Auditing: it’s over cuz it’s not smart

The last few weeks have been a high speed train ride to keep up with the firehose of material coming out of India and the US. If it’s not Deloitte it’s PwC, EY and KPMG next? Then I read this seminal piece from Umair Haque (courtesy of a Tweet from @timoreilly) and I suddenly had that feeling where you can see the car crash coming but can’t do anything to stop it.

If you’ve been in one of those kinds of accident – and I have – then you know exactly what I mean. It’s as though everything goes into slow motion and you start having irrational thoughts about things like: what might be for dinner tomorrow? This is what Haque has to say: (among other things)

Capitalism 2.0 cannot be powered by growth.1.0: that’s why the race for smart growth is inevitable. The economic pressure — the potential for value creation, in a world being ripped apart by value destruction — is simply too great.

His thesis is that all the hand wringing and fixing in the world is not going to reboot the global economy without what he terms ’smart growth.’ He goes on to set out what that means (for which you’ll need to follow the link.) The cynics in the community will nod wisely and say – yes but…and trot out economic theory. But the real shocker for me is where he says:

Dumb growth is about incomes – are we richer today than we were yesterday? Smart growth is about people, and how much better or worse off they are – not merely how much junk an economy can churn out. Smart growth measures people’s outcomes – not just their incomes. Are people healthier, fitter, smarter, happier? Economics that measure financial numbers, we’ve learned the hard way, often fail to be meaningful, except to the quants among us. It is tangible human outcomes that are the arbiters of authentic value creation.

In our profession we’re all about numbers and wealth yet if you follow Haque’s reasoning, that doesn’t make sense. Which basically means it’s over for auditors, and, quite possibly for accounting in the sense we’ve understood it the last 130+ years.

From where I am sat in the comfort of a semi-retired existence in a wee village in Spain that must sound patronizing or bordering on the insane. And no, we’ve not had enough sun the last few months for me to be getting sunstroke. It-makes-perfect-sense.

Here’s why. Look at what my old mucker James Governor and the rest of the Redmonkians do in what Shel Israel calls Twitterville: (note to Shel – that’s a daft name but it kinda works)

While we also attract architects and other enterprise IT budget holders, we don’t rate budgets above knowledge.

Everyone else is chasing the CIO. We’re more about people reporting to him and those reporting to them. RedMonk also plays an important bridging role because unlike traditional analyst firms, we spend as much time working with web developers as enterprise types. We thus provide a different perspective on getting things done…

Our reach and approach make us an attractive partner for companies trying to build communities.  The important thing to understand about the RedMonk model is that it decouples corporate sponsorship from agenda-setting.

In other words, Redmonk is about the connections that exist beteween people. And they make a tidy income from doing that. It’s what professionals should be like and yet it’s such a rarity to see in practice. Too often partnerships exist as little more than marriages of convenience. Perhaps that will be Deloitte’s next line of defense.

It’s difficult to imagine global leaders taking Haque’s words to heart because what he’s proposing is hard. It’s way outside our collective comfort zones. Yet I’m also thinking about how this line of thinking could propel a different kind of working, a different kind of economy where what’s being measured is creative value not historical dribblings from the imperfect books and records.

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Tagged as: Deloitte Touche Tohmatsu, Economic, James Governor, KPMG, PricewaterhouseCoopers, RedMonk, Shel Israel, Umair Haque