Asking Questions

Quarter End Reporting – A Time for Reflection

by Geoff Devereux on March 31st, 2010

It’s that time again! The big push for end of quarter. Salespeople are hitting up every lukewarm lead in their Contact List. The Accounting Department is hounding vendors for invoices, customers for payments, and internal folks for every last bit of supporting documentation they can get their hands on for the audit file. And the Marketing guys? I dunno, they are probably all on Twitter!

It’s a busy time. It can be frantic!

But remember that it’s also a time for reflection.

Lately, I’ve been spending a great deal of time delving deeply into the world of Business Intelligence (B.I.). One of the most prevalent themes within the B.I. space right now is the concept of Predictive Analytics: using B.I. software to use historical information to predict future events. This concept has actually been around for hundreds, if not thousands, of years. Who wouldn’t want a Crystal Ball? In the stock trading world, you can look to the guys we call “Technical Traders” as an example of how Predictive Analytics might model.

The point is that everyone wants to look into the future, but remember we first need to understand the past. Looking back on a periodic basis should be a healthy exercise from which insights can be gained. Quarter end is an opportunity to do so.

Move beyond idle navel gazing, the blame game, and compliance for compliance sake. What can you learn from the quarter?

For instance, I’ve been writing in this space for 6 months now. I took the opportunity yesterday to look back at some of my early posts. What I learned is that recently I’ve been so engrossed in the B.I. world, I’ve been forgetting my roots. I’m not a B.I. guy by trade. The whole point of Indicee is to bring B.I. out of the industry bubble and “to the masses”. Instead, the B.I. industry has been pulling me into its world!

Time to take a step back.

With that, I’ve pulled a selection of 5 early posts from the vault. Please share your thoughts!

1. Spreadsheet Nation

The idea was simple enough, write a short post about the role of spreadsheets in organizations. More accurately, write about the role of Excel in organizations. I’m trying to provide a frame of reference from which readers can gain perspective on what Indicee does. My thinking was, I could provide a bit of historical context (background of VisiCalc and Lotus 1,2,3 – the original electronic spreadsheets from the days when you actually had to use the word “electronic” in order to differentiate the thing from a paper spreadsheet), then a colourful anecdote about one or two of my favourite “Excel moments”(to illustrate some of the benefits and drawbacks to spreadsheet use), some stats on spreadsheet proliferation, end off with an introduction to the concept of datamarts, and Bob’s Your Uncle, point made. Readers could use the comfort and familiarity of the spreadsheet concept to relate to the new concept of Indicee. I figured the most difficult part of the whole exercise would have been choosing just one title for the post.

I was contemplating something like:

Confessions of an Excel Jockey
Fathers of Invention; The Mother of All Spreadsheets
or Ghosts of Spreadsheets Past

What is difficult, complex, or nuanced about that?

2. The Meaningful Scorecard

“Finding the one or two key numbers that drives success in your business, and bringing them to everyone is very powerful in a business”
– Joe Knight, co-author of Financial Intelligence

The inspiration for this post was a management improvement video (13 minutes) posted on You Tube by http://www.harvardbusiness.org of an interview with Joe Knight, co-author of the book series “Financial Intelligence”, Business Owner, and Harvard Business.org blogger. The central message of the interview was that everyone in an organization benefits from understanding the numbers by which success is measured within a business. The trick is finding the right numbers. Particularly in today’s climate hearing about transparency is nothing new, but what doesn’t get as much play is this idea of narrowing the focus on measures of performance.

With respect to the numbers: Thanks to technology, we now have ALL the numbers available ALL the time. Reports have become super-robust because they can. Although there’s an argument for providing surplus information and letting the end user choose which parts to digest, there is also a great danger. Knight argues that providing less information to end users can actually produce better business intelligence. The process of asking the questions and finding the underlying systems within an operating group can enable a more focused, effective approach to providing reports. First, understand the work flow and underlying system of work for operations groups; then, develop measures around them. It’s easy to say, but when was the last time these conversations have taken place in your business?

