Scott McLiver: Smart thinking driving rapid pace of change

Innovators like Uber have broken through by offering a simple solution to a specific customer need. Photo / Dean Purcell

Opinion

Innovation less about technology than how it's being used, writes Scott McLiver.

Make no mistake, the world is changing. We keep hearing about disruption and how it is and will continue to transform the markets in which businesses operate. For centuries, technology has been replacing jobs done by human muscle and more recently those done by human brains. Artificial Intelligence, machine learning, algorithm-based software and big data are at the forefront of this.

Despite the rapid advances being made on the technology front, most disruption occurs not from technological breakthroughs but from addressing a customer's need in a new and innovative way. Professor Clayton Christensen of Harvard University defines this as "disruptive innovation" and this is what most people think of when we talk about disruption in a business context; when new players ultimately displace large incumbents as market leaders. While disruption is often based on effective use of technology, the innovation really comes from the way in which it is used - with a fiercely customer-centric focus.

Uber and Airbnb are often-cited and well known examples of disruption on a global scale but what many people don't think about is that the technology enabling these disruptors has long been in existence before it was used to target customers' accommodation or transport problems.

What really drives disruption is companies attacking the market by creating products or services that are obsessively focused on solving a customer's specific problem and doing this in a simple way. The product or service is initially "just good enough" for the least demanding customers in the market, those who don't use all of the features of the existing market leader. Providing these low end customers with an acceptable solution that is simpler, easier to use and more cost-effective is how many of these companies begin and gain traction.

The Warehouse and Hyundai are both companies that originally entered the market at a lower, budget price point for consumers and have since built on initial success to improve the quality and value of their offerings over time. By starting with the lower-value, less demanding customers and then refining their offerings, they've increased sales and widened their customer base of those who consider their services and products - "just good enough".

We are seeing disruption happening not just globally but in our local market and previously high-performing New Zealand businesses are certainly not immune. Let's take the example of Sky TV that is currently reviewing its approach in New Zealand's paid TV market as the landscape continues to move fast. Competitors have come in at lower price points, increasing the quality of offerings and stealing market share. Changes to their business model are urgent and the challenge is whether they can evolve quick enough.

Closer to home at PwC, we are also being impacted by disruptive forces. The current role of a traditional accountant is predicted by some recent studies to be obsolete by 2035 and we are already seeing major steps at the start of this journey around cloud accounting automation. Simple tasks such as the data entry of bank transactions and supplier invoices are now being automated by accounting tools like Xero, MYOB and Reckon - and this is just the tip of the iceberg.

It appears a case of when, not if, the majority of current accounting tasks are made unnecessary by technology progress.

While a strong demand for high quality advisers will remain, the skill set of those advisers will, and in fact must, change, and why more effective leveraging, sharing, and distributing of knowledge and expertise among the advisers becomes critical for our industry. One example of this evolving skill set of advisers are Stem (science, technology, engineering and mathematics) skills which are increasingly recognised as being needed to drive future growth and economic success. Recent PwC findings concluded that nearly half of all current jobs in Australia are at risk of disappearing over the next two decades and that 75 per cent of the fastest growing occupations require STEM skills.

The world is changing at an unprecedented rate of acceleration and this provides challenges but also huge opportunity for those who embrace it and, in fact, drive it.

• Changing markets was the theme for The PwC Herald Talks series brought to you by the New Zealand Herald, PwC, Newstalk ZB and event partners Skycity and Kea.

Scott McLiver is a PwC Partner and the firm's Cloud for SMEs Leader.