[SSB#22] Value beyond the balance sheet
Updated: Aug 28
A newsletter from
Welcome to the 22nd edition of our newsletter "Supersonic Business", a fortnightly publication by Mantle, written by me, Laura Landmark, with a focus on business growth, value and performance management, in other words, all things that make a business better.
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Sandnes, Norway, Wednesday evening, 26 August 2020 ☀️
"Supersonic Business" is sent from me, a Management Accountant, to those that have a leading position in SME's (small/medium businesses), and their accountants. The vision for the newsletter is to share information, tips and tricks to build healthy, thriving businesses from the 'inside out', it is written from the finance and administration perspective.
I hope you enjoy [SSB#22], write to me on email@example.com if you have any feedback or questions.
Thailand and Majorca were on the agenda as destinations for the Landmark family this summer, but of course, we realized in good time before the summer began that probably wasn't going to happen. Instead, we have had a wonderful long summer at home in Norway, without the pressure of packing and unpacking and racing around the world.
My kids wonder when we will ever be able to travel again, a trip to England to see the family would be a real treat, but we are waiting to see how Corona develops before making plans to cross the border.
This is OK, we can wait. Or at least I can, for the kids it seems like an absolute age since we last saw the family, and unbearably long before we might get together again. Their time perspective is completely different than mine.
As kids, each day can last forever, and the focus is on what is happening now. The future stretches a little way ahead, maybe a few weeks, and the longer-term materializes only in short bursts of dreaming about upcoming magical days like birthdays or holidays. Otherwise, it is all about satisfying the most immediate needs and making the most of the NOW. In fact, my little one has just confirmed this by asking me when dinner was ready, and when I said 15 minutes she collapsed on the sofa and said, but "that's aaaaaaages!"
This is a wonderful quality for a child. May they live as long as possible in the beauty of the moment.
But, then all too suddenly, we grow up. Baby bears become mamma and pappa bears, and we start running the world.
So how can we do a better job of this, particularly in business?
Many of us work in SMEs (small/medium-sized businesses, which are typically between 10-250 employees). SMEs play a major role in most economies and account for approximately 90% of businesses worldwide. They create 7 out of 10 jobs according to The World Bank. The landscape might be changing with Corona, but as some businesses are forced to close their doors, new ones are popping up to take their place fueling growth and innovation.
The accumulation of our combined choices and the decisions we make for our small medium-sized businesses MATTER. And society has its eyes on how we are behaving, especially now in the age of Corona. Our response to these current challenges will form the judgment of investors, customers, suppliers, communities for years to come, we are all in the spotlight.
Right now far too many businesses are focused on the short term, on the race to be bigger, richer, more prestigious, or these days, just to survive, no matter the longer-term consequences. It is far too easy to ignore what might happen in the future in the pursuit of what is 'necessary' or possible now.
The value of the business is often measured based on what you see on the balance sheet, ie what you see 'on paper', but this short term financially focused paradigm will not capture the hearts and minds of the people that matter, the stakeholders in a business.
Short term financial focus will not capture the hearts and minds of the people that matter
We accountants have a particular responsibility to better understand how the businesses we manage create value from a long term, multidimensional perspective. And in turn, empower the others in the business by sharing that information in an effort to support effective decision making.
Those of us working with the numbers on a daily basis are masters at the monitoring and measuring and are used to playing a pivotal role in mediating the diverse needs of the multiple players. This is what we are trained to do. We can also drive the development of next-generation systems. Its a tall order, but the CFO's and accountants are usually the ones that are expected to produce the reports, forecasts, and analysis, so lets at least make sure we are rigged to do so!
Let's look deeply into what can we do to reinforce the value in the books, but at the same time increase our business's contribution to society. How do we promote the idea of caring as much about the next year, the next decade, the next century as we do about today? Even though, by then, we will be long gone?
Today's world is risky, a bit scary, and quite sad, but it is also full of opportunity. Now more than ever is our chance to wake up, have a reality check and to start focusing beyond the tips of our noses and get stuck in making a positive difference for the future.
Building for the long term means bolstering up and battening down the hatches to face the challenges of today, but at the same time setting the compass for the world we want to see, and then starting the journey, making a little progress in the right direction every day.
