Accounting is the language of business. As a CPA, one of my skills is the ability to read and interpret financial statements. While most people look at just a couple numbers, to a trained expert, the financial statements are like topographical maps telling a complex and multidimensional story.
While thumbing through The Fifth Discipline Fieldbook, I came across the following:
"Accountants are the architects of an organization’s nervous systems. They design the way the organization will sense what is going on inside and outside itself. They create a context that determines the relevant questions to ask. They search for ground where the organization can position itself for maximum strength and flexibility."
I love this paragraph. Our firm designs and installs a significant number of accounting systems and this really captures the essence of my work: The architecture of a firm’s nervous system.
The accounting system design will differ depending upon the values and goals of the system. A triple-bottom-line mentality requires different reporting systems to capture and respond to the data and feedback.
An accounting system provides feedback to the organization and as they say, what we measure matters. The current financial reporting framework reflects what matters to investors without saying much if anything to employees, customers, the community and other potential stakeholders.
What if we redesigned the central nervous system to provide feedback on sustainability? How would that influence behavior?
As you may recall from my earlier blog posts about system thinking, the key leverage points in any system are:
- Change the dominant mind-set out of which the current system arose
- Rearrange the parts of the system
- Alter the goals of the system
- Restructure the rules of engagement of the system
- Shift the flows of information and communication of the system
- Correct the feedback loops of the system
- Adjust the parameters of the system
What story is your accounting system telling? How would your company be different with a Triple-Bottom Line monitoring system?