Storytelling in business and research
Part of my job as a lecturer is to teach and research. Both of these tasks involve communication skills at various levels. To teach I need to get a point across and encourage students to think. To write up research, I need to communicate (in writing) complex things like theoretical constructs. Now, maybe it’s something to do with the fact that I am Irish (gift of the ‘gab’ ), but I love to use stories to get my point across. Why? Read on.
First, this quote says it much better that I ever could:
Storytelling (film) (Photo credit: Wikipedia)
“The universe is made of stories, not of atoms.” ― Muriel Rukeyser
In other words, no matter where we look, who we look at, or what we look at there is a story behind it. So no matter how complex the subject matter we are trying to explain, we can can a story about it.
Second, stories are known to all cultures.
No matter where you come from, what your cultural specifics are, or even what religion your are I can guarantee that there are stories in your culture.
Third, which bring together the previous points, stories can be utilised to deliver effective messages.
For example, some leaders are good story tellers (see here ), or some really complex matters can be explained using stories (see here for how a story is used to explain the ongoing euro crisis). Or to give another example that may surprise you. The story of the Princess and the Frog is actually originally a way to explain sexuality to young ladies. They may conceive it as an ugly thing (the Frog), which pesters them regularly (for a kiss) but once they confront it head on (kiss the Frog, or throw it a wall as in the original German version) it is quite beautiful (becomes a Prince).
So what’s my point. Well, simply put tell the story. If it is a presentation, a dissertation, thesis or whatever, remember there is a story in there to be told. Trust me, if you tell the story, you’re on the way to getting your argument/point across.
Expense tracking – there’s an app for that
To keep track of the many things I do, I have to take notes. For example, all the posts on this blog are noted somewhere first and then I write about them when I get time. I use a product called Evernote, which is just brilliant. I can do anything I want in this app in terms of taking notes. And, like all apps there tends to be adverts for related products from time to time. One I found interesting (but don’t use) is Expensify. This app seems to be very useful for track this annoying expenses. You can see more here on the app’s features. One thing it might be really useful for is those annoying fuel receipts small businesses have. For example, a sole trader might have 2 or 3 receipts for diesel each week, which are probably paid for in cash. These receipts frequently get lost and are a pain to store too. So it might be useful to use a product like Expensify to take a snap shot of these and store them. You can also use the app to track mileage, so this might be useful for small companies whose employees may get paid mileage.
Related articles
- Expensify Trips: Track your itinerary from your expense report (expensify.com)
- Apps I’m digging lately (intomobile.com)
Strategic scorecard – a useful tool from CIMA
A short post today – holiday season.
You may know about tools like the Balanced Scorecard which are used by many organisations to monitor performance from financial and non-financial aspects. Here is another type of scorecard, developed by CIMA, which may be quite useful to managers and boards of directors when trying to formulate a strategy. The tool prompts managers to consider the business model of the organisation and reflect in the external environment, risks/opportunities, implementation and options available. Have a read of a document prepared by CIMA/CGMA by clicking this link .CGMA Strategic scorecard_T1 FINAL . This document explains the scorecard quite well.
Related articles
- The Vision and Strategy of Balanced Scorecard (unicomseminarsltd.wordpress.com)
- 5 Valuable CGMA Resources for Business People (aicpa.org)
Is accounting sexy?
CIMA, Financial Management, Oct 2004.
A few months ago, I was at a workshop which consisted of publishers/editors and accounting academics. I was a bit late and when I arrived one of the editors asked me to introduce myself as follows ” tell us a little bit about yourself, where you are from and what makes accounting sexy?” First two questions, no problem. The last one, well thankfully I am a CIMA member and remember the series of adverts in 2004 from their Financial Management magazine. The ads (see the picture to the left) were for accounting software and featured a dominatrix and the caption “is your procurement strict enough”. I loved that ad! In one foul swoop it got rid of the dull and boring stereotype of accountants. Of course, some CIMA members did not like it at all and wrote to the editors. This complaining perpetuated the dull image of accountant and inspired a further article entitled “Miss Backlash” – see here.
So now for a completely unscientific experiment – I show just a few examples by the way
1. If I Google “is accounting sexy”, I get a good few interesting results:
A blog, accountantsaresexy.com – a bit dated
A blog post with the title The Surprisingly Sexy Chart of Accounts
A you tube video, JustThrive Makes Accounting Sexy – YouTube
2. If I google “sexy accounting”, I get some similar results to #1
I also get some pretty dodgy stuff.
3. If I google “sexy accountant”
The results are getting to beyond a PG rating! But a quick glance at the image search result throws up this ! You can decide for yourself on the sexiness (or otherwise).
