Following Prof. Bernd Okun’s thesis in his remarkable book “Leadership 2.0″—that decision-making time and complexity develop inversely—one inevitably encounters a contradiction within one’s own financial accounting. Today’s Corporate World 2.0 is characterized by increasingly shorter decision-making periods. Concurrently, complexity rises disproportionately. While financial accounting cannot inherently control the resulting risks for decision-makers, it can mitigate them. In the worst case, however, financial accounting can effortlessly complicate and exacerbate the situation.
What exactly is meant? An increasing deluge of documents, complex business transactions requiring entry, incomplete documentation for these transactions – the list of daily challenges for financial accounting is extensive. And how does it address these issues? Typically, with new forms, booking regulations, and attempts to force new circumstances into familiar frameworks. In short, companies are navigating the new world with traditional methods, thereby effectively hindering themselves! The consequences are far-reaching for corporate management, particularly for planning and control processes. The chapter on annual planning alone suffices to illustrate this impediment. The same planning tools are consistently used, sometimes merely Excel-based. Months-long creation periods are allocated, often extended further with increasing complexity, precisely because World 2.0 can no longer be adequately represented by numbers.
A solution can only be provided by a financial accounting or general accounting system that inherently renews and adapts itself; unfortunately, this is rarely seen in existing organizations.
What has been your experience? We look forward to your comments!
Image source: Fotolia.com, Photographer: ehrenberg-bilder
