It is Not What You Know, It is How You Share It

Mike JEANSPast President,Chartered Institute of Management AccountantsIndependent Management Consultant,Quagon ConsultingUnited Kingdom

It's not what you know, it's how you share it...

Mike Jeans

World Congress of Accountants

Hong Kong 2002

DRIVERS OF CHANGE

Main micro-drivers of change and their effects:

globalisation advances in ICT transformation to a knowledge economy dynamics of change demand for accountability (FMAC)

Interconnected factors

AGES OF THE ORGANISATIONTribal Agrarian Industrial Information Knowledge

Marketpiece Local Territory LocalCommunity

NationalColonial

International Global FreeTrade Areas

Vision Onegeneration

LandOwnership

MechanisationResourceownership

Market shareincrease

Long-termsustainability

Strategy &Goods

Survival offittest

Sustainabilityof land

EntrepreneurialProfit

Market shareProfit

FlexibilitySpeedCreativity

Processesand systems

Personalattributes

Crop rotationFarm Methods

MechanicalPaper based

IT based IT basedKnowledgebased

Resources Natural LandFarm Tools

Power sources(Steam, coal)Minerals

Technology TechnologyInformationPeople

Structure andrelationships

FamilyTribal Unit

FamilyCollective Unit

ComplexStructured

MatrixHierarchical

NetworksAlliancesVirtual Groups

KNOWLEDGE MANAGEMENT

The term coined by Peter Drucker in 1960sKnowledge as a key resource in today’s

economyKnowledge workers are the new capitalists

– they own the means of production – their knowledge

Capitalists in the traditional sense – becoming majority stakeholders through their stake in pension and mutual funds

DEFINITION

“Knowledge Management involves efficiently connecting those who know with those who need to know, thus converting personal knowledge into organisational knowledge”

WHAT KNOWLEDGE MANAGEMENT ISN’T

Devalued through overuse?A consultant-driven fad?Not an end in itself -- can’t be

implemented in a one-off initiative or by purchasing a piece of expensive new software

Technology just an enabler - allows scalability

OVERARCHING BUSINESS PURPOSE

Clear business purpose and benefitsA value proposition to inform the

implementation and drive it through every part of the system, including organisational culture

CULTURE

“You can’t manage knowledge, you can only manage the culture that leads to that knowledge being shared.”

But managing culture isn’t easyCulture influenced by structure,

resources, processes and systems

KPMG model

MARKETPLACE

MARKETPLACE

Vision

Vision

Resources

Processes and systems

Strategy and goals

Relationships and

structure

Culture

and values

KNOWLEDGE SHARING

Knowledge is power (especially in recession!)

Breaking down silo mentalityIncentivising knowledge sharing

ACCOUNTING KNOWLEDGE

Knowledge -- not information -- equals power

“Local knowledge and technical competence will be insufficient, instead a premium will be placed on value-adding contributions to management” FMAC

STRATEGIC ENTERPRISE MANAGEMENT

A management approach best suited to bridging the gap between strategy and operations

A process, not a systemRight people in the right place having

access to the right expertiseBETTER DECISION MAKING

Knowledge hierarchy

Wisdom

Knowledge with insight

Knowledge

Information with meaning

Information

Data with context

Data

Facts, observat ions, data points

SEM

STRATEGIC ENTERPRISE MANAGEMENT

SHAREHOLDER VALUE*Creation *Protection *Risk/return

Decisions

Decisions

Decisions

CULTURE, PEOPLE, STRUCTURE, PROCESS, SYSTEMS

EmpowerOperations

InformStrategy

Empower Operations

Inform Strategy

ABC BSC SEM Capability

SEM IMPLICATIONS FOR ACCOUNTANTS

Reducing the power of the finance function

But -- freeing up time to allow accountants to focus on more value-added activities

Repositioning of accounting function

IMPLICATIONS FOR THE ORGANISATION

Capitalising on knowledge creating a learning organisation

Knowledge can never be ‘owned’ by the company, only rented

Knowledge is portable -- implications for recruitment and retention

The virtue of forgetting

IMPLICATIONS FOR ACCOUNTING

Loss of distinction of accounting knowledge

Breakdown of silos -- teamwork

Continuing education and lifelong learning

Responsibilities of professional bodies --

CPD

Non-traditional delivery methods (Internet

and beyond)

SOFT or ‘PEOPLE’ SKILLS

Accountants becoming effective business partners: leadership communication influencing negotiating change management team building social and cultural skills

– The New CFO of the Future, KPMG & ICAA

FUTURE OF THE FINANCE FUNCTION

Accounting is still relevant despite the changes in the nature of accounting knowledge

FUTURE CHARACTERISTICS OF FINANCE

Finance Staff• Strong commercial acumen• Good analytical skills• Effective interpersonal skills• Consultative approach• Coaching ability

Finance Processing• Focussed on adding value• Integrated into business processes• Automated• Efficient and Effective

Finance Culture• Forward looking• Appreciate value rather than cost• Encourage openness and sharing of best practice• Encourage partnering with the business

Finance Systems• Flexible• Use emerging technologies• Integrated across the business• Reflect user’s requirements• Embedded controls• Enabling rather than constraining

Finance Strategy• Aligned with business strategy• Linked to business objectives• Practical and measurable

Finance Structure• Split accountability and responsibility• Be integrated with the business• Include a central advisory team

QUESTIONS

How does change impact on: CPD? Syllabus? context in which we train -- practical

experience? length of training? entry requirements?