What must Accountants learn from other sectors, that have faced disruption?

‘Whether black swans, unicorns, or merely a swarm of upstarts—they are entering the market and wielding new approaches with the power to interrupt your best-laid plans’ ~ Deloitte 

I’m worried.

I’m worried that there are a good number of accountants, who are underestimating the massive overhaul that our ecosystem, economy and indeed society is going through at the moment – The fact is, technology is automating what really talented people have done for centuries, throughout every aspect of our professional and personal lives. 

This is not a statement for the future… It’s happening now, and it’s a revolution. High value jobs are being affected. And yes, accountancy is one of them. 

A connection of mine, the author and entrepreneur Daniel Priestley uses an analogy which I think really helps bring into sharp focus, the type of disruption that is happening across the sector.  

“It took about 10-15 years to write a software programme that could play chess against a grandmaster and win… Then machine learning walked in the door, and in less than 4 hours, the machine learning ‘bot’ wrote an algorithm capable of beating the original software programme which had taken well over a decade to be programmed and improved, every single time it played.  

This in itself is impressive, but think about it at a more macro level – we’ve been playing chess for hundreds of years. We had the best chess grandmasters – people who have trained hard to be the best at what they do. Technology enters the scene, but it still takes over a decade to create software capable of beating these chess masters. And now machine learning does it in less than 4 hours.”  

This IS how technological disruption works.  

So, what happens when a market gets disrupted? 

Taxis don’t like Uber.  

Gyms don’t like Peloton.  

Bookstores don’t like Amazon.  

Cinemas don’t like Netflix.  

Restaurants don’t like Just Eat.  

Hotels don’t like Airbnb.  

Of course, disruption is not just about technology. Disruptive innovation was a theory introduced in 1995 and continues to be a powerful way of thinking about business growth.  It’s been a guiding star for many SMEs and entrepreneurial companies alike, and is useful when thinking about the challenges that exist in the accountancy market today. 

This theory has been tested and validated over and over again through studies (and real world examples, shown above) of many industries – retail, financial services, media, entertainment, travel and many more. 

Yet time and time again it has been proven that the biggest challenge when faced by disruption isn’t necessarily external to the organisation – its usual more about the way the company responds, or fails to respond, to be more precise.  

Disruptive forces inevitably create an opportunity by re-structuring the business landscape. Don’t look a gift horse in the mouth and don’t try to swim against the tide. Face the reality of change and lean in.

Disruption classically occurs when customers start adopting these new entrants offerings in volume. Leaving little business left for the remainder. They may start by appealing to the unserved or underserved, but soon migrate to the bread and butter market, too.  

In this way disruption is a process over time and more about a path that was, or wasn’t, followed rather than a new shiny innovative product. Failure to respond to this could lead to withering on the vine for established businesses, or in more extreme cases a sudden implosion.  

But how does this apply to the Accountancy market? 

The accountancy market was… compliance driven, it is now… productivity driven but it will soon become… automation driven. 

The accountancy market is standing on the precipice of great change. The way accountants work must evolve at a faster pace to keep up with the changing needs of the clients and the ever accelerating technology landscape.  

Accountancy is no longer about ‘ticking and bashing’, filing the necessary and explaining the past (often annually). It is about providing proactive and meaningful insight that helps clients plan for the future, daily. 

In accountancy, MTD is just the start of an accelerated shift towards cloud-based software. Software works based on ‘closed loops’ of activity. So anything that is a looped behaviour, which has a start, and end and a defined path, can be automated. When you think about it like that, most jobs (Yes, even accounting jobs) are based on closed loops – meaning one way or another most tasks can and will become automated. 

The nature of closed loop workflows, therefore, is enabling some vendors to service the SME direct, resulting in them (sometimes inadvertently) cutting the accountant out.  

This is all causing considerable disruption and uncertainty for the accountancy businesses, but also their leadership. To navigate through this, you need better processes, policies and technology, but also effective leadership and a solid plan. The sort of leadership and strategy that can anticipate opportunities and threats and adapt to changing conditions.

One thing is certain though. It’s happening, and it’s happening now. Are you ready for the next chapter of the accountancy practice?

How does disruption theory play out in Accountancy?

Well… As you can probably imagine, I have some strong views and I’ll be giving a talk at this years Accountex event, in London on May 11th.

If you’d like to hear more about how this will impact the industry and more importantly how you can use this to your advantage, join me by booking your free tickers, here: https://www.accountex.co.uk/london/

Author Info:

Jim Scott

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