It’s no secret that we are in the midst of a technology driven revolution, which will have no less impact on companies and the job market than the 18th Century Industrial Revolution. For decades we’ve seen how machines are increasing the level of automation and reducing the reliance on human interactions and this is only going to increase. It’s through new technologies like cognitive computing, artificial intelligence and machine learning that is now driving a lot more change. Not all jobs are at risk because some are more difficult to learn as they require understanding context and real world issues.
My favourite post on this topic was recently written by Bernard Marr regarding the 5 options everyone must consider when considering the future of jobs . It is brilliantly written to provide people who have jobs (which is pretty much everyone using LinkedIn), with a way of facing into these challenges. But the recent growth in cloud computing technologies, Excel (VBA) automation, App development and the increased acceptance and subsequent reliance of organisations adopting these new innovations has accelerated the exponential growth in this revolution specifically within accounting and finance over the past couple of years.
Finance facing disruption
As finance staff, we think that the jobs we perform in Excel are so complex that we are safe. Some believe they can hide their knowledge in a spreadsheet and thereby continue to stick their heads in the sand. “My spreadsheet is so complicated that no one will ever be able to understand it. My job is safe!” A machine would never be able to balance a balance sheet, build a financial model or understand my complex deep nested if statements (I probably shouldn’t have these to begin with, but that’s another post in itself).
This attitude goes against the fundamental principles of financial modelling, and logic tells us that proponents of this short-term thinking cannot expect to last long in a modern organisation. However, do not underestimate the inertia and instinct of self-protection of those reluctant to embrace new technologies.
Finance departments for major companies have been moving spreadsheets off shore for many years now, and tasks previously performed only by humans can now be automated. I previously decode 26 bespoke and complex corporate spreadsheets (with no face to face time), re-wrote the logic accurately so that it was transparent and consistent (both internally and in line with the prior version) that enabled full transparency, automation and transformed the spreadsheet into a financial model. More recently I demonstrated how to build, maintain and update on a rolling basis a 3 way financial model which sourced accounting data from Xero in under 10 minutes.
Whilst the title of this post implies physical machines knocking on your door and might conjur up images of the Terminator or the Matrix, I am referring to an augmented reality of man and machine, kind of like the Million Dollar Man, or Women. We already have evidence of medical advancements using machines together with human assistance.
Cautionary tale of cultural resistance
It is in this context that I have written my post as a cautionary tale. In my past experiences I combined powerful software and attempted to implement financial modelling techniques within a finance function that had such a profound impact on the way we worked that it completely disrupted my fellow colleagues and myself. I didn’t anticipate that the changes would have such a seismic impact on how people used spreadsheets. It was merely an exploratory journey rather than a deliberate mission to cause disruption. The lack of support indirectly resulted in me changing jobs whilst providing me with the opportunity to review my career and refocus on my core purpose and strengths.
It is often in the most challenging and confronting times in your career that you find an opportunity to re-create what you set out to achieve at the start. All the many years of studying and working in the corporate world suddenly was worth it and made sense. Ironically, the robotic turning treadmill of working life turned me into the walking dead. Uninspired by the monotony of work and corporate politics which detracted from getting awesome work done, I felt drained, because I knew there was a better way of doing things.
Once I started implementing these changes in my team, I suddenly found myself at the centre of a lot of angst caused by the fact that I was able to extract business logic out of spreadsheets, where everyone thought they were safe. An entire department of people were working behind countless complex, hard coded, error prone spreadsheets under intense pressure. They wanted a solution to improve their spreadsheet pain but didn’t expect — or want — the solution I was offering. Their jobs were to produce numbers with unfortunately limited time for analysis, insight or to redesign the spreadsheet according to a best practice modelling methodology. It is really tough being under such pressure whilst not being provided the right tools and training to be the best you can be. I wanted to help but understandably the finance staff were wary of implementing a new solution.
I deliberately call these spreadsheets and not models (or financial models) because they lacked what every good model contains in terms of transparency, flexibility, simplicity and accuracy. You only have to read more about this in F1F9’s publication on Capitalism’s Dirty Secret to realise that this is a fairly systemic issue with corporate spreadsheets around the world, a problem not easily solved.
Now tackling this is not easy due to both technical reasons and a much more difficult cultural adaptive challenge. But my team were clear on what benefits were to be gained from automating spreadsheets. It would facilitate more time to have meaningful and rich conversations and test hypotheses and scenarios of real business problems and not being a slave to the spreadsheet.
They gave me their full support and endorsed a strategic roadmap of transformation. Despite the roadmap being endorsed, other teams adjacent to mine were not so supportive or keen on the change as it exposed time that could be saved on spread sheeting by using a powerful Excel-based content management system. The shift to a new paradigm and unavoidable change to roles ultimately led to a fear of disrupting the status quo; a public “yes” in a meeting but a private “no” outside of it, the very definition of passive aggressive change suppression!
I underestimated the magnitude of this change as I hadn’t foreshadowed the significant impact it would have on everyone’s fixed mindset. Most people will state they want to see change, but are unwilling to change themselves; this is just the same as “talking a good game”, it all sounds great but completely pointless unless something is actually delivered. As a firm believer and active participant in a growth mindset approach, I expected them to take a similar viewpoint. In retrospect, this was rather naïve on my part.
Using disruption to find new opportunities
Having now started my own financial modelling consulting business leveraging the very same technology whilst developing a portfolio career, I reflected back on that experience. Whilst the technology and innovation has arrived we are not mentally or emotionally prepared to deal with those changes. Change like that can feel like a direct attack on our livelihoods and security. The subtle and at times outright aggressive behaviours I experienced were evidence of defense to these attacks. I was finally asked to retract my strategic roadmap and go back to being the walking dead. I just couldn’t.
What this taught me was if we are going to embrace the arrival of new and disruptive technology we have to invest in more change management, training and support to provide our teams with the right tools. We have to enable them to be prepared for what lies ahead or fail dismally and disengage the people who are the life blood of the company. More focus on the adaptive challenges and defining new and exciting opportunities for people to explore requires a lot of careful planning.
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Lance Rubin is the Founder of Model Citizn, partner of theOutperformer, approved training provider to the Financial Modeling Institute and Group CFO for SequelCFO.
I have more than 20 years of combined experience working in model audit, investment banking, corporate finance, finance business partner and Fintech CFO.
Organisations I have worked with include PwC, KPMG, National Australia Bank, Investec Bank and Banjo small business lender.