Whether we like it or not, the wave of digital disruption has engulfed us. Organisations that failed to adapt and harness the power of technology face a difficult future. On the other hand, those that adapted quickly by making informed decisions on the right technology for their organisations have ridden the wave of success by creating positive differentiation.
Whilst ‘Digital Disruption’ has been a buzz phrase in the Accounting Industry for the past couple of years, the principle equally applies across all industries. The idea that accountants need to shift beyond increasingly automated compliance services and expand their advisory capability is no secret, and I’m seeing it discussed openly among accountants as I attend events across Australia. Like most changes in the 21st Century, technology is the predominant driver of this change. The internet, along with cloud technology, is allowing customers to connect with businesses in new ways, and automation is driving the cost out of repeatable processes and compliance requirements.
Change is one thing, disruption is another. Whilst I can see some accountants preparing for change, I am less convinced that many are preparing for disruption. Unlike change, disruption:
– Happens quickly
– Scales massively when at a tipping point
– Cripples businesses that are unprepared
When it comes to being disruptive, size doesn’t matter. The classic example today is Xero, a technology most accounting professionals must be familiar with. Credit Suisse has recently tipped Xero, as the ‘Apple of accounting’ that has taken on established giants like Intuit, Sage, MYOB and Reckon. How did Xero do this? By a simple solution that others had not thought of offering – a low priced subscription accounting software using cloud computing that allowed accountants to utilise cost effective products that met all their needs.
On the flip side of this success story is Kodak, which saw its demise after reigning in the film photography industry for a 110 years. Why? Because it ignored digital disruption hoping that it would go away. The interesting fact is that Kodak invented the first patent for a digital camera and disrupted its own business, however they failed to bring it to market because they did not want to give up the lucrative film market with over 70 per cent gross margins. Kodak – who created the term ‘Kodak moment’ and had a name synonymous with photography – lost its ground to new entrants such as Sony, Apple and Nokia. These forward-thinking competitors decided to play in the visual image space resulting in Kodak eventually filing for bankruptcy in early 2012. Was Kodak future phobic? Yes, and not only future phobic, but also dismissive of the changes around them, refusing to question the world they lived in.
So what can we learn from these companies:
About the author:
Simon Allsop is the founder of My Accounts. His vision for the business was simple: take the robust operating procedures of large companies and use them to help smaller organisations get a clear picture of their financial performance. Using accountants as bookkeepers, supervised by qualified and experienced managers with the latest reporting formats he has rapidly grown the company to where it is today.