How CFOs Know if their Company Math is Hurting Them

Last week I reminded you how Steve Jobs launched the first Apple iPhone. The point wasn't that he couldn't accept 'no' for answer and pushed until he got a yes. The point was that he chose that company math. I asked whether you designed your company math, or inherited it. This week, I want to give you some guidance to help you actually find out.

Remember, company math is the operating logic that drives every decision in your business. It can show up in structure, it can show up in process, cadence or rhythm, and it can show up in culture.

How to tell whether your company math is operating by design or default

When I work with my CFOs, inevitably we start in the detail, and end up zooming out and looking at the bigger picture. When it comes to reflecting on lessons learned, it often sounds like 'it's so hard to see this when you're 'in it''. And they're right. You can't diagnose company math from inside it because it feels hard, it feels stressful. If you do that, you'll likely design the wrong thing. You need to look at what the company math is producing across the whole business.

Take the Jobs example. Brutal, culturally damaging and stress inducing. Yet it worked. The proof? Apple sales, share price, everyday humans queuing up in the twilight hours to get their hands on the device that came along with the apple sticker.

I talk about the real math of business. It's an equation. So when you're reflecting on your company math, I invite you to ask yourself the following 2 diagnostic questions:

• What is your company math actually optimising for?

• Does the rest of your business confirm that?

Sit with those for a moment.

Let's run these questions by a fictitious service-based business that runs 'a la Steve Jobs'.

• What is this company math optimising for? Let's say its strategy is high touch sales and high-quality culture. The routines and rhythms support lots of client and prospect facing calls and meetings. Add to that, there are lots of additional meetings as part of a technology implementation.

• Does the rest of your business confirm that? Depends on what you look at. What are their company engagement scores? Low? If so, what does that indicate? How about their turnover rate? If those are high, it's fair to say we can't confirm that their people math works. Sure – their acquisition math is probably good. Of course – that's the focus. Control math, assuming the technology aligns with the strategy, that's probably okay, too. But it fails the people math test.

When company math is helping, the other math levers align. People math filters correctly (i.e. the right people stay, the wrong ones leave), control math reflects alignment between spending and strategy. Market math is being served. It tells a coherent story.

When it's hurting, there is inconsistency in the other math levers. High turnover correlating with high sales. Spending that is misaligned to strategic priorities. Market promises that the business can't deliver. The story is all over the place.

Using the Jobs example is a good one, because it demonstrates that the goal isn't comfortable company math.

It's coherent company math. Company math that is intentionally designed and creates the outcomes you want.

If your answers to the 2 questions above aren't coherent, you don't have a performance problem that needs to be outsourced to HR. You have a design problem. That's on you.

Next week — what it actually takes to lead this.

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