“Business is like a game, and if you don’t understand the finances, you’re basically playing a game where you don’t know score”
- Joe Knight

According to Knight the emphasis should be, and this is where the interview really resonates with me, on providing a small number of operational metrics in a simple way and providing them to everyone. He rightly points out that the people receiving this information probably don’t want to be accountants, and have little or no interest in double-entry accounting “no matter how exciting it may appear to be”. For Accounting and Finance guys like us, it then becomes an exercise of translating Business Intelligence into Practical Intelligence in the reports we create to achieve an optimal value. It would be like one of us attending an advanced physics lesson. We would get way more out of it if someone simply dropped an apple on our heads. Sometimes less is more.

3. Sun Tzu’s Cash Burn

The Art of War, Chapter 2: Waging War

“Sun Tzu said: In general, the strategy for employing the military is this:

If there are 1,000 4-Horse Attack Chariots, 1,000 Leather-armoured Support Chariots,
100,000 Mailed Troops, and Provisions are transported 1,000 li, then the domestic and external campaign expenses, the expenditures for advisors and guests, materials such as glue and lacquer, and providing chariots and armour will be 1,000 pieces of gold per day.

Only then can an army of 100,000 be mobilized.” *

* Sawyer’s translation

As an accountant who has worked in a bunch of technology start-ups; when I read this, the first thing I do is try to extrapolate Sun Tzu’s Quarterly Burn Rate. It’s a bit tougher to try and calculate Cash Zero date seeing as, if the campaign is successful, you will have gained “the masses of All Under Heaven” – AKA “priceless”.

After spending a fair bit of time getting to know Indicee lately, the next thing that naturally came to mind was whether Sun Tzu’s Accounting system ties to his ERP system. If he has Pieces of Gold in one system and Numbers of Men in another, he could be spending a ton of time cutting and pasting reports in Excel to get his Departmental Salary Breakdown by Headcount!

4. Bringing Design Thinking to Accounting and Finance

Design thinking is a process for practical, creative resolution of problems or issues that looks for an improved future result. It is the essential ability to combine empathy, creativity and rationality to meet user needs and drive business success.

(There are number of definitions out there, but I think the above serves the purpose)

There’s a lot of Buzz around the concept of Design Thinking at the moment. A great deal of content has been produced, but I’m not sure how much has been directed toward the accounting and finance community. During the past 2 years for us, listening to someone talk about “radical innovation” usually entailed mostly hand-wringing and, well, … expletives. It’s understandable to have missed some of this.

So, I’m not sure how much about the topic has filtered in. Maybe that’s a good discussion point for the comments:

How much of the Design Thinking paradigm has filtered into the accounting and finance community?
How applicable is this school of thought to accounting and finance?
Do you believe there is a place for Design Thinking in accounting?

5. Ghost of Software Salesguys Past

We are greatly influenced by our experiences. As a child, the hand reaches out to a hot stove only once.

The last couple posts have talked about legacy issues; legacy IT systems, legacy education. Today I’d like to talk about another actor in the Legacy IT Show, the classic software salesman (circa. 2004).

This guy (above) may or may not be selling software, but does the song and dance sound familiar? I’ve sat on both sides of the table. Listening to salesguys pitch software to me as a purchaser, and doing the accounting & finance work in a company selling enterprise software. Software, as an industry, is still an infant relative to most other industries; and with youth, comes growing pains. Here’s the story on both sides.

Listening to pitches, sitting through demos, taking notes only to be asked by a Director, “what would it cost if we just built our own?” was crushing. Or, hearing about how easy a rollout will be (“it’s like lego”) and then, months later, hearing about how it won’t do all that stuff we thought it would do. Did we send out that cheque yet?

On the sell-side, working with salesmen who could barely operate a computer or use excel well enough to complete an expense report. There was one colleague who seemed to continually be calling me from the middle of a war zone, god bless ‘em. The path to hell is paved with good intentions, indeed.

Over the years, I think we were selling more than software. We were selling a dream. And the dream was that somehow this product would magically work and fix all reporting and organizational problems. Presto!

