A chat with Xero's Faye Pang

Navigating change, data responsibility, building trust and rewiring Small Business across Canada.

Welcome to The Balance Sheet from The huuman layer - a monthly(ish) deep-dive into Small Business voices, opinion and futures!

If you run a Small Business in Canada, the chances are your books (and therefore your taxes - and possibly payroll) touch one of three ‘cloud platforms’ - Xero, Quickbooks or Wave. So it makes sense to think about how these platforms operate, and how they intend to support Small Business owners (like yourself) moving forward.

Today we’re sitting down for a deep (and pretty fascinating) conversation with Faye Pang, the leader of Xero Canada, to talk about the challenges of making change happen, data responsibility, building trust - and how technology can really rewire things for Small Business owners.

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Rob: Hi Faye, thanks for joining us at The Balance Sheet! 

Faye: Thanks so much for having me! It’s a pleasure to be here.

Rob: Faye - Xero, as an organization, has spoken before about how their journey in Canada has been made possible by early adopters and change advocates. What challenges has Canada, in particular, presented to Xero? And, on a personal level, what has that taught you about Small Business and the broader Small Business ecosystem in Canada? 

Faye: It’s important to recognize that Canadian accountants, bookkeepers and small businesses have been incredibly welcoming and supportive. We’re all on this exciting journey to make life better for small businesses through the use of cloud-based technology together. I’ve been fortunate to have travelled across the country to speak with so many partners and customers to hear the success stories of those who have adopted Xero, business apps from our ecosystem, and other technologies to elevate their businesses. What we know from research such as our One Step report is that small businesses want to evolve but it’s really about tackling where to begin since there are so many technology options out there. We see an opportunity to help them navigate the journey and make sense of it all.

Rob: It - to me, anyway - feels like we’re in the middle of a ‘big change’ or shift in terms of how small business uses technology. That we’re headed towards the back of the adoption curve now for cloud products and ‘business tools’ as a whole - and that the majority of businesses are now using, or relying on, some level of software in their day-to-day operations. Would you agree with that? What challenges remain?

Faye: We’re definitely seeing a groundswell happening in Canada when it comes to cloud adoption. Though things were already slowing heading in that direction, the pandemic certainly helped accelerate digital transformation. Suddenly, many folks had to work from home and had to change many entrenched processes. For Xero specifically, we were born in the cloud more than 16 years ago now, so it was just a matter of riding this wave of new adoption to educate Canadians about the value that cloud-based technology and our small business platform can provide. A huge part of our customer success strategy is education - helping customers get the most out of Xero and building their confidence with the platform. Our education and partner services teams target customers at personalised points in their journey, reaching out to them before they need to reach us.

Rob: I did want to talk a little more about change, specifically the problems associated with change - even if change is always somewhat inevitable. Any change is hard, and we know that, especially with technological change, people can get left behind, or feel left behind - are we now at risk of creating a two tier business community? Those who embrace technology and what it can offer - and those who resist - or fail to grasp it?

Faye: Change can be difficult and daunting for some, but it’s also exciting. We know that technology helps businesses tremendously, and we saw this during the pandemic where heavy users of technology had better sales and jobs outcomes than lower tech-users. We also know from our One Step report research that there are barriers to tech adoption, even behind the obvious cost element. Choice is hard when there are so many options and change can be hard if it feels like things are going okay right now with a basic spreadsheet. So we see Xero as having an important role by working with small businesses and their advisors to overcome these barriers and avoid the ‘two-tier’ world or digital divide that you talk about.

Rob: Given change is somewhat inevitable - who is responsible for helping to create a level playing field for small business given the rate of - and clear advantages of - technology adoption? Or is it really about individuals using this opportunity for change to form a competitive advantage?

Faye: I believe that the technology itself is what creates a true level playing field for small businesses, especially as it has become increasingly accessible in recent years. It’s accessibility that’s key though. So whether it is ensuring communities have access to high speed internet or open banking regulations to allow for a secure exchange of financial information, both the public and private sectors need to come together to ensure Canadian small businesses have access to what should be considered the basics. From there, technology really is the true level setter for small businesses.

