Less Is More (May 2013)

I am currently working on presenting an analysis of spending over various categories, time periods, and numerous items that are inconsistent from year to year.   Fortunately, we have a substantial amount of detail.  Sometimes a lack of detail is the problem in trying to understand a problem.  In this case, however, the problem is not a lack of detail but rather being able to distill a large amount of data into a concise story.  

It can be a difficult balancing act to explain a complex situation simply but that is often what is required in order for senior executives (who often have neither the time nor the patience to delve into the details) to arrive at a decision.   

Once you believe that you understand the problem and you begin trying to put together a clear, concise summary for others to understand, you may find yourself going back to the details and doing further exploration.  I have often found that in trying to provide an explanation, more questions arise and that the very process of trying to distill a complex issue to a limited number of underlying root causes requires one to refine their thinking in order to be crystal clear.

In a world where email and texting have become the primary form of business communication (often dashed off far too quickly), the well thought out business memo is somewhat of a lost art.   And while that seemingly antiquated form of communication may seem inefficient, there are times when it was certainly more efficient than a plethora of hastily prepared emails that are misunderstood and serve primarily to generate more emails.   

As I am preparing the analysis and trying to explain how a large number of issues have impacted the financial statements from one year to the next, my initial assessment is that the issues can be summarized into three key bullets.    Underneath each of those will be a very limited number of items listed from largest to smallest.   While I could list 20-30 items underneath each bullet, the top three to four will account for 80% of the variance, and listing more will simply cause the reader to lose focus.  Instead, we’ll have the detail at hand or in an appendix in the event that someone wants to see it (usually, there is comfort taken that the detail is available but people usually trust others to do the analysis and don’t dive in more deeply than necessary).   

As you think about any business problem, whether you are trying to explain it to the next level of management or understand it yourself, try to distill it to its simplest form.  Through this process, you’ll likely gain more clarity of the underlying issues which will help in identifying potential solutions.

This article is shorter than most that I publish . . . but then again, less is more.
 

If your business could benefit from fractional CFO services, I would welcome the chance to speak with you.  Please give me a call at (314) 863-6637 or send an email to    For more information, visit www.homza.com

your cash is flowing.  know where.^®    

Ken Homza   

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