So here you are, the end of another quarter, another year or another whatever. Perhaps you’re the CEO, the CFO or the Chief Sales Officer, or maybe you’re the sales rep and your period end is looming; your financial results about to be submitted and scrutinized. This is a familiar theme; corporations and businesses world-wide walk this walk almost without exception. This is how boards, share holders and analysts judge efficacy; is this company performing or are they falling short?
This – tracking financial results – in and of itself isn’t the problem. Any sane individual would accept that there must be a bench mark… a metric by which success is deemed to have been achieved, or otherwise.
My soap box however is that financial results or numbers offer absolutely no window into what a business should be doing to alter future results.
Over the years – and there have been many – I’ve been party to countless discussions with various colleagues, clients and associates, all of whom have found themselves in the dance that is the predictable aftermath of less than acceptable results. At the management level, this jig requires elaborate deep diving, analysis and reporting as to “what went wrong”. Top brass and stakeholders are demanding accountability and explanations as to why their expectations weren’t met, and most importantly, what changes management will conjure based on financial results to pivot the ship in the desired direction.
As my arms now begin to flail away on my stump, I launch into my position that the problem with financial results is that at best, they are an accounting of history… and history, which almost always is expressed in numbers, has sod all to do with delineating the activities that produced those numbers.
Numbers will tell you that you sold a lot of this, but not so much of that. Quarter and year end results tell you who bought what, and which customers have begun to fade away. They do not tell you what the activities were that precipitated that outcome. Once you have an outcome, the ship, as they say, has sailed.
Moreover, the senseless analysis paralysis that most managers are forced to engage in to provide the “deep thinkers” with data they think will sort the mess out, is a quantum waste of time and resources. Time – the most precious commodity of all – is squandered as personnel spend endless hours and days justifying, explaining and regurgitating numbers instead of allocating this considerable amount of effort towards meaningful discussion, reflection and better understanding of what actions and activities would best deserve re-evaluation to impact future outcomes. As they say, at the end of the longest day, what’s done is done. Numbers offer little direction of what challenges lie ahead.
Don’t get me wrong. In large organizations where there are many hundreds, perhaps thousands of people involved in the selling process, numbers provide necessary key performance indicators that do just that. They indicate where the company is selling successfully and where they’re not. But its behaviours, actions and cultures that drive numbers and it is these processes that require the deep diving necessary to alter future outcomes.
Unfortunately, all too often it is finance departments and people that weigh in on what should be done – based on numbers – but with little to no expertise on why what happened happened.
Imagine if you will, if the sales department attempted to tell the CFO how the finance department could reorganize for better efficiency …
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