Transparency over control

January 27, 2015

Read time 1 min

Imagine doing accounting before computers. There’s still plenty to digitalize, but before computers it was ridiculously slow and tedious. Companies basically knew their balance once a year after inventory. It just wasn’t possible to get the numbers more often.

As a result, the feedback loop was very slow. If someone was able to do something financially stupid in a big company, you might only learn about it a year afterwards. Fixing mistakes was very expensive. This is why preventing such incidents with policies and rules was important.

transparency

The world has changed with computers. Nowadays even big companies understand their financial situation at least quarterly, most often monthly. A constraint has been removed. Yet most companies have not updated their rules and policies to match.

It is now possible to replace the controls with transparency. Transparency creates a self-regulating system that, as a side-effect, induces responsibility and trust in people.

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