Prepare Yourself – Change is Here
Change is not coming, it’s here. And it’s tough. But hiding one’s head in the sand won’t change the fact that everything we know and understand is about to change in ways we will struggle to comprehend let alone deal with. So let’s accept that change is painful but necessary and embrace it knowing we will be better prepared and stronger for it.
Last week a colleague sent me a fascinating article on how the future may look, the full copy of which can be found here (it’s a short read and I thoroughly recommend it). One fact really stood out for me from a personal and professional point of view.
Artificial Intelligence: Computers are becoming become exponentially better in understanding the world. In the US, young lawyers can’t get jobs. Because of IBM Watson, you can get legal advice (so far for more or less basic stuff) within seconds, with 90% accuracy compared with 70% accuracy when done by humans. So if you study law, stop immediately. There will be 90% less lawyers in the future, only specialists will remain. Watson already helps nurses diagnosing cancer, 4 times more accurate than human nurses. In 2030, computers will become more intelligent than humans.
And while we accountants think we are already dealing with changes to our industry with recent developments like cloud based software, what lies ahead will completely disrupt the traditional professional advisory services model. The role of an expert adviser, providing costly advice and analysis based on knowledge and experience to a limited number of clients will more than likely be replaced by an app on your phone with the intuition to know what the questions are and the processing power and data storage capacity to provide better advice than a human adviser. While this will democratise business advice and provide a level playing field for small business to complete with large business, it means I need to reinvent my business model to stay relevant. And I need to start doing something about it now because the speed of change is getting faster every year.
However, I still need to maintain profits and pay the bills whilst changing my business model and achieving this will be a critical challenge for myself and many other businesses – even the world’s biggest company Apple is facing the very same issue (read the article).
To do this, I will follow the path adopted by businesses in other industries impacted by technological change, such as the postal service, by firstly understanding and acknowledging the impact on my industry. Croxley is a global wholesaler of stationery and related products with Kiwi origins. While they know their postal mail business faces an ever decreasing market, they are determined to be the market leader of this space and make money until the last letter is sent.
Having understood the impact on my industry, I then need to decide how to position my business to adapt to the change. Typically the technology disruption begins with the adviser acting as an technological interpreter for the client, keeping up to date with changes and acting as an interface between the new technology and the client. However, in time the technology becomes so simple there is no need for an interpreter and my role as a business adviser will change again.
So whilst computers will eventually have the capability to replace me as a pure expert adviser, this will take a number of years and the interim step is for me to embrace the new technology as a tool in my business to improve our offering as business advisers.
There is no doubt the value of compliance work, that can increasingly be done by software, is diminishing and those traditional accountants who try to maintain high margins with intensive labour rates will see clients move to business advisers who provide real value with commercial advice that leverages the software tools at their disposal. A good example of this is the Xero Business Performance Dashboard. This powerful tool is free for all Xero ledgers and yet is rarely used, however, a good business adviser can set up a simple dashboard for your business and provide real time advice about those numbers that can help you grow your business and your cashflow. A much better way to spend your money than getting a pretty set of accounts done at great expense that are used by no one.
And as the computing power increases over the next five years, I will need to refocus our offering more intensively on the empathic side of being a business adviser, providing the coaching and mentoring services that rely more heavily on a human interaction (although this will no doubt be taken over by computers as well in due course – look at how good Facebook’s facial recognition software is). Which will require upskilling my team of advisers to ensure they have the skills and experience to remain relevant to our clients in this brave new world.
Wish me luck! And if you are in an industry facing significant disruption and need an adviser who understand these challenges and can help you with strategies to stay profitable, call me now on 0800 758 766.
Giles Ellis (Chartered Accountant & Business Adviser)