———————————-

Again, let me know your thoughts guys! Do these posts help? Hurt? Are you indifferent? Keyboard froze? Are you “reflecting”?

Let me know!

Enjoy!

Filed under: Asking questions, Business Intelligence, Industry Insights, Spreadsheets, culture

Tags: Asking questions, culture, Excel, Month-end, Quarter End, reporting, Spreadsheets

Measuring What Matters: Interview with Cheni Yerushalmi

by Geoff Devereux on March 3rd, 2010

Using Interviews to distill meaning

Last time, we were talking about how to “Think Like a Reporter“. My goal was to convey the importance of asking good questions in order to figure out how things actually get done and what the critical elements are in your business.

Today, I’d like to take it one step further and showcase an interview I was fortunate enough to secure with Cheni Yerushalmi, the managing partner and co-founder of Sunshine Suites in New York City. In the interview, I’ve tried to apply the principles of good questions in order to create an environment that’s conducive to storytelling. Then, getting out of the way and letting Cheni tell his story.

The other key point I would like to offer up as a takeaway from this experience for all of you is to stay alert for opportunities to expand your networks and your knowledge base. This interview would not have happened had it not been for: 1) Cheni’s willingness and his courage to put himself out there, 2) the enterprising, public invitation from Gary Vaynerchuk, founder of Wine Library TV and author of Crush It, and 3) my recognition of the opportunity and taking action. These are all voluntary actions. How can you ever bottle up this mix of bravery, curiosity, inquisitiveness, openness, and indeed playfulness that’s required to create something out of nothing into a “formula” or a “job description”? This stuff doesn’t show up on your desk with a neat little bow on it, conveniently labeled and packaged for consumption. You have to create it and I think that’s a useful lesson.

Instead of existing in a constant state of “beware”, move into a state of “BE AWARE”.

Back to the point, we are talking with Cheni Yerushalmi from Sunshine Suites in NYC about business, entrepreneurship, recognizing opportunity, and the critical measures that determine success within the business.

I’ll summarize and paraphrase some stuff here to keep the wordcount net-friendly, but feel free to look for some of Cheni’s other recent appearances here, here, here, and here for more great content.

Sunshine Suites NYC with Cheni Yerushalmi

What is Sunshine Suites?

Sunshine Suites is an office community in New York City specifically designed for entrepreneurs to get out of the house and network with other entrepreneurs in a cool environment. Sunshine has 2 locations and houses roughly 600 businesses and 1400 entrepreneurs at any one time. Far from being just another co-working site, Sunshine is serious about creating community! In addition to a place to work they offer mentorship, events, gym memberships, affordable healthcare, and even access to a timeshare in Vermont’s ski country!

The types of businesses incubating within Sunshine runs the gamut, “every company under the sun”, as Cheni and his partner Joe will sometimes say.

What motivated you and your partner, Joseph Raby, to start the Sunshine Suites?

Sunshine Suites was the result of the frustrations experienced, as an entrepreneur, with the lack of both affordable office space and community support available in the city. It was the realization that “there must be a better way”.

Leveraging each other’s strengths, as all good founding partners do, Cheni and Joe took the initiative to create the tool that they wished they had when starting out.

So, what would you say to people unfamiliar with the NYC start-up scene?

Historically, the NYC start-up environment has been difficult but it’s improving. During the heady days of the Dot-Com’s there was interest from investors and lots of money flying around, but not much of an infrastructure to support the companies. Since the bust, it has been a slow process of building that infrastructure and creating an environment better suited for start-ups.

A couple great examples of groups supporting this infrastructure are the New York City Economic Development Corp and the Coalition of Office Space Providers.

The message coming out of New York right now is innovate and build partnerships because right now nothing is being taken for granted.

How do you measure success at Sunshine?

Feedback from the community is most important. Of course, we keep track of revenue and occupancy rates, but these numbers don’t provide any context that we can act on. Obtaining real feedback from members through regular surveys provides a more accurate gauge of whether or not Sunshine is living up to customer expectations and provides direction that’s actionable. Fortunately, entrepreneurs don’t tend to be shy about sharing their opinions so we know exactly where we stand. It’s particularly important for the ongoing success of the business since 70% of new memberships are created through referrals.

