can be as simple as thinking through the necessary resources and identifying added value should the effort be implemented.
Not Just An(other) IT Unit
An audit office Innovation Lab will, most likely, use different types of technology for varying tasks. This does not turn the Innovation Lab into an Information Technology (IT) unit. An effective Innovation Lab employs a balance of analytical and methodological capabilities, business knowledge and coding skills—it’s about data science, cutting-edge analysis, tool fabrication and problem solving.
Goodbye Formality, Hello Informal Collaboration
Innovation Labs should be, of course, innovative. This means avoiding excessive documentation and formal processes, which can slow invention. New ideas can (and should) develop rapidly, and priorities can (and should) change. In this sense, “showing” (putting new products, processes and services on display) can be more efficient than “telling” (relying on memos to convey new ideas). Say goodbye to formal meetings and say hello to direct, informal collaboration with others.
Show Value Quickly
Innovation Labs, particularly those operating in a change-averse culture, will be met with skepticism. It is important to show value-adding capabilities early on by producing a useful product, process or service in the first few months.
Innovation Labs lead to invention, and there are few greater professional pleasures than creating products, processes and services that actually do or fix something. As a SAI looking to provide cutting-edge solutions to emerging S&T trends, we must embrace change, embrace risk and embrace the great rewards that follow.
For more information about Innovation Labs, contact the author at jan-roar.beckstrom@Riksrevisjonen.no.