By Andrew Leunig, Business Architect
Back in the day – about 1990 – I was pretty cool; I had a car phone and a pager. A few years after that I had a dial-up modem and a Compuserve email account. I was uber-connected. One of the first kids on the block.
Needless to say, we’ve come a long way.
I’m a Chartered Accountant but for the last 15 years or so I’ve called myself a Business Architect; I’m interested in the strategic “architecture” of the business and the business model – the interesting space where technology meets business models meets new workforces. I’m lucky enough to work with a range of interesting businesses to help them identify risks and opportunities not yet obvious. I help my clients think about what’s next: what does the medium-term hold?
I’ve said for quite a while that accounting is easy – you just need to get every transaction “right” every day.
For years I’ve been of the opinion that many accounting firms servicing the SME market have been generating a high proportion of their revenue from heroically fixing up accounting cock-ups; clients making the same (or similar) mistakes year after year. Accounting firms are charging high hourly rates for what is essentially problem-shooting bookkeeping, fixing “old” or “wrong” transactions.
I’m unashamedly a Xero fan. The mix of “rules-based automation”, daily transaction downloads and the power for multi-party delegated processing collaboration (including low cost – but capable – offshore processors) certainly facilitates “getting every transaction right every day”.
Let’s assume that every client got every transaction right, every day. What then?
Well then, “context” will matter. We all know that accounting profit is an opinion, but cash is a fact. I believe that the tools that will emerge with big data will enable us to better understand which transactions are opinion driven rather than fact driven:
- Accounting profit will be more easily ‘mined’ to enable alternative views of the accounting profit with an alternative set of assumptions;
- Improved risk analysis tools (based on historical and real time transactional data – financial and other) will dramatically expand and improve the ability of third party experts to provide reliable risk ratings of SME’s. Expanded access to capital through peer-to-peer lending, crowdfunding and new equity exchanges will go a long way to solving the current funding challenges of SME’s;
- Improved collaboration tools and ‘online’ workers (from anywhere) will enable global SME’s to grow much quicker and for networks of SME’s to quickly form and challenge large, established market players;
- Powerful cloud-based business toolkits will enable low cost business processing capabilities to be assembled in hours at a minimal cost per month.
Where does the accountant fit into this?
I want to share my vision of the global nomadic accountant. Of course, this won’t be the only type of accountant around, but I suspect that this group will be important.
They will assemble a best-of-breed degree themselves: this bit from Adelaide University, that bit from Harvard, this bit from Helsinki, that bit from Stanford. They may have a few components from the CPA’s or the ICA. A third party will verify the veracity of all of the components and “rate” the degree.
Accounting bodies will compete to have them as a member.
Their study will be a mix of online and live. They will attend several offshore universities, travelling on low cost, long haul aircraft. Overseas, they will use “Student Airbnb” to find somewhere cool and cheap to live. Networking apps like Tinder will reveal new and interesting people nearby.
They will have two assets of note:
Their smartphone will be the gateway to their cloud assets – photos, music etc.
Their second (and more important asset) will be their online reputation. A great online reputation will enable them to transact at a low cost. They need to own very little but they will be masters of accessing whatever they need, whenever they need it, anywhere on the planet. Someone else will own it – they will merely access it.
- LinkedIn or its successor will be paramount. Relationships will be accumulated and worked. They will understand that it’s not their first connections that matter but the second. They will aggressively seek introductions to people who can help them.
- They will understand that the great learning is happening at the great companies. They will prefer an average job at a great company to a great job at an average company.
- Their CPD (like their degree) will be custom designed. Their learning motto will be just in time, just for me.
- They will not be interested in climbing the corporate ladder. They see themselves as traversing a career lattice. Fundamentally, they will only be “loyal” to themselves and their own values.
- And their values will be fundamental. So whilst Boomers and Gen X’ers criticise the loyalty and work ethic of Gen Y & Z, the younger brigade are looking upwards and asking “why would you even expect me to want that?”
And why should they want it?
They’ve probably seen at least one older person close to them made redundant with little control over their destiny and perhaps ‘not so good’ prospects.
