Vikram regularly comments on issues driving disruption in the global business environment and advises boards and C-suites on how to navigate today’s overwhelming uncertainties. He helps his clients analyze the business impact of global trends, with an emphasis on economic, political, and social risks that might generate instability or opportunity.
Vikram has written for a number of publications and has authored two books, Boombustology and Think for Yourself. He’s a lecturer at Harvard University and was recognized by Worth magazine as one of the 100 Most Powerful People in Global Finance.
Strategic Finance: With constant technological developments changing the way accountants do business, how should accounting and finance professionals and the companies they work for move forward?
Vikram Mansharamani: Technology is moving forward rapidly and, for better or worse, is replacing many of the tasks that have historically been done by humans. Accounting isn’t immune to this trend, yet the dynamic also creates substantial opportunities for those who acknowledge the pressures facing the industry. Technology allows us to do more with less, and, in the domain of accounting, this might mean that basic tasks can be automated and humans are increasingly focused on unique situations and relationship management. Historical capabilities, like depth of knowledge, may matter less than breadth of experience and perspective. Perhaps it’s time for the accounting profession to zoom out a bit and pay attention to other factors that are affecting clients. Might empathy and the ability to connect with clients matter more than knowledge of specific accounting rules? Rethinking the function of an accountant in a technology-enabled world may generate big opportunities.
SF: What trends from today do you see having a lasting impact over the next 5, 10, and 20 years?
VM: Perhaps the biggest trends to pay attention to over the next decade or so are technological innovations and demographic dynamics. Technology continues to invade a broader section of the economy and political sphere. This will continue, and I’m specifically paying attention to what’s happening in both biotechnology and financial technology, two areas that technology can disrupt in substantial ways. The other trend that’s worth monitoring is the demographic one. The world’s largest economies are all aging. Historically, aging populations spend less as retired individuals move to fixed incomes. This implies less demand. When you combine these two megatrends, we get an outlook that differs quite substantially from the one many of us are feeling here in early 2022. Rather than inflation, the long-term pressures emerging from technology (more supply) and demographics (less demand) point to a world of falling prices.
SF: With the risks to the global economy continuing to exist as a result of the ongoing pandemic, what do you see as the best- and worst-case scenarios for when COVID-19 is behind us?
VM: I’m not a medical professional and don’t have a good understanding of the path of how pandemics might unfold. With that said, I think the world is learning to adapt to our new reality, and the adjustment will produce a new reality, regardless of how the pandemic unfolds. While we’d like to hope it will pass and we’ll return to our pre-pandemic ways, that seems extraordinarily unlikely. Our tolerance for rush-hour traffic has fallen. Our willingness to fly around the country for 90-minute meetings is gone. And our need to visit stores to purchase goods has disappeared. While the global supply chains have struggled to keep up with the shifting demand patterns, they will definitely adjust.
SF: Outside of the pandemic, what are the biggest disruptors to global business right now?
VM: Two potential disruptors to global business that I think are worth watching right now are inflation and inequality. Even though I think the long-term dynamics of technology and demographics point to falling prices, the short-term imbalances of demand and supply in labor markets and supply chain infrastructure are producing noticeable inflation. And we’ve seen (at least at the beginning of 2022) that producer prices are rising more quickly than consumer prices, meaning that corporate margins are likely to fall. Since inflation disproportionately impacts those with less income, it also increases inequality. Inequality may be the Achilles’ heel of capitalism as it leads to more redistribution pressure on policy makers, and that in turn can lead to dynamics that tend toward socialism. Recent wage data, however, provides a glimpse of optimism as wage growth among the lowest paid has been rising rapidly, and, if these trends continue, I suspect the pressure to politically address inequality will dissipate.