- People need to take time out from the daily grind to consider their future
- Understand automation, then add value to the parts that are left
- Subscription business models are the way of the future
To be on the right side of technology disruption, according to futurist Melissa Clark-Reynolds, people and businesses must be able to shape their future and not be a victim of it.
She says this requires foresight, which in turn means taking the opportunity to "stop being buffeted along by change" and take time out to think about what is coming in a world where companies are rising and falling faster than ever before.
"I suggest to people that when they come across things which suggest the future, that they start to put them away in a collective place and then start to look for patterns on how it might impact on them," says Clark-Reynolds, ONZM. Clark-Reynolds is one of New Zealand's best-known technology futurists, with 25 years' experience as an entrepreneur.
She says she was using this approach and app called Pocket to ponder the synergies of a deal between Disney and 20th Century Fox well before the deal became reality. This approach also allowed her to see the logic of Amazon making a bid for Whole Foods well before the US$13 billion merger was announced in 2017.
"The board of the company I was working with just laughed at me, but I had picked the pattern which suggested that might make sense," says Clark-Reynolds.
When people look to the future and consider the impact of automation, the piece of advice she offers most often is to calculate how much of what is done today that is likely to become automated, then "add value to the things which are not".
"Accounting and the legal profession are two jobs which are highly codified in terms of process and structure and that makes them the easiest to replace with code," she says.
"But that leaves many things which can't be done by a machine. For accountants, there are the nuances of understanding how to create a succession plan from one generation to another, or understanding that the kids have jealousies and don't actually want the business."
This resonates with CA ANZ's 2018 survey on the Future of Business, which found that 55% of businesses with above average levels of agility experienced above average growth. Less positive was the finding that more than half of the 1500 businesses surveyed were not using exponential technologies.
When she looks at many businesses, including in accounting, Clark-Reynolds sees people who talk about technology disruption without fully embracing what this means in terms of strategic change. This goes back to her advice about being a participant in, and not an observer of, disruption.
"I see a lot of accountants talking about becoming strategic partners, but I don't see how they can do that before they change their own mindset first," she says.
"How can someone be that strategic adviser if they don't understand the future world their clients are living in?"
Key to this is understanding that business models are fundamentally changing and that this is affecting how companies are structured and valued.
"Subscription business models are becoming the fastest growing business models in the world," says Clark-Reynolds, whose list of investable companies all have subscription business models.
"In the US, I can pay Mercedes a monthly fee and I can choose which vehicle I want, and I can change that on a regular basis."
"The world is becoming one big subscription model, and this goes for accountants who might move to monthly subscriptions instead of charging lump sums at the end of the year."
This has major impacts on capital expenditure and operational expenditure, with implications for profit and loss balances.
"These subscription businesses have got fundamentally different KPIs, and will sell for very different kinds of valuation formulas than older businesses which just sell lumps of stuff," says Clark-Reynolds.
"To me, the biggest specialisation the accounting sector needs to move to is understanding these new business models and how they might work in terms of things like bank financing, capex against opex, and new business modelling."
The biggest defence, she says, is to fully automate a business, then focus on "adding incredible insight" to the areas that can be done only by humans.
"This means everyone will need to have the mindset of an entrepreneur or a start-up," she says.
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