Wednesday, 30 August 2017

Holy cow, the robots are coming!


Back in the day, when I set out on some of my first auditing jobs, I was accompanied by a formidable team of comptometrists. Their fingers were a blur as they entered lines of numbers into their comptometers — for the younger generation who have likely never seen one, this was a huge, key-driven calculator — and added up the trial balances. In those days, the human was the final word in accuracy.

But by the 1990s comptometrists were a thing of the past. We had started trusting computers enough to run the numbers, and what needed double-checking were the systems that governed the computers, not the calculations themselves. And the comptometrists? Well, their role was made obsolete, not in a generation but virtually overnight. They needed to find a new space to apply their existing skills, or, retrain and stay relevant in a changed world. 

Thinking about succession planning today, this story keeps playing through my mind. Except today the changes we are experiencing are far more profound and fundamental, not to mention coming at us at an almost exponential rate. Take automation. Repetitive tasks don’t bore robots, they are faster and more accurate, they don't make mistakes and they don't take breaks; put simply they are just better than we are… at the routine tasks. It also means our clients, including small and medium-sized companies, through the use of technology, have the ability to do a lot more self-service accountancy work. 

In the same way the internal combustion engine drove (pun intended) the horse and cart off the road, robots, in this case software robots, are going to replace humans in your organisation sooner rather than later — on the factory floor as well as in the office. According to a PwC report, 30% of jobs in the UK are at risk of being replaced by robots and artificial intelligence in the next 15 years.

What does this mean for how we think about succession in our organisations? In the past, this meant ensuring the leadership had understudies waiting in the wings for their time to take the reins.  

But today — and I do mean today — succession planning needs to consider what happens to our people when part of their function is taken over by robots. We need to be putting a plan in place for our existing employees, and also hiring people that have the skills to adapt: not only to working with robots, but also to thriving at the functions that robots can’t do. Recruitment policies need to focus on ensuring organisations attract and retain the correct people, not necessarily for the skills they have today but for the ability and potential they have to adapt to the skills they will need tomorrow. 

Take strategic client relations. In an ideal world, with the repetitive work items picked up by robots, accountants will have more time to analyse the data, problem solve creatively and engage with your clients to help them grow their businesses. Suddenly an ability to establish trusted inter-personal relationships becomes essential. So that hard-as-nails accountant, the “human calculator”, who previously did incredible work in from the back office, but never ventured out to client meetings, may well become a square peg in a round hole. 

This is succession planning today. It’s about considering the functions that software will do for you, and then figuring out how to redeploy staff whose functions have fundamentally changed and they no longer fit. And hiring for the skills and talent-sets that you will need humans for.  

It’s in appreciating that some of our holy cows, the things we are the “experts” at, the production of accounts or even, potentially, the double-entry bookkeeping system, might be slain, and choosing to act like Darwin’s finches, adapting to new circumstances and thriving, rather than putting our head in the sand and hoping.

As published in Accountingweb – 22 August 2017



Tuesday, 1 August 2017

Digital Darwinism: it’s still adapt or die


Charles Darwin was right about survival depending on our ability to adapt. And never has this been more true than in the face of the digital revolution we are living through in the twenty-first century. While Darwin might have been speaking about adapting from generation to generation, today it feels like you need to adapt from month to month and day to day.  

Look at the taxi industry and Uber. Retail and Amazon. Publishing and Facebook. Hotels and Airbnb. 

Frighteningly, even these examples are dating. Amazon has already gone full circle and is expanding its bricks and mortar presence, armed with everything it has learnt about consumer behaviour in the digital world. Uber and its drivers are still figuring out their working relationship, but Dubai has announced it is launching driverless drone taxis this year. 

So where does that leave us, the accountants? We’re typically the conservative bastions of caution and risk-aversion in any company. Wielding the double-entry bookkeeping system for the last several centuries, we have, for the most part, kept businesses honest and solvent. But now even the double-entry system is being questioned in the world of blockchain and other decentralised, shared digital ledger systems.

The same thing applies to us, I’m afraid. Adapt or die. But bear in mind that adapting doesn't mean throwing out the baby with the bathwater. Adapting means understanding what needs to change in order to continue delivering value to your clients and your organisation. Look at Darwin’s finches on the Galapagos Islands, which, within one generation evolved larger and stronger beaks to find food during a prolonged drought. The birds adapted fast to their current reality, by optimising a function rather than replacing it all together. 

Likewise accountants need to look down the line and start shifting their position today — we are already seeing the impact of some of the changes brought about by digitalisation. Just like with the introduction of the internal combustion engine at the start of the previous century, there will be winners and losers. The “horseless cart” put an ecosystem built up around horse-drawn vehicles out of business, but enabled the growth of entirely new industries to support the automobile.  

The same is happening today. 

My advice? Step away from the spreadsheets, literally and figuratively. Step out of the shadows and reconnect with your colleagues at the coal face — they are the ones who know where the changes are coming from, can see the impact of these changes, especially the opportunities.  Open up the accounting process and empower your colleagues to collaborate with you. By doing so you’ll ensure that they have access to the numbers that impact their view of reality and in turn provide real input and value to your analysis of the numbers. This gives you an accurate picture, and creates buy-in and mutual benefit whether in the planning process or understanding the variances, when looking at actuals. You’ll stay connected and relevant, and by decentralising some of the accounting functions, you’ll free up your own time to be more strategic and adaptable. 

With the world changing so fast, the old rules no longer work but the new rules haven’t yet been developed!  This makes finance’s custodial role more difficult but even more important than ever before. Stay adaptable and you’ll be able to guide your clients and organisation ethically and prosperously through these opaque days; don’t and you will be one of Darwin’s casualties.

As published in Accountingweb – 27th July 2017