EcoTomics: The entrepreneurial accountant myth
How many presentations have you heard on accountants adopting an ‘entrepreneurial mindset’?
Looking over my trusty reporters’ notebook, I’ve heard variations of this theme seven times in the last six months (although I am cheating a little here, as it’s my job to attend conferences that put on these types of talks).
For those of you who haven’t had the pleasure, the gist of these talks tends to be as follows:
“accountants have historically tended to pride themselves on their technical expertise rather than on their entrepreneurial ability. With the rapid rise of technology cutting a swathe through the outmoded practices of the profession, accountants looking to grow should harness their entrepreneurial spirit and take the lead from hyper-growth businesses such as those in Silicon Valley.”
Even our dear Chancellor has got in on the act, proclaiming the Tory party as the ‘champion of the entrepreneur’ at the Spring Statement (although Mr Hammond was light on details as to how this would happen).
But a question I’ve found myself asking in these presentations is: “do accountants actually need to be more entrepreneurial? Or is it the system around them that needs to change?”
A summit I recently attended actually opened the floor to the accountants in attendance and offered them the chance to comment on entrepreneurialism in accountancy.
One point made on the conference floor was that many accountants are in the business of risk – more specifically, to mitigate risk for their clients. A great number of individuals and businesses pay accountants to avoid penalties and sanctions that they would otherwise fall prey to if left to their own devices.
As a commenter pointed out, for firms with more than a handful of client this requires a systematic approach with built-in checks and processes built up over years of experience. This falls in stark contrast to the tech giants of Silicon Valley, bred on the ‘fail fast’ mantra that preaches the learning power of trial and error over a slow and steady iterative process.
It comes down a fairly simple question: what would your clients choose? Given a straight choice between an experimental firm with a mini-golf course in its office or a guarantee that they won’t be handed unexpected fines or sanctions, the majority of UK clients would sign up with the safer option.
Therefore, given the systematic conservatism that currently exists, it makes little economic sense for firms to take too many risks.
Which leads us nicely on to the regulatory landscape. If the government was serious about encouraging an entrepreneurial mindset, then axing penalties and regulations would be the most obvious way of doing this. In short, taking away some of the risk associated with risk-taking.
There would be winners and losers from this, and given the current legislative whirlwind that is sweeping through Whitehall, it seems unlikely there is much appetite for root and branch reform.
Accountants don’t make the rules, but it is their job to help clients keep within them. So while accountants continue to evolve their businesses, those advocates for the entrepreneurial accountant won’t see the radical shift they’re looking for until the government, and society in general, move in the same direction.