Sig Rinde is one of the smartest, charming people I know. He’s developing Thingamy a business modeling toolkit. Long term readers may remember the 34-Minute Time and Expense application. It was the third most popular read during 2006 and despite being a year plus old, still gets a fair sprinkling of hits. Thingamy is a great start if you’re thinking about remodeling your business. Sig graciously agreed to crank out a piece for this site and he came up with Abolish Accounting. What a great tagline!
“Accounting is supposed to be the “glass cockpit” of business.
Oops, nope, it tries but is not. It should be, but it cannot.
The throttle and pedals and flaps and engines and gauges in the plane are all aspects of the same issue so they work seamlessly together. Without instant engine response and gauge feedback when throttling I
would stall and crash.
In business those are separate – throttle (orders), engine (work) and gauge (accounting) – comes in different packages. We’re saved from crashing by inertia, but we’re not saved from inefficiency.
In the aircraft a gauge is linked to one engine, no doubt, no reconciliation. In business you have masses of reports and documents that represents one single object – order sheet, invoice, shipping papers, production reports, sales reports, support reports – no end to error sources and checks, balances and reconciliation are required.
In the aircraft you’re allowed to add any kind of sensor to any part to give you any type of measure. In business the sensors are pre-set and regulated, they’re called accounts. That freezes any development of the measurement methods. Actually it froze it ages ago.
Two steps backward please, rethink and start over again:
- Order, action and feedback must be one. One single system,
- The real world object is the thing of interest, represent that with one single data-object that captures all that happens to it.
- Keep all data in raw form and add logic when needed.
- No more pre-set accounts, abolish accounting (required GAAP reports can be produced out of sight deep down in the basement for the government accounting trolls) and develop Your Own Measurement Methods.
Here’s a suggestion:
Imagine that a widget procured by your firm is represented by a widget-data-object and that the widget-data-object is punted from a procurer to supplier to the shipper to the chap on the dock. The widget-data-object presenting work orders and input fields in each step – “Hi, I’m your blue widget with serial number 2346 just arrived from supplier X, please move me to the warehouse. When you’re done with it please note here where you put me and hit “completed”.” The widget-data-object not only supplies the work order and information needed, but also captures what happens to the real widget in real time.
The system would know at all times where the widget is, who owns it at any time, it’s value, colour and serial number. Slap on a “report template” that sucks out the data and applies some rules to them and
you have the gauges in the plane cockpit. No more reporting errors, no more reconciliation, any kind of report you can imagine today or tomorrow. Real time flying with your own dynamic “business glasscockpit”.
Then perhaps accounting could evolve from it’s ledger past and start to represent reality as it is, or how you see it. At least the “department of input & reconciliation” would be redundant.”
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