Category Archive 'Corporate finance'

Metrics, metrics everywhere but where they should be

Corporate finance, Current events

Despite being a finance blog, I recently came across an article in that I thought was worth sharing. It’s pretty simple but drives the point home. I’ve worked in technology companies most of my career and they all claim to be data-driven. Few really are, and what’s worse, the amount of overhead that goes into producing so-called metrics reporting is horrendous in comparison to the value of its output.

Just because you have a dashboard with 72 metrics doesn’t mean you understand your business…in fact, if anything, it probably means quite the opposite. What that tells me is that you’re not putting your people to good use, and you don’t know how to distinguish what’s important from what’s noise in your business.

Instead of putting in all those man-hours to produce graphs that really don’t tell you anything (and that you likely don’t read anyway), why not take the time to really think about what you need your business achieve and the 3-4 indicators that you’d need to track? How should they be tracked? Remember, sometimes, it’s easier to talk to a person honestly in a one-on-one conversation than trying to measure something in a roundabout way. Like everything else in business, creating meaningful measures and indicators takes a lot of time, thought, and communication.

At the next level down, more detailed metrics can likely be tracked a bit more passively and set off an alert only if something goes awry (say, beyond a particular average, for example). Then you can spend your time looking into what caused that anomaly rather than putting together manual reports each week that don’t really add any insight. I heard a quip at work once that drives this point home. When you read an executive dashboard, it should be intelligible and useful while driving 60 mph, just like in the dashboard of a car. If yours can’t pass that test, then it has far too much info on it.

What’s ironic is that while many analysts spending their work hours busily dicing data every which way, they probably don’t spend enough time measuring in their own personal lives. What’s your monthly budget? How many credit cards do you have? How’s your 401K performed versus the market? Few of us can answer these questions or even think about them on a regular basis. Maybe it’s time to set our priorities straight :)

The most common career mistake most young employees make

Career, Corporate finance

This is the first post in a series called “Managing your career – an introductory series“. The main audience I have in mind are analyst-level employees in corporate finance, but I think many parts can be applied more generally to anyone working in US corporations these days.

I work with a lot of people who are in their first corporate job after college, and I’ve been there myself as well. The most common expectation I’ve heard from them is that someone will manage their career for them, and they look to their manager and leaders in their group to do so.

While it’s true that truly great managers will look out for opportunities for you and push roadblocks away to give recognition to employees who deserve them, the sad truth is that in most corporations, there are usually very few leaders of this sort, and the corporate system makes it extremely difficult for exceptions to be made.

So, how do you go about managing your career?

Read the rest of this entry »

Managing your career – an introductory series

Career, Corporate finance

Thank god the long weekend is here. There have been a lot of changes at my work in recent months. Reorgs seem to beget reorgs, and my finance team this week found itself in the midst of an unexpected leadership change in the group we support.

Although sudden and unexpected job changes reinforce the need, no matter your work situation keeping tabs on opportunities and actively managing your career these days is essential and wise practice.

After all, what you really want are a few options when your hand is forced. Even if you don’t lose your job, being able to have a choice in your next move is freedom worth striving for.

This week, I realized that many of my teammates are younger than me, have less experience, and could use some guidance on career management, so I’ve set up some one-on-one meetings with them. Over the next few weeks, I’ll post steps and tips I’ve learned along the way on this site as well.

‘Til then, though, enjoy the long Labor Day weekend, an apropos way to kick off a series on this topic!

New! Excel and finance consultations for small businesses

Business & entrepreneurship, Corporate finance

I’ve decided to soft-launch a . After receiving regular requests from small business owners for help and being encouraged by them to give it a try, I finally figured, “Why not?”

The type of consultations I’ve provided so far have varied from and to create spreadsheets for analyzing compensation payouts and inventory levels to calculating returns within confidence intervals and more. Usually, people find my site through a Google search and give my tutorials a try, only to realize they need a bit more hands-on help for their particular situation.

As long as you have a legitimate question or project you’d like help with, feel free to contact me and we can decide whether or not I can help and agree on a fee for the consult. You can also read a little more about me in my “About and contact” section. I will, of course, continue to offer and create free tutorials on this site.

Read the rest of this entry »

Recommended reading: a simplified explanation of the current financial crisis

Corporate finance, Current events, Personal finance

If you still don’t know how the current financial crisis happened, there’s an excellent explanation making email rounds in a few Latin countries. Unfortunately, it seems it’s available only in Spanish. It’s such a good piece, though, that I’m offering a basic English translation below. (Edit (11/19/2008): The translation is of the version I received. If someone knows of an English version that probably does a better technical translation than mine, please feel free to let me know.)

It doesn’t seem to have an obvious author, though the Word Doc I received lists an “ojimenezr” at the “Caja Costarricense de Seguros Social – C.C.S.S.” under “Properties”. If that’s indeed the author, I hope s/he’s ok with me using it on my blog. A commenter (thank you Alvaro!) provided me with the author and a link to the original piece. The author is Mr. Leopoldo Abadia, a 75-year old ex-professor at IESE. According to an , he wrote the piece one afternoon in January and the thing went viral (at least in Spanish-speaking countries). His blog called contains a link to the original piece, which he regularly updates. As such, please note that Mr. Abadia has since then (last edit looks like it was done on 11/6/2008), so my translation is of an older version. However, I believe it still does an excellent job of explaining the basics leading up to the financial crisis and in that sense is not out-of-date. Despite having heard of CDOs and followed articles in the Economist, I had no real idea how everything was connected together until I read this document.

Here it is:

Read the rest of this entry »