March 27, 2024
Out of the mouths of babes and newscasters
The NHS was on the news again this morning. Because, as the Guardian reported: “Just 24% of people across England, … Read More “Out of the mouths of babes and newscasters”
Category: Accounting
November 13, 2023
Masters and management
There was a time when being a Master was to be an expert. To have experience. To have care for … Read More “Masters and management”
November 2, 2023
Word of mouth
We all know that recommendation by an existing customer is the most powerful and the most sincere form of marketing. … Read More “Word of mouth”
September 28, 2021
Timesheets
There’s a very interesting article by Alistair Barlow on AccountingWeb today, about timesheets.
Not as a tool for calculating prices, but as a tool for measuring performance.
As I discovered a couple of years ago, ‘time spent’* is a pretty accurate proxy for all costs.
That means that a relatively easy way to get an accurate picture of how much a process is costing to run, is to measure how much time is spent on running it. And this can be measured straightforwardly, by simple observation.
Timesheets are one way to observe how much a process is costing to run. But they are a pain to fill in, cost time to complete, and feel intrusive.
Much better to let each process tell you as a side-effect.
I’m working on that.
*”Duration-Based Costing: Utilizing Time in Assigning Costs” Anne-Marie Lelkes, Ph.D., CPA, Management Accounting Quarterly, Summer 2017.
May 17, 2021
Managing what matters
When you pay a traffic warden by the ticket, you’ve incentivised them to find the easy targets, not to prevent illegal parking, and certainly not to keep the roads safe for other users. Worse, you’ve incentivised them to pursue minor infractions over major ones.
That’s why my street is full of traffic wardens just before school opens and just after it closes. It’s why parents arrive 30 minutes before they need to in order to grab a legal parking space, wasting an hour a day just sitting in their cars. It’s also why everywhere else in my town centre remains plagued by illegal, inconsiderate and dangerous parking.
This kind of simplistic proxy for performance has become endemic, because its easy to measure. If you can say ‘I’ve hit target’, you’re off the hook as a person, a school, a company or a government department. Never mind that you’ve actually made life worse for everyone, and really dreadful for some.
What gets measured gets managed, they say. True.
So start with what you really want, then explore different, creative and possibly multiple ways to measure whether you’re achieving it.
The answer’s unlikely to be a simple tally. And you may just come up with a completely new approach to the problem.
March 2, 2021
Money
Money is a human construct, representing a promise to pay. That’s all. No matter what it’s made of – shells, gold, base metal, paper, bytes – as long as the promise is good the money is good.
Money doesn’t make the world go round. Promises do that.
And we can never run out of promises.
February 25, 2021
How to capture a business process: Step 4
Now you have the story of your process written down, you can start to identify its components.
Read through the narrative, and pick out the names of things that get mentioned along the way. These will become ‘Props’, like the theatrical term for “an object used on stage or screen by actors during a performance.“
Props might be software e.g. “I enter the prospect’s details into the CRM System/Salesforce/Hubspot“; physical objects or their digital equivalents: “The prospect signs our non-disclosure agreement”, “I send an email to the client acknowledging receipt”. Props can also be implied: “I call the client” means there must be a telephone Prop of some kind.
One Prop in particular will stand out as being the thing that is being worked on by the process, the thing that is the point of the process. The star of the process, if you like. For example the key Prop in a process “File Annual Accounts”, is unsurprisingly, a thing called ‘Annual Accounts’.
This key Prop will help you identify the key Activities that make up the process, because it will be created, transformed and finalised through the process. Each transformation of the Prop called ‘Annual Accounts’ is a separate Activity, with an outcome that is either true or false. You have a set of Draft Accounts or you don’t, there is no halfway house. Any other Props you’ve identified will find a home inside one or more of these Activities, which may themselves be a process.
As an illustration, in order to “File Annual Accounts”, you generally have to create a set of draft accounts (an Activity you might name “Draft Annual Accounts”), check that they make sense (“Verify Draft Annual Accounts”), send them to the client for approval (“Request Draft Annual Accounts Approval”), deal with any changes (“Amend Draft Annual Accounts”), finalise them (“Finalise Annual Accounts”) and finally, send them to Companies House (“File Accounts”).
