Why the rules for corporate reporting should change in an era of abundance

10468391893?profile=originalWe are so used to the current conventions of accounting and corporate reporting that we never think to question them. But if you think about it, these conventions are based on the “I win, you lose” thinking of the industrial era. This is because that era (and all those that preceded it) were dominated by tangible assets which are subject to the laws of scarcity—that is, tangibles are finite assets, if I sell you something I have less to sell. It’s a zero-sum game.

Today’s economy is dominated by intangible assets which are not subject to the laws of scarcity. If I sell you a product/service dominated by intangibles, the value of my intangibles doesn’t go down. Rather my intangibles probably increase because I’ll learn from your use and be able to improve my knowledge.

What does this have to do with reporting? Well, in an era of scarcity, I’m motivated to maximize profit for each thing I sell. Showing you how much I’m making off you doesn’t help me maximize. So I probably am not going to share details with you. If I take public investors, I will have to report my financials but I’ll do it in a way that summarizes the overall profits/losses.

In an era of abundance, I still want to make a profit. But the way I do it is by creating value for my customers and stakeholders. The focus is on them. In this case, showing how I am doing (that is, how well I create value for my stakeholders) contributes to your confidence in me. It leads to more sales (and, if you're doing it right, more profits). But it's about you. So I want to share details with you. To help you see my strengths. To help both of us see my weaknesses (and understand the path to fixing them). It’s no longer about how I’m benefiting but, rather, how we mutually benefit from our relationship.

So bottom line, who should have access to your ICounting information? Everyone that you do business with. All your stakeholders. Customers. Users. Partners. Employees. Communities. And, yes, Financial partners.

Learn how to build and implement ICounting in your or your clients’ organizations through our ICountant Training Program.

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