CHALLENGE: Anders Heede recharges among the horses and cattle in his 22 hectares of hills and lakes, north of Silkeborg. With up to 180 annual travel days, tough competition from fast-growing IT companies and an imminent change of staff and organisation, he needs to appear refreshed in his new role as BDO International's Chief Operating Officer (COO).
Denmark’s new business star
Anders Heede is the new number two in the world's fifth largest international network of audit and accounting firms BDO. He faces tough competition from fast and skilled IT companies and must redesign the organisation.
Danish names do not often appear on the doors of the executive offices in large international companies. But this Wednesday there came a new one - Anders Heede formally became second in command of the world's fifth largest audit firm, BDO International with headquarters in Belgium.
Anders is from within the organisation and has taken the jump to the top from his first position as managing partner of the Danish firm in the years 2007-2011 and since then the position as Global CEO of Europe, Middle East and Africa (EMEA) region. His career path before then was by the consultancy firm which hatches many top executives, McKinsey - the consulting company with which BDO is now increasingly competing for talent and work.
There are big upheavals underway within the audit profession, according to Anders Heede - the first thing he states when JyllandsPosten meets him on the 3rd floor of BDO Denmark's home office in Aarhus. Here he sits with his back to a view that has also changed in the past few years: from a container port to exclusive housing in high-rise buildings behind one large glass and concrete building which belongs to the company Bestseller.
It is a small paradox that the neighbour on the other side of the road is the country's biggest clothing manufacturer. BDO's clients are especially small and medium-sized enterprises both on the Danish and international markets. The large corporate clients are often taken care of by the industry's ‘Big Four’ giants: Ernst & Young, Deloitte, PwC and KPMG - and it's hardly going to change, according to Anders Heede.
The major changes in the audit profession, which will affect everyday life for the 65,000 accountants and advisers of BDO are very much technology, and they are already happening according to the Danish leader. According to Bloomberg, few other highly paid jobs are equally exposed to automation as auditors, as it’s shown in recent research from Oxford University - a whole 94% of the auditor jobs can be automated.
The robots are already here
And no, it's not science fiction. BDO’s newly appointed Chief Operating Officer tells how BDO Switzerland has launched self-learning chatbots to answer questions in entrepreneurship. Entrepreneurs can ask about rules and regulations regarding accounting and also ask for advice about business operations. The answers are so accurate that, according to Anders Heede, they could have been given by individuals.
In Russia, BDO is working on the so-called blockchain technology, which will make accounts so transparent and hard to compromise that you do not need auditors to verify the numbers.
The same development is taking place in other advisory firms.
"Blockchain is really revolutionising our industry, as well as everyone who works with it. When it's up and running, you will not have the need to validate the figures. We will be advisers rather than auditors, as the technology will cause the audit process to run automatically. "
In the technological development lies the greatest management challenge for BDO’s new COO. Such a substantial IT-revolution brings companies with core competencies other than debit and credit into the market. For example, from Australia and New Zealand comes Xero, a software company that provides cloud-based financial management systems which according to the Danish top executive have a lot of momentum.
“At BDO, we have an established business - that is buildings, employees and established processes. These are optimised on the basis of an old way of doing things. Now we get some competitors starting from a greenfield and making online financial management systems, " - Xero is the most developed in this regard – “they do not have buildings and existing organisation, whereas I and the rest of the Global Management Team at BDO basically must protect what we have, especially our relationships with our clients. We must make that transformation so we can do what the new competitors are able to do," explains Anders Heede.
With these challenges, one understands why a top manager needs to retire to tranquil surroundings to recharge occasionally. Anders Heede does this by going to the 22-hectare country home that he and his wife own at Lemming, north of Silkeborg. Two rivers pass through the property, and there are three lakes and a lot of green hills. The Heede family, including his two sons, has lived here for the last 12 years.
"I am into horses. Earlier, I also rode, but now is mostly the financial support, while my wife runs the show at home." The eldest son is about to stop horseback riding, but the younger one is still riding, and the same goes to Anders Heede's wife.
The family has other animals than the six horses, which are trained in show-jumping and dressage. It amuses the chief operation officer to see how international business associates are often surprised when he shows pictures and tells that he also has nine cattle.