How do you balance the qualitative elements relating to feedback with the quantitative numbers side?

The business model itself isn’t very complicated. We know the model works and, being a “for profit” business, we need to keep track of the numbers. But, revenue is not the overriding consideration and the numbers can be misleading. Our success is more accurately measured by the happiness of our community. We like to think of this as a place where we help each other to succeed. For us, it’s better to look at something like, how many companies have we been able to graduate from Sunshine? We also work with entrepreneurs who want to be more active in the management of the programming. We call these guys “Shiners” and it’s this level of engagement that tells us we’re doing something right.

You mentioned companies “graduating” from Sunshine Suites; is that a formal process? Is there a ceremony or what?

It’s funny you mention that. We’re working now to create a more formal process and you should see something in Entrepreneur Magazine about it in the near future. Entrepreneurs who have “graduated”, our “alumni”, tend to stay active at Sunshine, providing mentoring to other entrepreneurs. As well, we provide workshops, panel discussions, and bootcamps.

What do you see for Sunshine Suites in the future?

We are looking at expansion. We would like to expand into other cities, but we want to be careful. Every city is different. They each have their own ecosystem and it’s important to know the environment and the people in order to provide something of value.

Distilling the meaning in relation to Indicee

So, how do we relate what Cheni told me to what we are trying to achieve at Indicee? Simple. The most important performance indicators for the business DO NOT come from the financial reports.

We all know the requirements for financial reporting. A full set of financial statements are crucial for dealing with banks, tax authorities, and investors; but it’s like Cheni said, these numbers lack the context that’s needed to guide meaningful actions on the part of managers.

Using Indicee increases the contextual meaning of your numbers and guides action in that way, beyond the financial statements.

Your customer’s happiness is not an Income Statement line item. The path to knowing your customer comes from looking at operational measures; things like behaviour, feedback, distribution, and consumption. This requires building the additional dimensions into your reporting structure to capture these things.

Final thoughts and random words to live by

Working within a start-up environment and having worked for start-ups in the past, I fully appreciate and applaud what the Sunshine Suites community is doing. I would also point to other great examples out there such as TechStars, YCombinator, and our own local BootupLabs and Network Hub doing great work incubating companies and providing mentoring in order to tilt the playing field a bit in favour of innovators and disruptors who will create the next generation of market leaders. You could even look to mainstream media and programs like Shark Tank in the US and Dragon’s Den in Canada and the UK as a means of educating and illuminating what goes into building companies. You have to look past the TV-silliness, but it’s there.

I encourage anyone who is interested in this stuff to get involved. Check out a networking event, look for people to follow on twitter, talk to your local politicians and get talking to each other.

During our conversation, Cheni told me about when he and Joe were last in Vancouver. The two of them flew into YVR with 2 bicycles in boxes, they assembled the bikes in the airport, then rode from Vancouver all the way to Tijuana, Mexico. He went on to tell me that he never buys a round trip ticket when he’s on vacation. He buys a one-way ticket in order to stay open to the opportunities that present themselves. I think there’s a great lesson in that philosophy and it exemplifies what being an entrepreneur is all about.

Enjoy.

Filed under: Asking questions, Industry Insights, Performance Management, culture, interviewing, stories

Tags: Asking questions, culture, interviewing, Metrics, Start Up, stories

Sharpen your Business Analysis: Think Like a Reporter

by Geoff Devereux on February 25th, 2010

Walter Cronkite, Amanda Lang, Tom Brokaw, Woodward & Bernstein, Barbara Walters, Larry King, the entire cast of 60 Minutes;

What do all of these people have in common?

These guys all make a living through establishing rapport (trust), listening, and through their skillful use of questions while interviewing.

Think Like a Reporter

As a business professional, whether you’re in accounting & finance, sales, marketing, or IT, you need good information about your environment. Some of the best information tends to be locked up in the head’s of all the people you work and interact with through the normal course of your day.

Why not try “interviewing” your colleagues?

