Sixth Sense Business Coaching
Business Is Simple - People Make It Complicated!

Using Numbers

The VP of Finance stared at me aghast. He wasn’t used to “How the f%ck should I know?” as a response to a question he asked of one of his direct reports.

Many of the directors and managers I work with complain to me about the time and effort it takes to prepare their regular reports.

Having slaved away to get all the data prepared, they must go through the ritual humiliation of their boss unpicking the numbers and asking difficult questions they don’t have the answers for.

If you want to avoid this uncomfortable ritual, this article will help you get on top of your numbers.

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Do you lose the will to live with management reports?

When I was Director of Financial Operations at Orange, I reported to the VP of Finance. We had monthly review meetings that always went one of two ways, depending on his mood. If he felt happy or had bigger things on his mind, it would be a cursory glance through the report, pausing to ask about why things had a red traffic light status. Those days were easy. They were red because I was dealing with a problem, and I always had an update to hand.

On other days he would be an arse (which is, of course, his prerogative), randomly picking something and drilling into the detail underneath it with difficult questions. He was trying to find out where my knowledge ran out.

He was the same with everyone. The Financial Controller always had his session before me. When he came out, he would walk past my desk to give me a signal if it would be one of ‘those’ sessions.

These sessions were painful, like watching one of those nature documentaries where a shark is circling a baby seal. It made me anxious, and I would feel my impostor syndrome closing its hands around my throat, stopping me from thinking and speaking clearly.

It took me a good few sessions until I figured out how to get on the front foot.

First, I had to learn a straightforward lesson. 

The value of numbers is not in the production of the numbers themselves. The value is in the time spent interpreting the meaning of them and formulating decisions and actions based on this. Knowing your numbers is about understanding what they mean.

I’m not a detail-oriented person and can struggle to hold my attention on anything longer than a page. My monthly operations report was seventy-five double-sided A4 pages… Staring at the tables of numbers, endless graphs and paragraphs of narrative used to make me glaze over. That was until I figured out an effortless, three-step way of understanding numbers.

Ratios, Variance and Trend.

If we assume that the numbers you have are accurate (I spent fifteen years as a corporate auditor, so my default is to assume they aren’t), there are three questions that we can ask of it to figure out what to do next:

Is this good or bad?

To understand whether a number is good or bad, we need to have a yardstick to measure it against. In business, this is typically in the form of a target, a budget, or a comparison to the previous year. We calculate the number against this yardstick to create either a positive or negative VARIANCE.

Is this getting better or worse?

A single number is generally unhelpful unless we can understand its direction of travel. Is the number getting bigger or smaller, and is that good or bad news? We can only do this by tracking the number over time so that a TREND emerges. It is often valuable to track numbers cumulatively as this will show us the pace as well as the direction the number is travelling.

How big an issue do we have?

Again, a number reported in isolation doesn’t always give us a sense of scale. Depending on the numbers we have spent our lives around, we each develop a unique understanding of what a big or small number is. Newspaper headline writers know this very well. So, if we are to avoid making mountains out of molehills, we need to understand how these numbers look compared to corresponding numbers. This is the role of RATIO’s, often expressed as percentages or fractions.

I organised the numbers in my monthly report and prepared for my review session around these three principles. Life became easier, and my contribution to the company became stronger. I was also able to have a much more significant impact on the company by focussing my attention on the big potential obstacles that the numbers helped me spot early.

“How the f%ck should I know” was the response to one of my bosses foraging sessions

He had drilled down into a level of detail that was just too far in for me to have an answer, there and then. I went on, “You pay me to manage nearly seven hundred people and the systems/functions that control every penny into and out of this £1bn turnover company. You really expect me to know the details about this specific small accounting line?”. He sat back, and for a moment, it looked like a career-threatening frown was spreading across his face. He then let out a loud laugh and asked if I could get him an answer the following week.

It turns out that knowing your numbers is as much about knowing what you don’t know as it is about knowing everything.


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