Financial Communication
How long has it been that we can’t use the rule of 72? Yet we still hold out for the day when we can use that metric again. The truth of the matter is that our markets won’t stabilize into the same pattern again and we will never be able to use that rule. All the metrics we have created to control and compartmentalize our world are quickly becoming defunct without valid replacement. They are becoming extinct and we are behind in our replacement of them hurdling toward crisis. What is really going on is that no one is willing to admit is that we are not embracing the change we see in our economy.
We, as habit-forming beings, prefer to build on our previous knowledge rather than start anew. When we are looking and assessing analyzing our companies (for investment purposes or to assess financial health of the company we’re working with) we are using old technology – we are using structural thinking, we are using analytics that are no longer describing the same picture. Yet we as humans, even though we know this intuitively, we still do the same thing over and over again. We would rather excel at doing something we know than suck (a technical word) at doing something new. This is very apparent any time even a small transformation (either personal or organizational) needs to take place.
Financial metrics are very interesting. I understand not every one holds a fascination for numbers so I’ll break it down how I see it. Financial metrics or information is really a language in itself like the language English we speak to each other. Financial metrics are used by individuals outside an organization to assess what has taken place inside the organization during predermined periods of time. If you understand how to read the financial information it provides you with a picture (not a complete picture) of what has taken place during the year or period. This is past information or old information that in our habit to date we look at and predict the future. Thing is, the present is a better prediction of the future than the past. However we have no way of measuring the present – or do we?
Let’s look at a skill we all seem to take fore granted: Communication. If I were to only communicate to you using my words I would sound much like a computer. There would be no tone fluctuations, you wouldn’t see my hand gestures, or know if I were joking or arguing with you. This is what the communication is like using the current financial metrics. It only gives part of the picture. If we listen to the communication of the corporations we can get a better picture to figure out the future possibilities with respect to financial metrics.
Being a financial auditor for many years has taught me well about listening to a company and integrating the information. When I walk into a company I listen to everything it has to tell me. What are the people saying and who are they talking to? Are they tired, stressed, over worked, bored, etc. All these things will signal you what is the present situation in the organization and helps predict the future of the organization and can be seen as soon as walk into the organization.
For example, I walked into a company to just in time to hear one of it’s sales people say it could get a customer their merchandise 5 days after the order was placed. I already knew the company was a manufacturing company and could not produce the order within the 5-day window. This told me there was little communication between the production and sales department, which is a sign of poor leadership within the entire company. Right away I wondered how cash-strapped the company was due to leadership disorganization.
The first thing we learn in life is how to communicate. How to speak a base language and that forms our method of being able to interact with the world. With further growth and development we learn different dialects based on our experiences and the backgrounds we are exposed to. We all may be speaking the same language but we all speak different dialects of that language. In school we learn how to read and write but not to bridge the gaps between all our different dialects.
If we make the effort and become proficient in understanding the communication of human beings we can use this as a method of accurately measuring our organization’s present giving us a more complete picture of the future. We will be using dynamic measurements to measure dynamic forces.
Tracy Slotin
CEO and Grand Sandmaster
The Executive Sandbox® Change Consultants
www.ExecutiveSandbox.com
Labels: Communication