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Rob: I wanted to touch a bit on trust. Trust is a major factor, of course, in technology adoption generally - trust in the products and services we use, that we invite into our businesses, that we become ever reliant on, that we pour time and effort into shaping - what from a technology industry point of view can really be done to improve that trust?

Faye: For me, trust is all about being transparent and authentic. Customers should know what technology is being used for and how it’s being used in an easy to understand way. It’s always fair and healthy to ask questions, so it’s up to technology companies to be able to answer those questions or have the information available. This is especially important for companies that use or hold personal data.

Rob: One of the biggest trust factors around technology is typically related to data and how it is handled - I guess this is partially touching on a broader discussion around privacy. It feels like we’re in an era of constant data breaches, data theft and data mis-use, which seems to always undermine trust in - maybe - what we used to see as infallible brands and mainstream institutions. How do you see this playing out of the coming years? Is there an end-game here?

Faye: I’m not an expert in this space by any means, so it’s hard for me to predict the future. What I do know though is that for as long as there has been technology and the internet, there have been people trying to use both with malicious intent. Security experts will continue to fix flaws or holes but new ones will be found, and so the cat and mouse game persists. What’s important is that people and businesses stay vigilant as hackers get sneakier with their attempts, and if it’s something you’re not comfortable with then use experts to help ensure you’re always up to date with the latest security measures and updates. If something feels questionable, then question it and double check.

Rob: Is the responsibility around data - which, I know, is a really broad topic - something which the technology industry needs to define and resolve on its own? Can it even be resolved on its own? Or is it about broader government involvement and ground-level education - or does the responsibility really sit ultimately with the individual?

Faye: Similar to accessibility, both the public and private sector play an important role here to ensure there is education on responsibility. But ultimately, it also comes back to being transparent, and if companies don’t openly speak about how they responsibly handle data then the market will speak with its wallet — especially in this age of radical transparency. At Xero, we are deeply aware of our responsibility to protect, manage and use our customers’ data in a responsible way. Xero’s responsible data use commitments aim to help our community understand the position Xero is taking on responsible data use. It’s essential for small business owners to understand the challenges and opportunities associated with managing and sharing data, so they can be in a position to benefit and use their data responsibly. Xero runs a Responsible Data Use Advisory Council, comprised of experts and thought leaders from across the globe, dedicated to educating and empowering small business owners on responsible data use.

Rob: I want to briefly talk again about Xero, and in particular about its mission to ‘rewire’ the world of small business. I feel we can all imagine something in the world of small business that would benefit from a ‘rewire’. What, in your view, does this ‘rewired’ future look like for everyday Small Business owners?

Faye: Imagine a world where small businesses owners don’t need to hold on to physical receipts or invoices. Where one digital platform — thanks to thousands of app integrations — can handle everything from physical sales and inventory management to cash flow projections, payroll and accounting, all while accessing real-time information and insights anywhere in the world. AI and machine learning help to automate thousands of tasks and make predictions. If that sounds familiar, that’s because, to be honest, we’re already getting a taste of what a rewired future could look like for small business owners, it’s really just a matter of educating them on the possibilities.

Rob: Speaking about the future; business ‘futures’ are an interesting space that we’re somewhat obsessed by at The Balance Sheet, and the majority of the possible ‘futures’ we look at seem to be inevitably based around technology - I’m interested though in your take on the human barriers that exist, the incumbent, institutional, industry-specific or cultural problems you’ve encountered or foresee that muddy - or may muddy - these ‘futures’. 

Faye: It really does come back to whether or not people are comfortable with change, as we discussed before. Time and time again, the biggest human barrier for adopting new technology is a psychological one with people being hesitant to change. This is something we also have found in our One Step research, that there are 12 different barriers for small business owners including: decision paralysis, avoiding decision regret, the hassle factor and more. But as humans, we’re constantly changing, and it’s important to push ourselves and try new things, which is why in this research we also provided tools that help small businesses and their advisors overcome these mindset barriers and start their technology journey. 

