To embrace change simply isn’t enough in today’s disruptive environment. Change means to continue doing the same thing only introducing some degree of variation. This is often referred to as directional innovation. If you put a group of like minded thinkers in a room, you will get incremental improvement. The key is transformation. Transformation means doing something utterly and radically different. Stepping outside of the box isn’t enough. We need to transform the box itself. Inside-out change, proactive change and opportunity driven change is where growth comes from, both personal and organizational. This requires intersectional innovation where multiple disciplines and diversity come together to think differently about the problem. In fact, they may even forget about today’s problem and focus on future challenges. Wayne Gretzky is known for his statement about skating to where the puck is going to be, not where it has been. To many in the accounting profession, this may seem too radical and with the recent demand and rapid increase in partner income the question becomes “why should I change?”
This is a valid question, yet much like with a tsunami, waiting too long can mean disaster. Many don’t see a sense of urgency, so let me try to explain why it is much different today than it was five to 10 years ago. The impact of technology (disruption) is much greater today than it was several years ago. This is due to what is known as the law of increasing returns. Moore’s Law (April 1965) is probably the best know example regarding the price/performance of processing power. In 1965 processing power doubled every year; today it doubles every 18-24 months.
Most of us have been trained to think linear and local rather exponential and global. Today, we are being forced to change our thinking about age old challenges in the accounting profession (talent, knowledge management, workflow processes, succession, technology and providing relevant real-time wisdom rather than just information). The micro processor has been around for over 50 years and when it doubles today, the increased capability is significant. To demonstrate this law in another way (financial), how much money would you have after a month (31 days) if you started with a penny and doubled it every day? At the end of two weeks you would have $81.92 and at the end of 31 days, $10,737,418.24. Most people can’t comprehend this without actually doing the math and even then it is difficult to comprehend.
The important point of exponential growth is there are three primary digital accelerators currently converging: processing power, bandwidth and storage. Bandwidth and storage are increasing at an even greater rate then processing power. Full motion video requires approximated 10 Mbps which most people have this capacity on their cell phone or in their home. The first hard drive was developed by IBM in 1956 (5 Mb), the size of two refrigerators and leased for approximately $250,000/month. In 1979 Seagate released a 5 Mb drive for $1,500. Today, 1 terabyte drives can be purchased for under $60 (Samsung T1 SSD, the size of a thick credit card – <$450). These examples demonstrate that the curve is going vertical and no longer in a slow growing horizontal slope meaning we need to think differently about the challenges we have today and into the future.
Every CPA firm leader says talent is their number one challenge. They especially don’t have the talent to take over (buy out) the partners who are at retirement age and rapidly grow the firm. Thus, we see an incredible amount of merger activity. I ask, “is talent the real problem or are there other considerations we should be focusing on?” Talent has been the problem for decades, but perhaps the real problems are lack of a shared vision, lack of integrated and standardized systems, poor internal communications and processes and a need to focus toward advisory rather than after-the-fact compliance services which are becoming increasingly commoditized. Where will you and the profession be in 10 years?
According to the Economist in 2013, there was a 94% probability that accounting and audit jobs as we know them today will be lost due to disruptive technology over the next 20 years. In the February 2016 edition of 24/7 Wall St., it references the Bureau of Labor Statistics as making a similar prediction that jobs in bookkeeping, accounting, and auditing will decrease by at least 8.4% by 2024.We are already seeing the early stages with new technology that eliminates data entry and reconciliations.
Are we as a profession going to miss this opportunity and lose relevance or are we going to embrace the exponential and global movement? Some will probably choose to allow the gravity of the past to paralyze them while others will become future ready. I believe accountants and their firms should and can do both. It is not an either or proposition. I believe it is an “and” proposition providing the excitement and needed growth opportunities to attract excellence and leverage technology that allows you to work from anywhere and at anytime. Work is what you do, not where you go.
Relevance means CPAs should move up the value chain, focusing on knowledge and wisdom. Think-Plan-Grow!
For more insight into how firms are achieving and outperforming their growth targets, download our whitepaper, Unlocking the Secret to High Growth through Technology by Sandra Wiley, COO, Senior Consultant and Shareholder for Boomer Consulting, Inc..