I can’t claim to be a martial arts buff, but I’ve always been fascinated by Aikido, with its emphasis on "harmonizing with your opponent to bring peaceful resolutions to situations involving conflict"* And like Aikido I like to get the most done with minimal effort. Seems to me if you must develop a system to protect yourself against physical threats, that’s the way to go.
Don’t choose wrong-footedness when it comes to ASC 606
Aikido makes me think how companies have been wrong-footed when they throw themselves severely to the defensive side against ASC 606. The new FASB standard is nothing less than a revolution in accounting for revenue recognition, and it presents significant risks for many. In fact, it’s been widely described as the biggest compliance challenge to hit businesses since Sarbanes-Oxley (SOX), with deep implications for changing processes as varied as financial planning, tax, and even executive compensation.
What’s more, any change in the revenue recognition rules as big as this is bound to raise the specter of financial reporting errors—rev rec is one of the accounting standards most frequently cited as a cause of restatements.**
Brute force and lots of money may not be the way to go
Companies’ responses so far have been a distinctly un-Aikido-esque (word?) exercise in defensiveness and sheer brute force. Reminiscent of SOX, the approach has been to throw money, time and bodies at ASC 606 to meet the immediate compliance needs, without much thought, if any, on how to develop a sustainable compliance and/or rev rec process. Or how to capture any upside from it—like, let’s say, having better insights into customers and therefore a potential new source of revenue.
There’s an Aikido-esque alternative
There is a whole new approach, one that can be taken without a rev rec team intervening or entering one piece of data. I’ll be talking about it in a 30-minute informational webinar on November 16 at 11am PST: The ASC 606 Clock Is Ticking: Brute Force Isn’t Your Only Option. We also have an offer for a FREE 1-hour assessment that we’ll tailor to your rev rec team, using 50 contracts of your choice. And you’ll get to keep the analysis.
Aikido is a good reminder that to counter threats in a potentially difficult situation, you don’t have to resort to defensiveness or brute force. Instead, you can be smart, strategic and ultimately, more agile.
*in the words of the Aikido Association of America
** See for example this Wall Street Journal article: Revenue recognition leading cause of restatements