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Is Digital Financial Reporting About to Cross the Chasm?

Crossing the Chasm, the book by Geoffrey Moore, points out that there is a chasm between the early adopters and the early majority customers when dealing with disruptive innovations like XBRL-enabled structured or digital financial reporting.

One of the big challenges a new technology has relates to having a complete product solution that will serve the market appropriately.  There are different approaches to providing the essential functionality markets demand.

Strategies exist for crossing the chasm, for example here is a blog post by Product Strategy, What is the Chasm and How do I Cross It?, which outlines these essential strategies:

  1. Reduction in Scope (Niche Marketing) - focus resources on one target market and provide a complete solution to that niche.
  2. Quickly Capture the Lead Market Share - Be pragmatic, work with market leaders, choose technologies and approaches that will likely become industry standards. 
  3. Alliances - Don't necessarily build the entire solution yourself but rather partner with others and create alliances to bring a complete solution to the market.
  4. Marketing Support - Creating the appropriate marketing materials that will support moving the pragmatists/early majority customers forward.

Is digital financial reporting about to cross the chasm?  Perhaps it is, perhaps not.  The actions of the pragmatists, that early majority, will dictate whether digital financial reporting is or is not crossing the chasm.  But one thing is certain.  Digital financial reporting will never cross the chasm if the products provided by software vendors do not work or do not provide functionality demanded by the market.

The Digital Financial Reporting Manifesto summarizes my views of where digital financial reporting is going and important information related to building software for serving the potential market.

Software vendors don't get to define what a complete solution looks like.  The market defines that.  Miss the mark and your product offering will fall short.  A product offering that has missing pieces will not be useful to the market. If you don't understand these dynamics, go back and read Understanding the Law of Conservation of Complexity.

Digital financial reporting and a mandate to provide XBRL-based financial reports to a regulator like the SEC are not the same thing.  They are related.  But they are not the same.

Blind optimism will not cause digital financial reporting to cross the chasm.  Arrogant ignorance will not keep digital financial reporting from crossing the chasm.  Well-functioning software which provides the necessary and complete set of features will cause digital financial reporting to cross the chasm.  The Digital Financial Reporting Manifesto provides many, many clues as to what that software must be able to do.

Ultimately, digital financial reporting will cross the chasm.  That just makes sense.  The question is which software vendors benefit most as this disruptive change unfolds.

Posted on Sunday, November 29, 2015 at 07:55AM by Registered CommenterCharlie in | CommentsPost a Comment

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