Jamie Lyon NEW PHOTO

By Jamie Lyon, head of corporate sector, ACCA

Collaboration, collaboration, collaboration should be the new mantra for corporate evangelists. Speaking at our Asia CFO summit last week, I had the temerity to suggest that finance had to up its game in working cross-functionally, and that future business growth was dependant on greater collaboration between the CFO function and the rest of the executive team. In a customer focused and digital knowledge economy, collaboration is king to evolving the business model, realigning operational processes and mining (in particular) the enterprises’ intellectual capital to create value. Consider one of today’s most prized enterprise assets – data. Today, there are countless examples of savvy enterprises who continue to invest in breakthrough technologies to leverage the power of the data at their disposal. Yet we also know that many enterprises still aspire to a single source of data truth. Functional responsibilities continue to blur in the great data debate, and the unspoken question at the C Suite table remains this: who takes ownership or leads the enterprise wide agenda in this critical asset class?

I am duty bound to say the CFO function has an outstanding case to take the leadership role here. The CFO is the steward of corporate value, the keeper of the purse strings, and it is they who must primarily drive required enterprise ROI. But in today’s connected environment, understanding and leveraging the value of enterprise IP is critically dependant on reaching out and building alliances with the CMO, the CIO, the CHRO and other new emerging C suite roles; the assets and processes that create corporate wealth today typically have little respect for functional boundaries. The data example provides an outstanding opportunity for CFOs to move the dial on peer collaboration. Collaboration of this kind will bring much greater clarity and agreement across the executive table on the processes that will create value in the future, it will mean a much more effective capital allocation strategy for the business, and it should help the CFO lead a clearer line of sight tracking, measuring and reporting on the enterprise activities that matter most.

Collaboration, collaboration, collaboration. A new year’s resolution for every CFO.

Ewan Willars-7651

By Ewan Willars, director of policy, ACCA

Last week, the Prince of Wales’ Accounting for Sustainability project celebrated its 10th year anniversary. The great and the good of the sustainability world gathered in London to mark the occasion. ACCA was there, and we have also helped A4S identify the issues that will matter in the next ten years.

Looking back, the past decade has seen the sustainability agenda championed, challenged, and even denied.

Sustainability has been (and remains) an issue of fervent debate.

Policy-wise, there is of course more work to be done. The outcome of the Rio+20 global summit in 2012 showed that a global consensus on sustainability reporting is hard to achieve. Agreeing on reporting measures remains a challenge.

However, against these dynamic, and often difficult political, social, scientific and environmental contexts, A4S has played an instrumental and highly influential role in leading the sustainability debate. It has pushed for greater transparency from business, for clearer reporting and for an integrated approach to sustainability. A4S’s assertion that sustainability is critical for the future prosperity of the world is one that ACCA supports whole heartedly.

As a member of the executive board of the A4S project, ACCA is proud to play a part in A4S’s important work. With A4S, ACCA has published research into the developments and progress of sustainability and non-financial reporting, examining the wider corporate and social responsibility debate and the part the accountancy profession plays in sustainability reporting.

ACCA has long recognised that sustainable development is critical to society and business. The accountancy profession has a vital role in defining and delivering the means by which sustainable development is measured and reported.

To celebrate the 10th anniversary of A4S we conducted research amongst over 4500 of our students around the world, from Africa to Australia, to understand their hopes, fears and aspirations for the future, and specifically their thoughts on sustainability and business over the next ten years.

The main focus of our questioning was: what will the world look like in 2024 for them, as financial professionals of the future? We wanted to get opinions of tomorrow’s finance professionals  on how they believe the global macro sustainability trends will impact businesses and the role of accountants in 10 years from now.

To what extent do you think the following sustainability issues will have impacted businesses by 2024?

A4S 1

We asked the students what they saw as the key global trends that might impact business over the next ten years.  The top three concerns were the decline in natural resources; population rise and instability in the finance markets.

The impacts of social, environmental, population, economic and political changes are a concern to the majority of respondents – 78% said this was a worry, agreeing that the sustainability of businesses will be challenged as the world changes in the future.

Looking ahead to 2024 and beyond, to what extent do you agree with the following statements about the possible role of the finance and accounting profession?

  • 87% think finance and accounting professionals will need to provide businesses with more decision-making insight than now e.g. forecasting (so, more on what might happen in the future, than recording what has happened)
  • 79% think sustainability issues will be more prominent in business
  • 74% think the environment’s impact on organisations will be a bigger focus for finance and accounting professionals
  • 73% believe the role of finance and accounting professionals will be more crucial to the performance of businesses than it is now
  • 68% think sustainability considerations will impact my everyday working life
  • 68% believe the finance function will be key to creating a sustainable business
  • 62% think business will have established ways of addressing global sustainability issues
  • 57% believe there will be greater opportunities for finance and accounting professionals than now 
  • 34% believe the world will be a better place for me to live in

Our research also showed that finance and accounting professionals will need to provide businesses with more decision-making insight than now, such as forecasting and providing insights on more of what might happen in the future, rather than recording what has happened.