In this way, following the lifecycle of the key Prop will help you define Activities and the rough order in which they must happen.
In the next post in this series, we’ll look at finessing that order to take account of exceptions.
June 5, 2020
Witch-hunts
Famously, a common test of whether you were a witch or not, left you dead either way.
If you floated when thrown into water, you were a witch, ripe for burning. If you drowned you were innocent.
That must be pretty much how the sub-postmasters using The Post Office’s Horizon system must have felt, when they discovered discrepancies in their accounts. They could either make up the difference themselves (again and again, as the error repeated itself), or stand accused of theft. Either way they lost everything.
The difference is that this is 2020 not 1620. Computer systems are human artefacts not gods. Blind faith in them is unforgiveable.
PS. This very angry post is my 400th.
If you’d like to help these people get justice, you can support them.
May 7, 2020
Long reads for a long weekend
As human beings we are complex sytems, inhabiting complex systems.
Some of these are natural – weather, plate tectonics, ecosystems, the galaxy; some we’ve made up ourselves. And of course, through the social systems we invent, we impact some of the natural ones.
The more we’ve understood our bodies – the physical system we inhabit – the better we’ve been able to cure, contain or prevent individual suffering and maximise the potential for individual flourishing. The more we’ve understood the natural systems we operate in, the better we’ve been able to exploit or enhance them to our benefit.
As businesses we operate within social systems, and if we want to maximise the potential for it’s individual flourishing, it pays to understand those systems better.
They’re both a long read, but with a bank holiday weekend ahead, Capital in the 21st Century and its sequel Capital and Ideology are a great place to start to understand the social system that’s had the biggest impact on everything in our world for the last 250 years.
If reading is not your thing, Capital is available as a documentary film too.
Remember, all models are wrong, so it’s worth exploring as many as you can. Some of them may prove useful.
March 26, 2020
Writer’s block
Like many people, I guess, I’m finding it harder to write every day during this crisis. Who wants to listen to me? What have I got to say that is worth saying? I’m not famous. I’m not powerful. I don’t feel relevant.
But.
I can read, and learn and think, and listen. And I can pass on stuff I think will help.
So here are 3 things I learned this morning that I think are worth sharing:
- Out on my early morning walk, more people said ‘good morning’, ‘hello’ or ‘thank you’ than I’ve ever had before. We said these things at least 2 metres apart, but we said them. Keeping our physical distance has given us an excuse to really see each other. I hope we can keep this politeness up. It feels good.
- Richard Murphy shared this article today, from Tomas Pueyo on Government’s options for dealing with coronavirus. It is well worth a read. Science is always good.
- Richard Murphy also shared his own AccountingWEB article today, on looking to the future. I’m going to quote the last 2 paragraphs here, because I think he’s right, we have to start thinking about this stuff now:
“Reaction five: Recovery
But the fifth, and crucial stage, is the one we need to already anticipate, however, overwhelmed we now feel. This will be the recovery stage, and although that might seem a long way off at present (and the wait may well seem interminable) it will happen. When it does, there will be at least as many problems as there or now, and in the immediate months to come. These need to be planned for, and good accountants will be doing that very soon.
Picking up a mothballed business and returning it to a thriving state is not easy. It demands a lot of working capital. Many businesses will have almost none. As a result, all the usual problems from overtrading will rear their ugly heads remarkably quickly when the recovery begins, and those businesses that might have made it through the immediate crisis might then discover that they cannot make it to the end of the year unless they begin to plan now.
Planning for the future
Many of us are facing enforced time at home, with too much Netflix for company. My suggestion is that anyone with responsibility for a business should use at least some of this time to think about their plans to reopening their activities when this crisis is over.
Deciding what goods, services, outlets and staff are key to that process, and working out how to phase the returns to normal is critical to survival. In particular, new product mixes, ways of delivery, supply chains and customer interactions all need to be thought about if success is to be likely.
This is not the time to sit and do nothing if businesses are to survive. There’s a massive amount to do. And now is the time to do it.”
So that gives me my theme for the next few weeks or months. How to use the unsettlement of the current crisis to think differently about how we do things, and lay the foundations for a more secure, sustainable and profitable future business.
Phew! I can feel useful again.
PS Seth Godin is right. There is no such thing as writer’s block. You just have to write.