Rob: When we talk about ‘futures’ there’s usually a dual aspect to it - the initial early cultural shift followed by the mass adoption. But after that mass adoption there comes a larger cultural re-alignment when what was once a shiny seamless future becomes a messy human reality (the arc of social media is a good example of this). When we think about what happens after mass technological adoption in business - something I think we’re solidly in the midst of (e-commerce, payments, automations, machine learning, etc) - what messy human reality will we end up with? What will this larger business culture re-alignment be - and feel - like?

Faye: It’s important to remember that part of this is also because of the people and not just the applications you listed. When I think of how business is changing, it’s also because younger people who are more comfortable with technology are also entering the workplace. Gen Z finished university either just before or during the pandemic, quickly a lot of digital tools had to be adopted, and now they’re helping companies embrace these applications in the workplace. So part of this “messiness” will come down to the friction or tension between those who adopt these new technologies and those who are hesitant. We’ve seen this play out before with other innovation, whether that be the computer, email, the smartphone or collaboration software. Every decade we’ve seen drivers of change emerge and so we know that this will continue. There are always growing pains, but eventually an equilibrium of sorts prevails.

Rob: The other thing we try to focus on at The Balance Sheet is voices - how much of the future of small business and ownership comes down to hearing people's voices - and how can we go about amplifying them better. It feels like the existing business community is full of newer, more diverse voices now, especially post-pandemic - voices that aren’t typically part of the ‘established’ conversation. What’s your take on this?

Faye: I believe that more diverse voices is always a good thing, whether that’s within an industry, workplace, or elsewhere. The business community always benefits from having fresh ideas and new voices, instead of just amplifying an established few. I think of this sort of like what music streaming did for independent musicians. Previously, in order to get your music out there you had to go through record labels and radio stations. Now, thanks to the internet and streaming, anyone can make music and offer fresh ideas and then it’s up to the broader community to decide what is good or not. Similarly, platforms such as LinkedIn, blogs, podcasts, Discord, TikTok, meetups, and other places all allow for new voices to be heard, then it’s up for the larger business community to champion them and decide what should be amplified. It allows for healthier discussions or debates, plus it allows for more diverse perspectives to have a seat at the table and offer up new ideas we otherwise wouldn’t have.

Rob: We spoke the other week in The Balance Sheet about climate change, and how small business adopting things like sustainability as a core business strategy (rather than a brand strategy) is a good thing - but also about how there are so many unknowns and trust issues around existing ‘green solutions’, with growing evidence of green fraud and related human rights issues around carbon crediting. What are you seeing in the Small Business community that’s giving you hope around the approach to climate and climate strategy?

Faye: Like with many areas of business, the small business community is quickly embracing sustainability strategies and climate change is top of mind. If anything, they have been leading the way since they can be nimble and adapt easier than larger corporations. What gives me hope around the small business community’s approach to sustainability and climate change is how transparent these businesses often are about what they’re doing. Small businesses are at the heart of communities around the world, creating jobs and a sense of connection and community, and that means taking care of the climate for these communities as well. Purpose, such as helping stop climate change, is a small business’ secret weapon - it resonates with and inspires its customers. Now for Xero, building a fast-growing but sustainable business means consciously managing our environmental impact, helping to build thriving communities, and attracting and cultivating an engaged workforce. Our responsibility as a sustainable organisation spans across everything we do as a business, from our people to our customers, our investments and our products.

Rob: Lastly - seeing as we’re speaking about hope - we’re of course seeing very unique market conditions at the moment. Talk of recession, inflation, labor fluctuation, post-pandemic realignment - and the seemingly constant swing between good and bad news around the Canadian economy, which can often feel overwhelming for decision makers. What gives you hope that Small Business can navigate these challenges over the coming year?

Faye: It goes without saying that these past few years have been challenging for small businesses. But just when I thought I couldn’t be more impressed by the ability of Canadian small businesses to adapt with whatever was thrown at them, I kept seeing examples of resilience and adaptability. For many of them, this past holiday season was a critical period and their tenacity for finding ways to succeed during uncertainty was inspiring. I know that this year already has its share of uncertainty and questions, and that will likely continue. However, if the last few years have shown us anything, it’s that the Canadian small business economy is adaptable - the period of challenge ahead is another opportunity to demonstrate this agility. Those small businesses that continue to evolve their models and ways of working will be the ones that continue to thrive.

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