THE future is unwritten,” said the late, great punk prophet Joe Strummer. But this message could equally have come from a business futurologist. Whatever the source, every business in every sector has a responsibility to start planning the opening chapters for their future development and growth.
Finance professionals are no different. Next month, ACCA (the Association of Chartered Certified Accountants) will take a forward look at the role finance professionals could and should be playing in building a strong and sustainable economy.
Over a week, experts taking part in our Accounting for the Future conference will address issues like how professionals identify new areas of risk; how corporate reporting keeps up with increasing demands from stakeholders; how to account for investor needs; and which business models will succeed best in a green economy.
This last section includes a view of London’s economy in 2050. It argues that, while governments make many economic decisions on the basis of factors like inflation, production and unemployment, a critical issue is being ignored – the environment.
While some economic issues are cyclical, environmental resources – water, carbon fuels and metals – are not. Accountants must ensure that economic decisions take these critical limitations into account.
NEAR DISTANCE CHALLENGES
But we’re not just attempting to look into the far distance. We’ve asked our members, and those of the Institute of Management Accountants (IMA), to identify the factors they should be considering to prepare for the opportunities and challenges they and the wider profession will face over the next five to ten years.
With shifts in regional wealth and power, extreme economic uncertainty and political transitions, as well as market volatility, globalisation and transformational innovation, there are a lot of challenges to consider.
The study identified 100 drivers for change for business and the accountancy profession. But, more importantly, it enabled us to come up with five priorities each for business and the accountancy profession. We believe these need to be addressed if both sectors are to be in a position to perform effectively in the decade of uncertainty that lies ahead.
UNCERTAINTY IS THE NEW NORM
For business, we believe it is critical for organisations to assume and plan for volatility. Uncertainty is the new norm – businesses must factor in turbulence as a very real possibility, and should develop strategies for a range of economic and market scenarios.
That leads to the second imperative for business – to build an effective “radar”. This involves developing systematic, organisation-wide approaches to scan the future external environment for opportunities and challenges. Business managers and leaders will need to prepare for a range of possibilities, must be comfortable with uncertainty, be curious and have the ability to see round corners.
The pace and disruptive potential of the development of information and communications technology has placed technology firmly at the heart of strategy and operations of businesses of almost every size. New mindsets and approaches to technology management are needed to exploit and extract full value from the next decade of advances.
With the rise of developing economies, and with a shift of economic influence from West to East, and from North to South, businesses must develop a truly global operating model.
That will not only mean businesses needing to leverage technology effectively. They must ensure they develop the capability of management to work with, adapt to and get the best out of a multicultural, age-diverse workforce, based in a range of locations.
The final imperative for businesses in an increasingly complex and fast-changing environment is to build what we call a “curious” culture.
This involves nurturing and developing a business environment that is open to external ideas and in which participants are encouraged to forge a network of strong working relationships across the business ecosystem.
But its not business alone that has a number of challenges – and accountants have been quick to identify the five key issues and opportunities facing them and the profession.
Firstly, they recognise that, as businesses adapt and prepare for a turbulent environment, opportunities are emerging for accountants to assume a far greater organisational remit. There is a potential for accountants to be more involved across all aspects of corporate decision making, from strategy formulation through to defining new business models.
There is also a clear need for the profession to be seen to be addressing public concerns. According to the research conducted for our report, there is a perception that the profession could do more to highlight and prevent everything from small-scale financial irregularities through to the major systemic failures that helped cause the global financial crisis and the ensuing economic uncertainty.
There is also a growing consensus on the need for accountants to ensure that corporate reporting provides a firm-wide view of organisational health, performance and prospects. Such a holistic perspective must acknowledge the complexity of modern business and encompass financial and non-financial indicators of a firm’s status and potential.
And, as businesses need to adapt to the globalisation of the business environment, the same is true for those who want to advise them. The pace of global expansion of firms from developed and developing markets is placing the spotlight on accountancy’s ability to master the technical, language and cultural challenges of cross-border operations.
With that comes the final challenge. The growing range of demands and impacts on the profession is forcing a rethink of everything from training and development through to the type of people being recruited.
This means that it is more likely that anyone wishing to become an accountant will need to demonstrate characteristics like entrepreneurial spirit, curiosity, creativity and strategic thinking skills. The future will not be just about the numbers. This is a challenge to which professional bodies around the world – like ACCA – will have to meet. We’ll be working to ensure the professional accountants who qualify in future will help script a sustainable future for business and those who advise it.
Ewan Willars is director of policy at ACCA.