So is accounting sexy? I don’t know to be honest, but I hope this short reflection puts a smile on your face. Now back to those ledgers……
(If you want to know more on the images of accountants, check out the work of Baldvinsdottir et al)
Technology and new business-models – taxi despatching
I always like to read about new ways of doing business, or new technology can change existing businesses. You may have seen how various new technologies have helped the taxi-sector. For example, in London you can send a text from a smart phone requesting a taxi and your position can be pin-pointed by the GPS within the phone. Now let’s take this a step further and add an app to the smart phone and then the way the whole taxi industry operates could change? How you might ask. This post from the Babbage blog on Economist.com explains why. In several European countries, taxi users can now use apps to request a taxi. The apps ping the nearest cab, and once a customer accepts a particular offer they can track the taxi progress. All the taxi needs is the same app effectively. This changes the way business is done in the sector as the taxi dispatcher is effectively cut out of the picture. I don’t know about other cities, but I can tell you that a taxi dispatcher would charge its drivers in the order of €200 per week or more in Dublin. For this, the driver (who suffers all risks of owning and paying for the cab) gets fares directed to them usually through some system installed in their cab. Now, if I were a self-employed taxi-driver you could cut out that cost by using an app, I’d be giving it some serious consideration. Of course, as the post notes, taxi dispatchers are not seating idle and a race is on between taxi dispatchers and app developers!
Can decisions be driven by cost alone?
As an accountant, it is too easy to condition yourself to only think about costs when making decisions. Of course many business decisions must consider things other than cost, such as market share, customer satisfaction, quality and so on. I am often looking for examples of how decisions are made in organisations, which seem to be on the basis of cost alone and ignore important qualitative factors.
In May of this year, what seems like a great example of a tough decision which was influenced by cost came to light. The Irish government made a decision on at least re-opening talks with drug companies on whether or not to make a skin cancer drug called Ipilimumab – better known as “Ipi” – available through the public health system. The re-opening followed public pressure. It is what happened before this which provides the example of the tough decision. In September of 2011, it was recommended to the government that the drug should not be made available as it was not cost-effective. The drug costs approximately €80,000-90,000 per patient and according to reports at the time, might prolong life by 3-4 months. Now, I would not like to be the person making that decision I must say. But, from my external view, it would seem the decision was based on cost alone. What about the benefits? Three or four months may be invaluable to a family. And to put my accountants hat on, what would the cost be of not treating the patient. I’d have a wild guess that a three or four-month hospital stay costs way more than €90,000, so there are bound to be some cost savings if a patient is healthier. As I said, I would hate to be making these kinds of decisions, but it does show how cost information can be used in complex decisions where many other factors are at play.
What is big data? And what does it mean for management accountants?
Image Copyright The Economist
You may have heard the term “big data“, or perhaps not. Here, I’ll try to explain it and pause for a moment to consider what it means for management accounting.
The fact that many businesses capture vast amounts if data is not brand new (see this article from The Economist in 2010), but the focus of collecting and analysing what marketing people call big data is now beginning to come firmly under the radar of management accountants too. Before looking briefly at what big data means, we need to define. First, back to basics. Data is simply facts, numbers, statistics etc. For example, 175,80,40 are just numbers. They are in fact my approximate height, weight and age. This is information, as you now know some facts about something i.e. me. The problem with big data is getting the information value from it.
Here is where a management accountant can help – assuming of course (s)he has some technical proficiency. Here is an extract from an item on CNET back in May of this year (bold is added by me):
Put simply, the analysis that big science brings to the table makes big data relevant. I envision big science combining with big data to create big opportunities in three significant ways: real-time relevant content, data visualization, and predictive analytics.
When I read the above, I immediately thought isn’t this what management accountants have been doing for years now? If you remember the basis definition of what management accounting is, you’ll remember it is about providing decision-relevant information to managers. This includes real-time data, forecasts and predictions and is often aggregated (or visualised). Personally, I believe management accountants, IT people and marketeers (who might be responsible for collecting all this big data) can all work together to make big data work as information. In particular, management accountants are well placed to assist as they know what information drives a business.
Our management accounting textbook – sample chapter available
As you may know, I have been part of a team who wrote a management accounting textbook. We have received a sample chapter from the publishers – you can see it here . Hope you find it useful.
What does a management accountant do?
I read this interesting article from CGMA magazine a few months ago. It brings out some of the actual roles of management accountants in business. Personally, I never liked the term “management accountant” at all and have always thought of myself as more of an advisor and information provider. Have a read of the article.