The value of our business and our contribution to society is definitely not on how much cash we have stashed in the bank, it is what we do with it that matters. But its more than that too, its how we treat our people, how we care for our customers, how we engage with our suppliers. I was watching a series last night where some awful property tycoon threatened to throw one of her suppliers over the edge of the skyscraper if he didn't cut his prices by 30%. Maybe a bit extreme, but how far from the truth? We reinforce that kind of behavior every day when we go for the "cheapest" option and become the victims of predatory pricers.
Providing value to our shareholders whilst respecting our obligations to the wider world, and refusing to unnecessarily tear up the natural environment for short term gain is a worthy goal.
This doesn't mean we need to be ashamed about being less than perfect today, none of us are. Our focus should be on showing that we are getting better, that we are on the right course, or at least that we are conscious of what we need to do to be better. It's about starting the dialogue and admitting where we are failing.
Us CFO's and accountants are best placed to dig out all the facts and get them on the table, to enable connected and informed decisions, and this is ongoing.
This is not a one time exercise
This is not a one time exercise. We need to be the grown-ups every day and build sustainable businesses with good systems and processes for analyzing and interpreting the data, the facts, and then making it easy for the management team to find the red thread from yesterday towards a better tomorrow.
I have just spent the last year studying for certification in a fantastic framework called Integrated reporting (IR) put forward by the International Integrated Reporting Council (IIRC) which supports companies in accounting for and communication how they create value for internal and external stakeholders (ie for the world).
Integrated Reporting (IR) supports Integrated Thinking (IT), and this promotes a deeper understanding on how things hang together, on how we define, create, deliver, and sustain value. If this is a topic that you would like to discuss further please pm me.
“Life can only be understood backwards; but it must be lived forwards.”
Søren Kierkegaard Danish philosopher
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COVID-19 offers a chance to reset and reshape the world in a more sustainable way!
This article addresses what Covid-19 has taught us (at least should have taught us).
It talks about how we can reset specific industries, how the financial system works, and how we can tackle climate changes. Covid-19 has taught us how to surmount our socio-environmental challenges, and that every one of us needs to take responsibility and ownership of our future. Covid-19 offers us a chance to reset and reshape the world in a more sustainable way.
As I mentioned earlier far too many businesses are focused on the short term, on the race to the bigger, richer, more prestigious, or these days, just to survive, no matter the longer-term consequences. If you want to know more about how your business can be more sustainable and long-term value-focused, the author of the article also wrote the book, Small Actions, Big Differences, and her findings reveal a handful of businesses that successfully instilled a sense of sustainability ownership in their employees and have engaged them in the firm's sustainability journey.
Sustainability Is The New Business Reality
This article talks about how sustainability is the new business reality. What does that mean?
Sustainability is no longer a buzzword, and companies will be forced to actually include sustainability as a part of the company's strategy. The customers are changing, and as a business, sustainability is an advantage, and an opportunity to bring products and services to the market that satisfy new customer needs.
Six Leadership Priorities For Boards Beyond The Crisis
We talk a lot about Covid-19 these days, but that's how our everyday life has become.
But as I mentioned before, Covid-19 has also given us opportunities to think differently, it's not all bad! In this article Forbes outline a six-point Leadership Agenda for corporate Borads, that Forbes believes will be essential for ensuring companies’ longer-term competitiveness and resilience as well as addressing some of the systemic societal challenges that have been thrown into sharp relief during the pandemic.
Books on the bedside table this week.
This book is all about sequencing. Its about mastering the art like chess grandmasters who look several moves ahead. He's pretty funny and the book quite inspirational. At least it gets you focused on the fact that to get from here to there is going to take a bit of thought power!
Always end with a thanks!
🙏Thanks to my colleague Espen Kringstad for getting my machine up and running again after a hacking incident within an hour. Pretty impressive!
Something to watch
Here is my recent webinar on simulating the future with rolling forecasts, which are about the best management tool that I think exists (rolling forecasts, in general, that is... although mine is also pretty good!) 😁
Thanks for reading & see you next time
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