Have you ever been tempted to strangle your CFO? Desist. Instead ask your CFO to read Everything You Know About Business is Wrong and to start practising it. If he fails to do either, you can justifiably strangle him.
Alastair Dryburgh, of course, intends his book for a general corporate audience – not just for people in Finance – but his own training as a chartered accountant, followed by years of experience in the commercial functions, makes him particularly adept at identifying the sclerosis a traditional accounting mindset can bring to the best of organisations. Dryburgh displays a practitioner’s insight when he identifies the tension that exists between a Finance Director’s job as Head of Control and Compliance (“Produce the basic accounts. Make sure customers pay when they should. Prevent people spending money they shouldn’t …”) and a Finance Director’s job as a Business Partner (“How can I help this organisation make more money?”). Most of the shibboleths Dryburgh trashes are associated with atavistic accountants but that does not prevent his treatment from being amusing and instructive for the general business reader.
Take, for instance, the first commandment of the accountant’s Decalogue: to cut costs. Dryburgh demonstrates, with logic and illustrations, why making a religion of cost-cutting is not only an inadequate answer to the fundamental question of how to improve profits, but is in fact frequently counterproductive for meeting the goal of raising profits. As Dryburgh puts it, “… getting rid of the corporate jet is … cost saving. Reducing capital expenditure or research and development is sacrificing the future of the company to the immediate short term.”
Everything You Know About Business is Wrong also presents a sound, if not exactly eye-opening, demonstration about the fallacy of relying on standard financial measures like gross margin and net margin for taking management decisions. The instances of efficiency measures destroying real efficiency are also incontrovertible even if they seem familiar. Dryburgh adds more to our knowledge-stock when he enunciates the characteristics of useful measures (e.g. relating financial quantities to something that is not money) and useful information (“… it has to include more commentary, that is to say, more words and fewer numbers.”). He delivers sledge-hammer blows to the orthodoxy of financial control when he points out how budgets are inimical to both planning and performance (“… the more you hold me to my guarantee of what I will produce, the less I will offer you.”). Equally insightful is the trade-off Dryburgh posits between growth, profitability and risk: “If you decide that you want to grow faster, assume that you need either to increase cost (and hence sacrifice profitability) or increase risk, unless you have very good reasons for thinking otherwise.” In these heady days of double-digit corporate growth in our country, this is an admonishment company boards would do well to re-read periodically.
There are a couple of chapters in the book that deal with topics not directly within the domain of Finance. Here, too, Dryburgh has views that are refreshingly different from those of his biradari. The priority he accords to non-financial incentives may not come as a surprise to enlightened managers but it is refreshing to hear it from a dyed-in-the-wool chartered accountant. More contra-intuitive is the conclusion Dryburgh derives that Top Management’s performance is most likely to be reduced by financial incentives whereas those doing routine jobs would benefit from larger financial incentives. No less interesting is the short shrift he gives to standard “time-pass” programmes like Time Management which, he says, “is such a huge industry because it doesn’t work”.
The genesis of Everything You Know About Business is Wrong was a series of articles Dryburgh wrote for Management Today. The book betrays its origins. The chapters stand up well individually but there is a degree of repetition and overlap between them which would not have been expected in a book written independently. By the same token, the first chapter, which is meant to provide an integrative framework, and the last one, which lays out a plan of action, are possibly the weakest. But these are minor quibbles in an otherwise re-juvenating call to question the beliefs and solutions that we normally take for granted. If you manage to get your CFO to practise even half of the recommendations of this book, you will no longer feel like strangling him. Before you put your asphyxiating aspirations away forever, however, remember the advice Dryburgh gives on the last page of the book: “Somebody asked me recently how I decided the first thing to do each day. My answer was: ‘The most important of the things I don’t feel like doing’.”
The reviewer is CEO, Banner Global Consulting
EVERYTHING YOU KNOW ABOUT BUSINESS IS WRONG
Alastair Dryburgh
Headline Book Publishing 2011
213 pages; Rs 295