• Home
  • About
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

Graham Liddell: Could you miss the IT revolution?

0
  • by Graham Liddell
  • in Blogs · Graham Liddell · Resources · Technical
  • — 6 Feb, 2018

Photo (cropped): geralt/Pixabay, CC0

Technology is going through a revolution. Will local government embrace the change or, like scientist Joseph Priestly, cling on to the old ways even when it is obvious they have become irrelevant.

Joseph Priestley (1733 to 1804) was one of Britain’s greatest ever chemists. He showed that air was a mixture of different substances, discovered a range of important chemical compounds and even developed the process for carbonating water used by Johann Schweppe. But he is mainly remembered for the one thing he got spectacularly wrong: his support for the ill-fated phlogiston theory.

The theory sought to explain why and how things burned and was widely accepted well into the second half of the 18th century. But, then Antoine Lavoisier developed the rival oxygen theory which subsequently proved to be the foundation of modern chemistry.*

The surprise isn’t that Priestley was a phlogistonist. Rather it is that he wouldn’t ditch phlogiston, even when confronted with overwhelming evidence that the theory just didn’t hold together. Phlogistonists, can I think, teach us something important about local government finance.

Revolutions

Thomas Kuhn in The Structure of Scientific Revolutions concluded that scientific progress is neither as linear nor as rational as we would like to believe. He identified periods of ‘normal science’ but also periods of revolutionary change when an existing paradigm is challenged by newer ways of thinking. A key feature of these revolutions is that many scientists hang on to old ways of thinking and refuse to move on.

Established and respected businesses have been caught napping by digital disrupters that have turned their business models upside down. Take the digital case study of your choice (Uber, driverless cars, the music industry, Amazon) and a pattern emerges that is eerily similar to that proposed by Thomas Kuhn for scientific revolutions:

Beliefs

So, what does this have to do with our role as finance leaders in local government? In short, everything.

Over the next ten years, technology will drive changes in the way financial services are provided that will far exceed anything we have seen to date. And if some of the great minds in scientific history and some pretty impressive businesses managed to totally miss the point during periods of great upheaval, perhaps we might too.

Furthermore, it strikes me that whilst we need to establish strategies and processes for digital transformation, none of this will deliver results unless we are able to change attitudes and beliefs about the way we need to work.

And on the basis that we need to start challenging our own thinking before we start to influence others, here are three questions to get you thinking.

Q1. What is your attitude to driverless cars?

A. It’s not going to happen anytime soon. People like driving and being in control. There are too many practical issues in the way. How will the issue of insurance be resolved? Will it be OK to have a drink when getting into driverless car? What happens when a human needs to take over? How can a computer make a choice between bad choices, such as crashing into a cyclist or a pedestrian?

B. It’s going to come sooner or later but (because of the practical issues) will take time and be mainly for the rich.

C. Bring it on. This will be a transportation revolution that will liberate both the old and the young. There will be no need to own your own vehicle and calling for a driverless car will be easy, cheap and reliable. Local government needs to start thinking about our response. We’ll need to make sure our infrastructure (road markings and drop off points?) are up to scratch. We’ll also need to think about what do with all those town centre car parks.

Q2. You’ve read that 95% of jobs carried out by accountants and auditors are likely to disappear. Which of these most closely matches your thinking?

A. All computers do is generate more and more complex information. Services managers will always need accountants to interpret financial information, keep them in line and dig them out of holes they create for themselves.

B. As we automate processes, we can streamline the back office and secure efficiencies, but a computer is not going to replace an experienced accountant with a respected qualification.

C. We need to seize this agenda. Compliance and audit checks will be carried out more accurately and more quickly by robots that will learn to identify patterns of unusual activity. Financial analysis and interpretation will be provided by artificial intelligence. We have to start thinking now about the people and skills we need for the future. In the short term we will business analysts and data scientists to help us automate and learn how to extract and manipulate data. In the longer-term our role will be about relationships and financial counselling.

Q3. Month 8 budget returns are showing an unexpected £10m overspend. At the same time an audit report tells you that 70% of budget holders don’t bother to access the budget monitoring system or update their monthly budget returns in the first six months of the year. What is your reaction?

A. Hit the roof. Services need to take more responsibility. They signed up to their budgets.

B. Deliver some training and then run monthly reports that identify budget holders who still don’t access the budget monitoring system. And then hit the roof.

C. Make the budget monitoring system focused on the needs of the customer.

Conclusions

Did you answer mainly A, B or C? You will have your own views on what this says about your attitude to the digital revolution, but for the sake of completeness here is my (very unscientific) evaluation.

Mainly As: you are the digital equivalent of a late 18th century phlogistonist. Early retirement?

Mainly Bs: you can see glimpses of what is coming, but you are still hanging on to the familiar. It’s time to expand your thinking.

Mainly Cs: you can see the possibilities that the future holds, but you can’t do it on your own. How are you going to bring others along with you?

Graham Liddell is Head of Finance (Technology and Process Improvement) for the Orbis Partnership.