Integrated reporting
Some recent items in the CGMA magazine summarise some of the features and issues with integrated corporate reporting. Integrated corporate reporting means reporting means more than just reporting the traditional financial/economic type reports to shareholders. Instead, an integrated reporting approach considers social, economic and environmental factors. In the longer term, it can be argued that if firms ignore the environment and society, then firm itself may not be sustainable.
Ideally, a business should be able to prepare a single report which shows now only the typically legally required financial reports, but also how its financial performance affects society and the environment. Some global companies are already doing this. For example, PUMA publishes and environmental profit and loss which values its impacts in terms of resource usages (see here). The CGMA has embarked on an integrated reporting pilot programme over the next two years. They asked an investor, accounts preparer and an integrated reporting advocate for their views. They make for some interesting reading – click on the links to read more. One of the key points emerging is not the difficulties faced in preparing the report or getting the information. Instead, trying to introduce more non-financial data without increasing the information loads (mainly legally driven) given to investors is a great challenge.
What is a step fixed cost?
by maccie1, flickr.com
From previous posts, you know what a fixed cost is. There is another type of fixed cost called a step (or stepped) fixed cost.
A step fixed cost takes its name from the fact that the cost can take a “step up” if certain things happen. This usually means a cost increases when the activity of a business exceeds a certain level, and the fixed cost then suddenly increases, but remains fixed at this new higher level.
Here are two examples which may help you to understand.
1) Employer liability insurance costs may remain quite stable until a certain threshold is reached. For example, it may cost €10,000 to have cover for up to 100 staff, but €15,000 if the staff number exceeds 100.
2) Typically, internet hosting costs include a high allowance for data traffic volumes. But if a company exceeds this, they may have to change to the next package up. This typically would give a much greater data traffic allowance, and the cost would increase in a step fashion.
What is a mixed-cost?
A mixed cost is a cost that contains both variable and fixed costs (see my previous two posts for more on these). Utility bills traditionally were a food example of a mixed cost. Take a telephone bill. Traditionally, a phone bill had a fixed cost which you had to pay even if you made no calls – the line rental in other words. Then you paid for each call, and the more calls you made the greater the total cost – in other words the call cost was variable. Nowadays phone bills tend to be fixed costs – all calls, line rental and Internet are bundled together into a flat monthly charge. Electricity and gas bills still tend to have a small fixed cost – the standing charge – which is paid regardless of use.
New text book – Management Accounting
I am co-author on an up-coming text book publisher by McGraw-Hill. It should be available early 2013 – see here for more.
What is a fixed cost
From Flickr by Medieval Armour
In the previous post, I explained what a variable cost is. Now here, let’s look at fixed costs.
A fixed cost is a cost which does not change with the level of activity of a business. For example, there are some costs that a business will incur even if it is closed – such as buildings insurance. Other fixed costs might include a managers salary or other similar payroll costs which are fixed, taxes or business rates paid to a local authority or rent paid to a landlord. The term overhead is frequently used with reference to fixed costs.
Although the total fixed cost is that, fixed, as the level of activity of a business increases (more goods made or more services provided) the fixed cost per product/service actually falls. Let’s say for example if a business has total fixed costs of £48,000. If the business sells 24,000 units of product, then the fixed cost per product is £2, but if it can manage to sell 48,000 units of product, then the fixed cost per unit is just £1. As more and more units are made, the fixed cost will become negligible on a per product basis. Thus, I think it is easy to see how the level of fixed costs can affect the level of profit – high fixed costs with low volumes might spell trouble.
Are fixed costs fixed forever? No is the simple answer. As a business increases activity, then quite often more fixed costs are incurred e.g. more managers or a bigger premises. So fixed costs are not “fixed” indefinite, but they are fixed within what is called a “relevant range” of activity. A good example of this kind of effect is employer liability insurance – normally the cost is fixed with a range of employees (maybe 1-100) and the cost jumps once this range is exceed (i.e. 101 staff or more).
What is a variable cost
(photo from Flickr.com)In this post and the next few, I’ll explain some basic terms used to understand costs in management accounting.
A variable cost is a cost which change in accordance with the activity of a business. For example, if I order a meal at a restaurant, the food itself is a cost that would not be incurred had I not walked in. As the restaurant fills up, then the food ingredient costs go up. Another variable cost example might be fuel in a car or truck. The more the car or truck is used, the higher the cost.
In a business, variable costs can usually be saved by simply not making any product or delivering a service, but this of course may not always be possible. Typical variable costs are labour and materials associated with a product or service. Such costs would not be incurred if the product or service was not delivered i.e something triggers the incurring of variable costs.Think of the chef in the kitchen of a restaurant – a customer order means food costs increase, or a variable cost has been incurred. You may be thinking of the chef’s wages – I’ll come back to that in the next post.
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