Insight
Turbulence is the new normal
March 2016
To help make sense of what is going on, and to prepare for the challenges ahead, ACCA's Accountancy Futures Academy has carried out a research study on drivers for the future. Its report, 100 Drivers of change for the global accountancy profession, draws on the insights of the members of the academy, and ACCA's other global forums and experts.
Forces shaping the business environment
Analysis of the drivers in the report suggests that the next decade will be one of critical forces affecting business.
Global economy
Globalisation continues against a backdrop of persistent economic turbulence and uncertainty and growing pressure to rethink the entire global economic and financial governance infrastructure.
Business environment
Growing business and regulatory complexity is growing at the same time as global competition intensifies and business cycles shorten.
Innovation and change
Rapid advances in technology are driving disruptive innovation, overhauling industry structures, challenging and reinventing business models and spawning new sectors.
Society and work
Shifting social values and work expectations, an increasing global population and an ageing society working far beyond current retirement age are creating challenges for how business manages and maximises its use of technology to cope with the demands of a diverse multigenerational, multicultural and multinational workforce.
Learning and development
The structure, techniques, distribution channels and costs of providing education and training are being transformed, with a growing trend towards online courses and accelerated learning.
How the accountancy profession will need to change
As business changes to react to the forces thrust upon it, the accountancy profession will need to adapt the way it supports business.
Trust and reporting
Pressures are increasing on the accounting profession to strengthen its public image and go beyond current financial reporting practices. The profession will need support businesses by providing a more transparent, simplified but holistic picture of a firm's health and prospects.
Regulatory expectations
An increasingly globalised business environment will create a drive to globalise accounting standards and practices. The profession will need to manage any increasing regulatory burden and compliance costs.
Intelligent systems and big data
There is potential to use intelligent systems, data mining and predictive analytics to exploit the repositories of 'big data' that firms are amassing. This could transform both the operational and interpretive elements of accountancy.
Organisational remit
There are increasing expectations that chief financial officers and accounting functions should play a greater role in everything from strategic decision making to the design of new revenue models.
Weathering the storm
As well as identifying the 100 drivers of change, the research sets out the must-dos for businesses and the accountancy profession to deal with the volatility and shocks while reaping the benefits of existing opportunities.
Imperatives for business
- Plan for volatility
With uncertainty the new normal, businesses have to factor in turbulence as a very real possibility and develop strategies for different scenarios.
- Build the radar
Preparing for a wide range of possibilities, while developing an ability to tolerate uncertainty, embrace curiosity, and anticipate what's coming around the corner will be critical development priorities.
- Pursue technology leadership
The pace and disruptive potential of technology development has placed it at the heart of strategy and operations of businesses of all sizes. New mind-sets around managing technology will be necessary to exploit it and extract full value.
- Prepare for true globalisation
Developing a global operating model is a priority requiring an emphasis on making the most of technology. Equally important is developing the capability of management to work with, and get the best out of, a multi-located, multicultural and age-diverse workforce.
- Be curious
A critical success factor in a fast-changing environment is building a curious culture. This means nurturing an environment that is open to external ideas and encourages participants to forge strong working relationships across the entire business environment.
Imperatives for the accountancy profession
- Embrace a bigger role
As businesses adapt to a turbulent environment, opportunities will emerge for accountants to expand their remit. Accountants can help businesses across all aspects of corporate decision making, from formulating strategy to defining new business models.
- Establish ethical leadership
The profession must address public concerns. There is a perception that the profession could do more to highlight and prevent everything from small-scale financial irregularities to the major systemic failures that helped cause the global financial crisis.
- Take a holistic view
There is growing desire for reporting to provide a business-wide view of organisational risk, performance and prospects. This holistic perspective must acknowledge the complexity of modern business, and encompass financial and non-financial indicators of a business's status and potential.
- Develop a global orientation
The pace of global expansion of businesses is placing the spotlight on accountancy's ability to master the technical, language and cultural challenges of cross-border operations.
- Reinvent the talent pool
The diverse range of demands and impacts on the profession is forcing a rethink of everything from training and development to recruitment. Entrepreneurial spirit, curiosity, creativity and strategic thinking skills could assume far more significance when choosing tomorrow's accountants.
Ten years from now
There are significant uncertainties about how these driving forces will play out. However, one thing is certain: the opportunity exists for accountants to support business by playing a more strategic part. This means providing the highest standards of integrity while adopting a broader leadership role.