Get the Room151 Newsletter

 

* The phlogiston theory was based on the very reasonable assumption that substances burned because they contained something that enabled them to burn. This was called phlogiston (from the Greek, ‘burned’). Fire was created by phlogiston leaving the substance.
The theory provided a practical framework for some important advances in 17th and 18th century chemistry. However, it ran into serious trouble when the French chemist,  Antoine Lavoisier, began weighing substances before and after combustion. He confirmed that many substances (such as wood) lost weight on burning. This was consistent with the theory that phlogiston had been absorbed into the air leaving behind a residue.
However, he also found that some substances (such as metals) some gained, rather than lost, weight. Lavoisier correctly concluded that this directly contradicted the phlogiston theory and that the weight gain was because something (oxygen) was being added to the burnt substance (eg to produce a metal oxide).
The phlogisonists couldn’t accept such a radical change and found all sorts of explanations for this anomaly, including the bizarre suggestion that in some circumstances phlogiston had negative weight.

Share

You may also like...

  • Interest rates to rise in the U.S.? Interest rates to rise in the U.S.? 23 Jan, 2012
  • Property sharing delivering big savings, says LGA report Property sharing delivering big savings, says LGA report 30 Apr, 2014
  • Richard Harbord: Business rates reform still addressing many unanswered questions Richard Harbord: Business rates reform still addressing many unanswered questions 2 Aug, 2016
  • The Ice Age in bond yields doesn’t have to mean frozen returns 23 Nov, 2020

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 18 hours ago

    Going beyond the standard metrics for climate change: Sponsored article: With climate change an investment imperative and an imminent reporting requirement, Ritesh Bamania argues UK pension schemes should look beyond today’s standard metrics. With… dlvr.it/RtnpLS pic.twitter.com/6ABaFHyS9I

    Room151 2 days ago

    LGPS webinar: Governance the key to TCFD implementation: LGPS funds have been warned that governance is it at the here of Whitehall plans to impose a new climate reporting regime on pension funds. In January the Department for[...] dlvr.it/RtjwNq pic.twitter.com/YMiMdmRyzU

    Room151 2 days ago

    LGPS webinar: Central bank management of bond purchasing could affect all asset classes: When the government debt caused by the pandemic is eventually tackled there may be a huge impact on assets of all classes, according to a leading investment expert… dlvr.it/RtjwJx pic.twitter.com/7v8K5vMYHo

    Room151 2 days ago

    #LGPS readers...what to do about #bonds? room151.co.uk/blogs/lgps-web… @BrunelPP 's new CIO, David Vickers tackles a problematic area #centralbanks #assetallocation #fixedincome pic.twitter.com/yUJr0azbKv

    Room151 2 days ago

    LGPS Challenges: Balancing Realpolitik and responsible investment: Elizabeth M. Carey warns of the perils of an ESG echo chamber as countries outside the West continue to invest in fossil fuels. Anyone working with the LGPS probably feels[...] dlvr.it/RtjMpq pic.twitter.com/MykIYxuYri

    Room151 6 days ago

    How can local government ‘build back better’?: Beverley Gower-Jones looks at the options for driving small business entrepreneurship in clean technologies. Innovation is essential for local authorities to save money and reduce emissions, it is the… dlvr.it/RtT3nS pic.twitter.com/bSMB6OG70t

    Room151 6 days ago

    Helen Randall: Spelthorne report places spotlight on ‘controls’: Fresh criticism of Spelthorne Council raises the question of what “good” controls look like when negotiating a property deal. Spelthorne Council’s continuing debacle over property… dlvr.it/RtSPhy pic.twitter.com/9uCOJgBcH6

    Room151 6 days ago

    Step-out strategies: Hitting the sweet spot between liquidity and ultra-short duration: Sponsored article: Jemma Clee describes how an ultra-short duration strategy can help local authorities enhance returns. Despite the expectation of a low, and… dlvr.it/RtSPZb pic.twitter.com/pdXPpv5lcN

    Room151 7 days ago

    What role will climate change have on the pricing of government bonds?: Sponsored article: Kerry Duffain finds that “vulnerability and resilience to climate change” have a significant impact on the cost of government borrowing. Ardea Investment… dlvr.it/RtNKv7 pic.twitter.com/wDjT31x4Yt

    Room151 1 week ago

    ESGenius: Slashing emissions will fuel green growth for decades: Sponsored article: Velislava Dimitrova argues that a big enough investment could mean transition to a low, or no, carbon economy can become a reality. The world needs to slash carbon[...] dlvr.it/RtKZJp pic.twitter.com/cd8S3ijERl

    Room151 1 week ago

    Prudential code: “Not perfect, but its heart is in the right place”: The new Prudential Code offers revised rules for borrowing. Nikki Bishop is sceptical it will work while Gary Fielding offers his support. Nikki Bishop I have been asked to give[...] dlvr.it/RtKZFh pic.twitter.com/OriN28lXcb

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story Northants first to reach tipping point as council issues section 114 notice
  • Next story Agent151: Northamptonshire’s section 114 – the Ghost of Christmas Past

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.