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It's in the numbers

When I first took an interest in business strategy, I shied away from getting too involved in the numbers.

I had a degree in accounting, and, later, and MBA. So I didn't have a problem dealing with numbers. But I didn't want to be seen as a 'bean counter'.

Bean counters, I reasoned, focus on efficiencies and cost cutting. Strategists focus on the big picture. Blue sky thinking. Frameworks and models. Inspiration couldn't be reduced to spreadsheets.

But I quickly realised how wrong I was.

Yes. Strategy is about the big picture, blue sky thinking, frameworks, models and inspiration. But behind all of those things lie the numbers. And until you can get to the numbers, the job isn't done.

The numbers used in business strategy include but extend well beyond those typically found in financial statements and reports. 

They include demographics and economics; product and process performance. They include market research. They come from within the organisation, within the industry, and from without. They deal with durations and conversion rates, volumes and prices. They look behind hunches and anecdotes to spot trends and structures. They range from statistically valid samples to pure educated guesswork.

It requires imagination and insight to determine what numbers to look for, where to look for them, and how to interpret them.

Triangulating between more diverse source of information increases confidence. Understanding how to reconcile disparate and even contradictory information requires finesse and experience.

If you want to understand how a business works, and if you want to get good at doing your job, ask how, what, when, where and why.

But if you want to get good at business strategy, you need to go further. You need also to ask how much, how many, how often and how long.


(The image at the top of this post is partly inspired by one of my favourite films, the Matrix, and in particular the scene in which Neo finally learns to see through the real world to the numbers and code it manifests.)

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