Introspection illusion (4) - what am i reading ?

Just as Covid-19 appears to be fading, we are in the middle of the largest military conflict since World War II. The consequences have been devastating and now adversely impacting global economic stability.?Chances are that we will have no winners … but these developments will have a profound implication for what comes next and the new global world.

This time around, I am sharing my thoughts on 4 topics - (a) How do we think (b) How we make decisions (c) Why do presentations go bad and (d) Are they any management lessons from accounting? Notwithstanding my passion for accounting, I will go there last for I don’t want to lose the few who read my random musings.?

How do we think?

Each has a story but only a few the microphone & We only hear only a fraction of what is going in people heads.

These two powerful statements do force us to ask the important question of how we think. So, some fodder for thought

• We all belong a tribe... this collective has a big bearing on how we think and how we act. Tribes have their advantages given shared goals and common interests. However, we can so easily be blinded by loyalty or even willingly nod along with bad ideas.
• We are extrapolating machines in a world where nothing good or bad lasts indefinitely. A bull run will end, so will a bear phase. ?When you’re in the middle of a powerful trend it’s difficult to imagine a force strong enough to turn things the other way.
• Our willingness to believe in a prediction is influenced by how much we want that prediction to be true.
• We are pushing towards more efficiency which leaves no room for error despite error being the most important factor for long term success. We need to leave time and have resources to wander, to explore and make mistakes. We waste years by not being able to waste hours.
• Finally, we hear so little of diverse views and get influenced by media (of all kinds) which is dominated by loud noises. So, get out there, listen and listen more. ?

How do we make decisions?

To make good decisions, you will need to think about it, the contours, and consequences – Stacey Abrams.

Some believe they make good decisions because they are decisive and are guided by strong instincts. Others collect data, evaluate from many different angles, consult, and take their time. Then we also have people who don’t take a decision and don’t realise that no decision, in itself, is a decision.

Yes, it will be good if we can make a right decision to begin with, but our current environment offers exponentially more challenges and does not make it easy. Will the following work for you?

• Develop a framework identifying a set of values, ideologies that you believe in. You will have to trust these values more than the outcome of any one decision. When the going gets tough, the values (compass) will stop you from wavering / confronting difficulties.
• Open to changing your mind when presented with new data and compelling views. A step back from wrong path is a step towards the right one.
• Be aware of your emotions and passions while making decisions. Focus on things you can control.
• Perspective matters – so don’t make important decisions without getting input from others...it is difficult to read label from inside the bottle. But this does not mean that your decision is an average or median of various views. It must be your own and in line with your values?

Why do we make bad presentations (even for simple routine ones)?

Sample this – ‘Sorry for the quantum of the text in the chart but you don’t need to focus on all of it’ or ‘We hope to get through 30 charts in the next 15 min’ – Even Sherlock Holmes will wonder about the motivations of the content creators for (a) creating a complicated deck and (b) then giving an upfront disclaimer.

To succeed always focus on (a) Decisions to be taken (b) Questions to be addressed to make the decision (c) with style of delivery and content appropriate for the audience. Think and address these questions even before you start your PPT. ?Your charts will be sharp, and your discussions focussed.

Big moments and big meetings will require you to have that edge in your delivery. Writing down your script (of what you will say and how), presenting to a few people, thinking of likely questions and your response are good first steps.

Never fall into the trap of trying to demonstrate your knowledge and skills and don’t use 20 words when 5 can do the job. Remember audience can only focus on a few things and you look good (and even better) when you deliver on the objectives. ?

Are there any management lessons from accounting?

I am sure there are plenty of management lessons amidst the debits and credits of accounting; one needs to invest sufficient time to find them. However, there are plenty of reasons (very good ones including disclaimer at the end of this note) not to go there but the accountant in me wants to make a valiant attempt using the ‘concept of impairment testing’.

In a very broad sense, every entity must ensure that recoverable value of its assets is more than book value (cost in Balance Sheet). If the book value exceeds the recoverable amount, we have account for this difference as loss i.e., you are impairing your assets. ?In case of intangible assets (good will etc) we have run the impairment test annually. I hope I still have you with me.

So, each year you should assess if you have delivered on your performance goals and where you stand on your long-term potential. Your long-term potential is the intangible asset that you create. If you stay still - you will depreciate, lose value, and eventually get impaired. When you enhance your skills and capabilities, you grow. ?Make sure you test for impairment each year and don’t overestimate your recoverable value.

As always before I close – sharing a lovely line from Richard Powers – ‘’The best arguments in the world won’t change a single person’s mind. The only thing that can do that is a good story’’

Almost there

• Every week I look forward to the blogs from Collaborative fund and Scott Galloway. Do try them.
• Impairment of assets is detailed technical subject and is best understood by reading IAS 36. The above analogy is my light-hearted attempt at linking accounting and management.?