That's his way to unwind. He is relaxing when he walks around with the horses and cows and cleans up after them, fixes a fence or uses the chainsaw when a tree has fallen.
"It gives me a balance that I greatly appreciate. In my job, there are a lot of activities around me in many different destinations. Occasionally it is nice to pull the plug and be in some quiet, calm surroundings. It is something very different from being in Hong Kong or Shanghai, and it gives me a balance. "
He also grew up in the countryside, between Fredensborg and Humlebæk in North Zealand - amongst the greenhouses in Søholm to be precise.
As a young man in the late 1980s, he studied strategy and marketing. After his studies, he worked five years in McKinsey, after which he moved onto senior positions in first Ferrosan and then Tvilum, before he came to BDO as CEO of the Danish firm.
During his career he has worked with business development but he is not an auditor. Nevertheless, an inclination for numbers is not far away and he states that he has traveled a total of 1.5 million km in the last six years with 150-180 travel days per year.
35 times around the world
"That equals 35 times around the world. I'm surprised that this has not taken its toll. On the contrary, I have experienced a lot of exciting things across the globe that few others have seen. Sitting in a plane does not wear me out; it is no different from sitting in traffic in your daily commute.”
“Going forward we will become more advisers than auditors, as technology will automate the audit process.”
The trip to the airport was previously done in a Land Rover. However, his wife did not think that the car should collect dust on Anders Heede’s permanent parking space at Billund Airport, so she "confiscated it.”
"Land Rovers are good at pulling horse trailers, so I got her car. " Right now he is waiting for his new car, an Audi.
Back to Anders Heede's coming challenges with change management in a giant group, which is spread over 158 countries.
When the task of validating accounting figures becomes superfluous, does the world still need auditors? With about 9 out of 10 audit jobs being automated, the 65,000 employees worldwide in BDO risk becoming just 6,500.
"If you ask me what this means, if there will be fewer employees at BDO, I'm actually not sure about that. But I think it will be very different with a myriad of new business opportunities “.
Is an increase in employees not a daring projection when you seem to be hit hard by technological developments? How should employees create value to finance their own cost as well as generate a profit for the employer?
"With analytics. Sorry again for that English expression, " Anders Heede apologises for the third time in less than an hour. He is excused. Many of his working days are spent either around the world or in the headquarters in Brussels. Then you understand why English words are entering the conversation now and then.
“It is a huge opportunity for our industry at this time to learn and decide how to work with and utilise the exponentially rising data volumes. There are systems and advisory opportunities in helping clients in making better decisions and help them to reach new conclusions within their business. "
Besides advisory, the employees must deal more with data analysis. With this, he does not necessarily mean the current staff as some will not have the capabilities for this journey of a more analytical and advisory role at the expense of audit technique.
Auditing – a zero error culture
"It is still a zero-error culture in the audit industry. Regarding advisory, however, it becomes harder to say what is right or wrong. It is the difference between the left and right brain, which can be difficult to play together. The more tasks get digitised and automated, the more we need to use the right side of our brain. Our employees must be able to look at the numbers and interpret the possibilities in the numbers with the client. There is much that must change. Some can change, and others cannot."
This makes him conclude that 80 percent of his efforts as COO is going to be dealing with people and organisation changes, while only 20% is going to be dealing with the technological developments.
"In the digital transformation, it is not the digital part that is tricky. Those who win are those who can manage the organisational part and get the right people in at the right time and get the whole equation to work. This is a people business - sorry for the English again – and it's not about becoming an IT business in order to win. "
What is it that has placed you so central in the changes at BDO?
“In addition to having a reasonably good understanding of technology and know where the development is, one of the most important aspects here is timing. When will we go from here and which of the new technologies should we not go into? The other is change management: to get people to embrace opportunities and realise that they must change and be ready to move forward. And to get the right talents in because we need new people for the new business areas.”
Anders Heede considers his managerial skill to be suitable in leading highly skilled and educated leaders. He discovered these skills for the first time when he worked for Rockwool in Toronto. He was challenged with limited resources for a large commercial and technical task but was able to get production people, developers and external partner to work well together and create a commercial success.
20 years later, this external partner remains a personal friend of his.