I’m talking about anything from stuff about business process to procedural and administrative workflows, operations design, and business and financial report requirements. Pick a topic and ask questions on it.

The opportunity exists to understand all the systems operating around you better when you start thinking like a reporter and asking good questions.

Let’s be clear. I’m NOT talking about badgering, browbeating, hectoring, pressing feet to the fire, inquisition style questioning that’s designed to embarrass or belittle your colleagues.

So, what makes a good reporter?

I’ll go into a few pointers and some media, but I would also encourage all of you to watch the CBC’s Amanda Lang interview some people. In my view, she is far and away the best question-asker in media right now. She’s a great example of doing all the right things through the course of an interview to engender trust of both the interviewee and the audience as well as to ask insightful questions that allow for detailed answers.

The Role of a Reporter

Mathew Ingram, formerly a technology reporter with Globe & Mail and now blogger with GigaOM, sums up the job of a traditional reporter beautifully in his recent TEDx Toronto talk, Five Ways New Media Will Save Old Media, as:

“we called people up and asked them irritating questions and then wrote down what they said”

Whoops! Sorry, wrong clip. Do we have the right clip? Do we have a clip?

Ah, okay, what he said was,:

“If you’re writing about a story, somewhere someone out there knows more about that story than you. In fact, a lot of people might know more about that story than you. So, you should allow them to tell you what they know.”

This is the essence of reporting.

Now, when he said this, he was actually talking about having newspapers incorporate comments and input from readers into the process of journalism and not specifically about interview etiquette. But, in the New Media world there’s less and less difference between the audience and the subject. Here’s Mathew’s TED talk where he describes this evolution:

I think Mathew makes a good point as well in recognizing the importance of having a dialogue going. In “traditional” reporting, there may have been the perception of a one-way exchange. The reporter asks, the subject answers. That’s only half the story. It’s a conversation and like any good conversation it’s a two-way street. But, it’s a conversation with purpose. You are the guide.

Simple Tips

Broaden your sources

Think about this question: Where do we get our information? Bob Woodward, one of the journalists that brought down Nixon in the Watergate Scandal, tells us in the following clip that we get information 1) from people 2) from documents (or evidence) and 3) from the scene (observation).

He make a great point about talking to people. He says, talk to A BUNCH of people. Not just one person. In a day, he may talk to a dozen people around the same issue in order to gain that broad perspective of views.

Asking Questions

Basic journalism tells us to focus on the Five Ws (that isn’t really 5… or just Ws, okay, so don’t use Journo’s for calc’ing your Net Profit):

Who? Who was involved?
What? What happened?
When? When did it take place?
Where? Where did it take place?
Why? Why did it happen?
How? How did it happen?

Of course, all questions are not created equal. Journalism 101 blog lays out some ground rules about the soft skills, but suffice to say I don’t think you want to make people feel stupid.

In general, keep an open mind and ask open-ended questions. Keep that question engine going in your mind so you can delve more deeply as opportunities present themselves. LISTEN, so you can key off of what the subject is telling you.

Remember, you are questioning yourself during this process as well. All of those assumptions you may have embedded in your thinking need to be questioned throughout this process.

Say Thank You!

and, of course,

Be Prepared

‘Nuff said!

Here’s some additional resources that should help you build up your skills.

Media Training Basics: Mastering Tough Questions from the Media by Harvard Business Service

How To Ask Better Questions by Judith Ross at Harvard Business Review

Learn To Ask Better Questions by John Baldoni at Harvard Business Review

The Four Principles of Interviewing by Columbia University

From Chapter 13 of Sun Tzu’s famous, Art of War, on the use of spies:

“The means by which enlightened Rulers and sagacious Generals moved and conquered others, that their achievements surpassed the masses, was advance knowledge.”

“Advance knowledge cannot be gained from ghosts and spirits, inferred from phenomena, or projected from the measures of heaven. But must be gained from men.”

Added Bonus

Sun Tzu’s Five Types of Spies

1. Local Spy

2. Internal Spy

3. Turned Spy

4. Dead Spy

5. The Living Spy