One of the most useful things I have been taught is always to ask, ‘What’s missing? What has been left out?’ I’ve always found this to yield some useful insights, for example, it can help to generate an additional option to address a problem or improve a report by including valuable information.
This struck me forcibly when we recently held a discussion of 15 or so senior CGMA designation holders: all were chairmen, CEOs or CFOs of major companies in a range of sectors. To facilitate the discussion, we had supplied a briefing paper, setting out some of the key issues such as the economic conditions facing business and what this meant for finance professionals. The first question posed by the chairman was (you guessed it!) ‘what’s missing from the briefing paper?’
What was so interesting was (a) the speed of the response and (b) the unanimity about what needed to be included because we knew we were hearing the real ‘top of mind’ issue of concern to them.
What they told us was the need to take account of the equally turbulent impact of the ‘digital world’. They agreed that this is a major structural change that has been just as painful as the economic cycle. Some major considerations included:
- The internal manipulation/mining of data along with the responsible use of data and privacy. Who owns data? These issues need to be dealt with. Value is now created from property that is not the subject of a formal transaction/exchange. Responsible stewardship of data is directly linked to the licence to trade.
- The impact of the ‘digital natives’ generation which is used to dealing with lots of information from many different sources.
- Smaller companies may be better able to respond to the impact of digitisation.
They went on to say that there a need to do more to model the impact of disruptive technology more widely and that companies need frameworks for analysing these different scenarios. In addition, technological change has contributed to significant changes in the value chain where the customer now holds the power; this has led to a shift in our understanding as to where value is created. For example, organisations are now focusing more on the customer experience. The impact of technology should be viewed through the lens of the customer rather than taking an overly defensive stance. So the question to ask is ‘What is technology going to disrupt for the customer?’ Remember also that the customer still wants to buy – it just might be through a different channel than previously.
These insights are informing the continuing evolution of our research and innovation agenda, but one thing is clear for the finance professional. Make sure that the impacts of digitisation and disruptive technology aren’t missing from your agenda.
Senior Global Thought Leadership Manager and Head of Corporate Governance, CIMA