So how can accountants manage these future challenges? ACCA’s policy paper, Sustainability Matters (May 2014), said that the global accountancy profession has an important role in making organisations more responsible and accountable in the pursuit of sustainable development.

From sustainability reporting to integrated reporting; the assurance of non-financial reporting and disclosure; climate change; natural capital and the green economy – accountants are central to making the sustainable equation add up and make business sense.

In terms of integrating sustainability issues into business in the future, do you see finance and accounting professionals becoming…?

  • 54% believe they will be much more involved
  • 34% said somewhat more involved
  • 8% said same level as today
  • 3% said less involved
  • 1% said not involved 

Accountants’ professional skills in developing metrics, information systems, reporting and designing economic instruments, among other business attributes, will help make economies greener, companies more accountable, and achieve global and national measures that look beyond economic output to factor in non-traditional measures, such as human well-being and natural capital.

The bottom line is that the finance professionals of 2024 will have more challenges ahead of them than now, with research from the UN and the OECD telling us that climate change will have a major impact on business. The OECD’s Environmental Outlook 2050The Consequences of Inaction” (2012) said that: “Climate change presents a global systemic risk to society. It threatens the basic elements of life for all people: access to water, food production, health, use of land, and physical and natural capital.”

We believe that the young accountants of today will go on to develop the skills, abilities and knowledge to shape and change the future; many are already doing so. Our hope is that by 2024, the accountancy professional, wherever that person may be working, will be creating a brave new world with sustainability integral to it.

Palma Michel

By Palma Michel, former CFO headhunter and founder of the Mindful Leadership program at BeYoCo 

The world as we know it has changed dramatically since 2008 and there has been more volatility in the past eight years, than over the past 30 years. It sounds like a cliché but we live in a world of constant change, increased complexity and uncertainty. Applying yesterday´s business solutions and behaviours to today´s and tomorrow´s problems does no longer work. It is no longer about “what” someone does but “how” they go about it.

In order to initiate or guide skilful change we need to be present to what is here, not what we thought would be here or to what was here yesterday. We also need to be able to hold ambiguity and be comfortable with the unknown.

What typically gets into our way to do this is our nervous system. We evolved in circumstances that did not change as intensely as the circumstances we find ourselves in today.  Back millions of years in evolution, our reflexive bottom-up mind or reptilian brain (amygdala) favoured short-term thinking, impulse and speedy decisions. Whenever the amygdala perceived something as a thread this led to a fight, flight freeze reaction. While this was useful when our ancestors were attacked by a tiger, fast forward to now, the problem is our amygdala still goes off when it perceives something as a threat, which typically happens when we are faced with an unknown situation; but it could also just be a full inbox, a budget meeting, etc. The other problem is that fMRI scans show, that what mostly switches on our amygdala are not even external circumstances but our very own thoughts. Our amygdala is also much faster in brain time than our executive brain and as a result we often react to what we think is here and fall into habitual reactive patterns instead of being able to respond according to what the situation requires.

According to Professor Jeremy Hunter from the Peter F. Drucker Graduate School of Management, contemporary management education has largely overlooked creating an educational process as systematic as accounting and financial analysis for managing oneself. Professionals are left to fend for themselves to know how to skilfully handle and transform the inner forces of emotions, physical sensations, thoughts and beliefs.

Neuroscientist Richard Davidson and his team suggest that mindfulness training can change our in-built response to pressure and demands; by strengthening our executive brain (the left side of the prefrontal cortex) as well as the white matter between the amygdala and the executive brain. By dampening down the amygdala, the prefrontal cortex is able to quiet signals associated with negative emotions, enabling the brain to plan and act effectively.

As such mindfulness practice is not a nice to have but a core capacity for managing today. Mindfulness training in the business world means examining our underlying assumptions and what we are doing while we are doing it – moment by moment. With mindfulness we begin to uncover the workings of our own mind, seeing how the filters of our mind effect our focus, engagement, perceptions, decisions and strategies.

Mindfulness training can be a capacity to effectively meet adaptive challenges, which are those challenges that require us to do something different and to develop a new way of operating in the world. Training in mindfulness helps us to say no to impulse and regain our capacity to be present in the midst of the current environment.

Predicting the future is a dangerous business – just think Sinclair C5 and you’ll understand straight away.  Yet, the newly published ‘See the Future’ report from ACCA and EFMD, gives some pretty good clues about where business education is heading.

It’s perhaps no surprise that technology is going to play a big part.  It’s not just about the MOOCs that have become the subject of so many conversations in the past two years.  Technology has been changing business education since the Open University started broadcasting on late night television in the 1970s.

Indeed, the Open University have been pioneers of technology on many occasions in the past 40 years.  Several years ago, the Open University became one of the first adopters of iTunes U, the Apple platform for disseminating educational content free of charge.  Today, the Open University has had more than 60 million downloads from the service out of more than one billion worldwide, and tops the rankings of most downloaded with Stanford University from the USA.  More recently, the Open University was the driving force behind futurelearn, the UK MOOC platform.

