The release of the AICPA’s history of XBRL, The story of our new language, reminded me to lookup an article I wrote almost exactly 10 years ago in Business Finance magazine called XML Means Business, in which I confidently concluded:
All kinds of applications that finance managers now rely on will soon use XML to import and export data. Don’t panic if your current ERP system, financial report writer, workflow application or document-management system does not support XML; compatibility with this technology will be high on every vendor’s upgrade wish list when its product’s next major release is in development. But if you are buying a new system that imports or exports data and claims to be Web-enabled, see whether the product includes XML support. No XML, no comment.
Of course I was wrong. And I had hair then.
XML support did not become a key part of ERP and reporting systems. Nor did the XML-based report mining and the automated consolidation I discussed in my 1999 book Financial Analytics happen either. But XBRL has taken off and a lot of people in the XBRL world deserve a lot of credit for their participation in what Everett Rogers (way back in 1962) popularized as the ‘diffusion of innovation’, which he defined as - the process by which an innovation is communicated through certain channels over time among the members of a social system.
Long before Gladwell’s ‘tipping point’ and ‘mavens’ and Gartner’s technology adoption curve, Rogers defined rates of adoption and adopter categories. He also discussed what he called collective-innovation decisions and authority-innovation decisions. Classic examples of authority-innovation decisions are the various regulatory mandates around the world to file in XBRL.
So here’s my point (finally!)…
What XBRL needs now (ps. I believe Burt Bacharach rejected this as a lyric and XBRL was replaced with ‘the World’) is some collective-innovation decisions within organizations to fully leverage the potential of XBRL. To educate and encourage the development of internal XBRL champions who are not focused on ‘compliance’ filings but on improved control and communication of financial information within and between enterprise business units. Only by penetrating the corporate firewall can the XBRL community ensure that what is a genuine innovation within the social system of financial accounting and reporting will be fully diffused and able to realize its optimum potential.
Tags: innovation
