Over the past few years, use of the word disruption in business discourse has blown up. You come across it in text and on television. You hear it on podcasts and in private conversations. Everywhere you turn, someone seems to be saying that technology will disrupt this industry or that profession--including accounting.
Yet, despite its near constant use, disruption is often misapplied or used in the incorrect context. Disruption is not the same as innovation. It's not the addition of one cool feature or a beautiful new design. It may include these things, but true disruption is more--much more.
In the accounting profession, we are eager to develop disruptive new ideas that could change the way we do our jobs. To do that, though, we need a clear understanding of what disruption is.
I've found the Cambridge Dictionary's definition of "disruptor" to be the clearest and most concise summation of what disruption truly means. Cambridge describes a disruptor, in business usage, as follows: a company that changes the traditional way an industry operates, especially in a new and effective way.
Disruption, then, isn't building a better mousetrap; it's building something that replaces the mousetrap altogether. Innovation may render a competitor obsolete, but disruption can render entire business sectors outmoded. (See the sidebar, "A Classic Example of Disruption," for a discussion of how Netflix upended the home video market--and drove established competitors out of business--by leveraging new technology and a creative business model.)
So what does this mean for accountants? What can they do to capitalize on disruption instead of being victimized by it? This article seeks to answer both questions. Accounting as a valuable service and viable profession isn't going anywhere, but technology-based disruptions to the fundamental way we do our jobs could radically alter what makes an accounting firm or finance team successful. In a world with the potential for real-time, verifiable data-entry methods--something theoretically possible with blockchain-based technology--clients may soon be clamoring for advisory services and services we haven't even thought of yet.
POSSIBLE DISRUPTIONS IN ACCOUNTING
As disruption becomes the aim of many ventures in the marketplace, increasing numbers of accountants and their employers are speculating about the ways accounting could be disrupted in the coming years. The use of blockchain-based technologies is one of the mechanisms by which disruption seems eminently possible. Deloitte went so far as to publish a report called Blockchain Technology: A Game-Changer in Accounting?, which details how blockchain could radically transform a profession that has resisted major overhauls.
"The blockchain technology has the potential to shapeshift the nature of today's accounting," the report states. "It may constitute a way to vastly automate accounting processes in compliance with regulatory requirements. ... A cascade of new applications will likely follow that are built on top of each other, leading [the] way for new, unprecedented services."
Though blockchain remains in the very early stages of application, we're already seeing the potential for major disruption when it comes to auditing practices. As innovations begin to stack on...