They’re imagining a lifetime of interest payments on a “too large” house that probably will not have the crazy capital growth that we have seen in many of the past 50 years. The honour of paying big licks of stamp duty? No thanks. Weekends of lawn mowing and house maintenance? No thanks. Who wants to be tied down like that?
Who wants the commitment of the lease on a BMW 5 Series you can assemble, manage, optimise and pay for from the smart phone? On any one day, these PEOPLE could blend cycling, buses, trains, hourly hire car and Uber taxi. No registration and no car service to organise. A few weekends a year, they’ll get away in a rented 4WD or a Ferrari. And they’ll use this mindset seamlessly wherever they are, across the planet. Why own when you can simply access?
And back to their values – they may not look like “greenies” but they take a sustainability ethic for granted. Social entrepreneurship to them is at least as cool as capital entrepreneurship. Anyone can make money, but changing the world – now that’s cool.
So what might their career look like? What might a few years in their life look like?
Joshua: A Case Study
Let’s look at a few years in the life of Joshua. It’s 2020 and Josh (to his mates) is 25.
Josh was a top achiever at his public high school and was socially popular. His ATAR was high enough for him to get into the accounting degree of his choice in his home town.
But Josh and two of his mates deferred university and crafted their own gap year. It was a hand-crafted “experiential” year. Leveraging their online reputations and networks, they combined periods of earning with periods of volunteering, switching seamlessly from capitalists to socialists, from personal indulgence to selflessness.
A highlight was their three weeks in Budapest. They’d hatched the basic plot a year before but had no idea when or where they might implement it. When they drifted on to Budapest from a week on the Croatian coast, they knew that was ground zero. Over a weekend and with capital of only $100, they launched their business. Fundamentally, it was a sophisticated pub crawl for Americans, British, Australian and New Zealand teenagers, plus “bolt-on” private parties.
Over that weekend they launched the website and social media campaigns, secured local “pub” partners and their American, British and New Zealand online teen ambassadors. Their promo video went viral and three weeks later they each left Budapest $20,000 richer.
No one (except their local “pub partners”) even knew they’d been there. There was no local bank account (all funds were paid with Bitcoin and Paypal) and much was bartered. There were no “employees” – apart from their Philippines-based “virtual assistant” who did fantastic work developing their website, setting up the payment arrangements and implementing the social media streams. No taxes were paid and (luckily!) no-one got hurt.
Those 3 weeks changed their lives. The global set of friends (direct and extended) they made has set them up for life. That year gave Josh a taste of the way that he wanted to live.
Upon his return home, he retained only a part of his originally secured degree, creating the portfolio degree that I described earlier.
He only lasted 6 months at home. Crowd-sourcing ideas and experiences from his new global network, he secured low paying (but high learning) jobs as an intern at Google, Uber, Kahn Academy, one VC-backed Silicon backed start-up and two NGO’s in India. He worked and studied in intense, frantic, 14 hour day bursts, punctuated by exciting but low cost six week holidays in Mexico, Romania and Bulgaria.
What Josh accumulated in that time was enormous “reputational” and “experiential” wealth but almost no physical assets and only modest cash savings.
Now, at 25, Josh is a pretty useful guy to an entrepreneur – capitalist or social. He’s a global CPA. He has little detailed knowledge of the tax or corporate law of any jurisdiction but he does know what he doesn’t know.
What he does very well is understand current technology and global context. He’s highly tuned in to what is happening now and what is likely to happen next. He has great analytical skills and an intuitive understanding of sales and marketing. He is a skilled communicator, which is much appreciated internally and externally by suppliers, investors and financiers.
He can assemble (and project manage) a highly qualified, high-performing, low cost virtual accounting team (and outsourcing partners) in 24 hours. He can report to the Board or he can be on the Board. And – if your business gets on a fast growth pathway – he can get growth funding: a globally sourced, well priced cocktail of equity and debt.
He’s got options. If the business is achieving rapid growth and a financial exit is in sight, Josh may well be there on sale day, having helped maximise the sale price for everyone’s advantage.
If an exit is not in sight, expect Josh to be off. It could be to a new high potential technology start-up, or it might just as likely be a social venture in Africa, or joining a team in Argentina to re-capitalise government debt.
There is no way you will know, because Josh probably won’t know either; it will just be another movement on his lattice.