Maybe it is the ghastly weather in Glasgow that makes me cast my mind back to that lovely balmy evening in Matera that I mentioned in my Blog after the IFKAD 2010 conference. I had a conversation with Rob McLean of Matrix Links on what we described as “emergent reporting” and promised to elaborate on it. Well better late than never here it is.
Rob is a leading thinker on financial reporting and valuation of intangibles and we were considering how the use of Social Media (SM) could influence financial reporting as it has already affected Marketing and Communications. One of the most profound impacts of SM is how it changes the dynamic in communications. Traditionally Communications has been a case of establishing the message and then managing the channels that carry that consistent message to the eager and waiting public. The theory being that if you manage it enough and are consistent enough the message will eventually get home.
The rise of SM and its viral power and emergent nature means that it is simply not possible to manage it in the traditional way. It is by definition unmanageable. Communications are democratised to the extent that it has become essential for communicators to listen and then respond to the emerging view and in this way the exchange becomes a conversation and the dynamic of the relationship is completely changed. The benefit is that by listening to this complex environment previously invisible insight can be made visible, and in so doing it can open up new possibilities and opportunities that would otherwise have remained hidden.
How might this effect financial reporting? Well Rob and I considered and agreed that reporting is, in its current mode, a communications exercise. It has an agenda to present a particular view of the financial position of an organisation to a variety of stakeholder groups.
Now this leads to debate and varied interpretations. In some cases it has implications in markets, and brand value from a CSR perspective. Part of the challenge is that these different stakeholders have different needs and interests, and will be looking at different things in the figures. It is difficult to prepare a statement that will please all parties.
So, our idea was how about putting raw data out there and let the various parties derive their own reports. So the deal is, you can have the data as long as you provide us with the report back. We can then analyse your reports. The dynamic is entirely changed and as a result the organisation would gain deep insight into what each group was looking for by the way it used the raw data, and be able to respond directly to each groups concerns. This type of emergent reporting would be underpinned by social media tools and create a completely new reporting model.
I don’t expect it to happen in the short term, but it is, in my view, an interesting idea. And for those that say it will never happen, I say that I recall people saying how communications and marketing weren’t going to be changed by SM.