More than anything else, technology is enabling lifestyle learning, the opportunity for students to learn any time, anywhere.  A prospective university student can be up to speed on a subject before they arrive at university, a current student can download the best professors from anywhere in the world as part of their studies and the alumnus can get updates on their specialisation while working, continuing their professional development to suit their individual needs.  The future is flexible and personal.

Such a future poses challenges for business schools, some of which are already manifest.  Recruiting high quality faculty has been difficult for some time and may only become harder and/or more expensive in coming years.  Some business schools have adapted some of their delivery by moving to a fly in, fly out model, with faculty not on the payroll, but booked to deliver certain programmes at certain times before leaving again.  Increasingly technology means that the cost to the business school may be reduced further with faculty logging in to teach and then logging out, avoiding the costs of flying.

What does this mean in practice?  Imagine the first year of an undergraduate accounting degree.  The high cost of faculty, perhaps more interested in research than teaching, means that the classroom experience has had to change.  To give students a richer experience, a business school might partner with an employer to provide their qualified staff to act as facilitators in a digital classroom where students are ‘taught’ with a MOOC delivered by some of the best global accountancy professors, located at universities elsewhere in the world.

The technological transformation of business education won’t stop at traditional class room degrees.  Employers seeking to grow productivity are already using technology to deliver learning in the workplace.  According to the study ‘By 2020, employers believe 57% of training and development will be delivered online in their organisations’.

Again cost is an element of this transition.  Rather than sending staff away for professional development, employers can run programmes in the workplace, without staff having to leave their desks in some cases.  Perhaps more important are the impact on the individual and the flexibility of delivery.  For an individual, lessons learnt can be applied as soon as a course is over, there is no delay returning to the office.  For the employer, programmes can be quickly constructed with the choice of many different providers available online.

All of this technological involvement in education begs the question, but is it as good as face-to-face learning?  Had you asked the question, ten years ago, the answer might well have been no.  The experience was clunky and often involved little more than watching videos of slide presentations online.

Today the experience is much improved.  Not always perfect, but definitely better.  Interaction with instructors and other students is much more common as providers add social tools to their learning technology.  How will it be in ten years time?  Better still and, perhaps more importantly, there will be a generation of learners who think digital is normal.

Cheryl Sandberg, COO of Facebook, commented a few years back “If you want to know what people like us will do tomorrow, you look at what teenagers are doing today”.  My 10 year-old daughter still has a few years until she becomes a teenager, but I see already she has no fear of technology, it is part of much of her life and will increasingly be so.  For her not to do some of her learning online or with a range of digital tools would seem odd to her, for her not to learn with the best providers wherever they are in the world wherever she is in the world would seem strange and for her not to learn from her peers and from the knowledge and experience of all those around her not just academics would be a missed opportunity.  This is my prediction for her future and for the future of business education.

Andrew Crisp is a Director and co-founder of CarringtonCrisp and author of the See the Future report.

The mid-market sector is now the “most finance-constrained segment of the real economy.” 

I’ve analysed ACCA’s Global Economic Conditions research and how it relates to the Autumn Statement.

The UK recovery throughout 2013 was very robust, but has started to slow down significantly since the end of last year, weighed down by weakness in Europe and low real income growth at home. Here’s what our business confidence readings look like – all saved to here: http://share.pho.to/88bfB.

It’s clear from our analysis that the mid-market is holding up best, but even those very dynamic firms can’t resist the pull of gravity. We note the significant loss of confidence among financials. New orders are up, especially for the mid-market, while other parts of the real economy have seen trends slow in 2014. And job creation, while up significantly year-on-year, is definitely slowing across all size-bands.

ACCA / IMA Global Economic Conditions Survey

When it comes to Small and Medium Sized Enterprises (SME) access to finance, the Treasury must be feeling very relieved. Our analysis of finance constraints and growth capital index data for recent quarters is insightful- it’s worth noting how well micro and small firms are going – as recent as mid-2013 they were lagging the rest of the UK economy significant in terms of access to finance, but they’ve caught up very quickly since.

“This is not likely to last forever, as today’s liquidity conditions are extraordinary. But there are reasons to be confident. To me of course, what is news is that the mid-market isn’t better catered for. They are now bizarrely the most finance-constrained segment of the real economy (not least because they are innovators and exporters). But they clearly also recognise that government support is increasingly targeted squarely at them.

Is any of this going to lead to an increase in investment? Well, so far capital spending by SMEs and the mid-market has soared year on year from 2013. But it’s very interesting how large corporates are weighing down capital spending – lots of stories in the press about falling capital expenditure among listed firms; it’s a longer-term trend that the UK and the world needs to address.

GECS can be found here: 

http://www.accaglobal.com/gb/en/technical-activities/browse-resources/gecsr-update.html