Machiavelli on Creating New Systems
Saturday, January 24, 2015 at 05:29PM
Charlie in General Information

This is what Niccolo Machiavelli said about creating new systems back in the 1500's.  Just as applicable today:

It must be remembered that there is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than a new system. For the initiator has the enmity of all who would profit by the preservation of the old institution and merely lukewarm defenders in those who gain by the new ones.

Niccolo Machiavelli

 Another version of the same quote:

It must be considered that there is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things.  For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order, this lukewarmness arising partly from fear of their adversaries, who have the laws in their favour; and partly from the incredulity of mankind, who do not truly believe in anything new until they have had the actual experience of it.

Niccola Machiavelli

A new order of things for financial reporting has been arising.  The pieces are slowly falling into place.  The ability to structure information using the XBRL format is only one piece of the puzzle.  Here are other pieces as I see it:

More and more machine-readable business rules are becoming available.  For example, the Financial Report Ontology is a working prototype of some of those rules.  For example, the machine-readable information about financial statement disclosures (and human-readable) summarizes many common sense, logical, mathematical, and other obvious business rules.

To the extent that financial information is consistent with business rules, that financial information will be reusable by automated machine-based processes of all sorts.  Information which is not consistent with established business rules indicates inconsistencies within the system.

In a distributed system such as financial reporting where you have thousands and perhaps millions of financial reports being created by millions of reporting entities taking the time to create formal, standard, well-thought-out business rules to control the system is essential to making the system work correctly.

None of this happens by accident.  It takes intension, conscious effort, discipline, rigor, skillful execution, and persistence.  The result does not need to be complex, the system can be sophisticated and also simple and elegant.

Article originally appeared on XBRL-based structured digital financial reporting (http://xbrl.squarespace.com/).
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