When you put the words audit and society together in one sentence you can easily go over the same old ground of the so-called ‘expectation gap’. To bring a fresh and challenging perspective to our debate, we invited Matthew Taylor, the chief executive of the Royal Society of the Arts and former chief advisor on political strategy to the prime minister, to our Second Assembly.
A charismatic speaker and thought leader, Matthew offered an inspiring view on the role of the audit profession in rebuilding public trust in institutions. He started his talk with a reflection on the progress of our society in areas like respect for each other and respect for people different from us. “We should remind ourselves in these gloomy times how much we have achieved in our society to become more humane, more fulfilled, and more progressive.”
The problem that Matthew Taylor sees is that there is a gap between our aspirations for the type of society we want and the society we actually live in. In many countries (Britain in particular), we don’t have a major disagreement and we know what we want. The problem is that we are “not on track” to create the society we want.
We have this social aspiration gap – this is the gap that we have between the society we want to create and the society we have. We say that we want to live in a society that is fairer, but we don’t create opportunities for society to be fairer. We want to live in more sustainable and environmentally friendly ways but we don’t do that. We want to live in stronger communities but many of us don’t do much about it.
Matthew pointed out the need for leaders who can confront us with the existence of that gap and engage us in conversations that help align our behaviours with what we want. But at the very time when we need that transformational leadership, we don’t trust leaders and don’t trust institutions. Some of the reasons he discussed are that institutions have stopped delivering and that people have become more educated and so understand how hierarchies and bureaucracies work. “Today we need people who are creative and innovative and these large sprawling organisations do not provide such cultures.” Even technology, which used to favour hierarchical power because only big organisations could afford computers, has come to be used in exactly the opposite way.
What you auditors do is make institutions function.
This is our opportunity to reconstitute institutions. In the current vacuum of public trust, people will seek new leadership and if we don’t step up, they will find it in the charismatic populist leadership of the past. It is our role and responsibility to repurpose the audit profession in the public interest and Matthew Taylor offered three imperatives for the new institutions of the 21st century.
The first thing institutions need is to learn to operate as if “we are making decisions in a glass box”. We need to get out of the mindset that we can continue making decisions which people would have disapproved of had they known of their content.
Secondly, institutions have to have account for their social purpose. Regardless of whether you are a political party, business organisation or profession – you can no longer be successful only within your own group. If you’re driven only by shareholder value, you miss the essential thing you can do. “All businesses make profits so that they can do better things with their money. If you simply maximise your profits, you miss the point.” Therefore, institutions have to attend to the higher social purpose and the responsibilities that they have.
The third point that Matthew made was about collaboration – the most overused and under applied concept. He asked: “would you rather be first in a slow race or third in a fast race?” We have to believe that while competition is powerful and vital, we have to stop believing that we can keep above the water because we’re slightly better in a poorly performing sector. “This is the wrong mentality to have. The right mentality is to promote innovation in a great sector. Why is Apple so great? Because it operates in a sector that is constantly improving. It just has to be better and better in a sector that gets better and better.”
I particularly agree with Matthew on how vital it is to understand that if one of the big audit firms is very innovative, all of the others in the profession will be. But we have to believe in innovation: “…it will keep you on your toes, you will have to work hard, but there is no alternative to that.”
Matthew Taylor’s key message resonated with us and our intent for the Second AuditFutures Assembly. If we are to solve the problems that we have to solve, if we are to continue progressing as a society, one of the things we have to do is to restore the public trust in institutions.