The businesses you work in, and the technologies you use, change so fast that it’s hard to keep up. There will always be some new thing you need to learn.
You’ll be able to predict your future career more accurately if you know what kinds of problems your boss is trying to solve.
Learning curve: the steepness of the line on which a new product or process or technique rises from its early stages to its peak. If you’re trying to get into a new market, one of your main concerns is learning curve. Many companies try to reduce their learning curve by hiring people with experience in the market. That’s an expensive way to do it; if you can hire people who are already experts, you can save money with no loss of productivity.
A different approach is to take time to understand the business before you start doing anything, during which time you can work on things with low risk. The most common kind of problem in startups is that they don’t have an idea for what to build at first, or they have an idea but don’t understand how it relates to the problem they are trying to solve.
The financial controller’s job is to turn the business into money. So it can’t be too complicated. The chief problem with business is that it is hard to get your arms around the details fast enough to make good decisions about how to invest.
But you can also turn a complicated business into a simple business. And so, the other way around, you can turn a simple one into an extremely complicated one — unless you’ve done it wrong in the first place.
The simplest companies are those that sell one product, which they make themselves. That’s why there are so many consumer goods companies that don’t have to worry about finance or inventory or transportation or any of these things that don’t involve making their own stuff.
You can do this with software too. A lot of software companies start out doing something simple: for example, writing a spreadsheet program that runs on Windows and looks like Excel on steroids, with all kinds of features hidden under the hood. Then over time they add more features and pile more complexity on top of what started out as a simple product.
It will probably work out OK in the end, but you won’t know until a year or two in whether you’ve made a mistake by going down this path.
I was the business analyst in the finance department, and I was in charge of our company’s financial software. The software was buggy. As the software got more complicated, it became harder for me to understand what it did, and harder to fix bugs.
By this time I had been with the company for several years. I had put in my share of late nights fixing bugs, but that wasn’t what I was there for. I wanted to understand how the company worked.
So when we started working on a new project, I started learning about finance myself. It took me around three months to read through all the documentation for our accounting system (which was huge), and another month or two to learn how to use it well enough to make changes without needing help from someone else.
I learned about finance in stages. The idea is that you don’t need much depth at any one time; you just need enough depth that you can do your job when you get there. You can do this by taking it one step at a time, starting small and working your way up until you have an understanding of the whole system.
The idea that “the only thing that matters is what you know” is wrong. The less you know, the greater the learning curve; the less experience you have, the harder it is to make good judgments.
The size of your learning curve affects how long it takes for you to become an expert. If the learning curve is high, you need a long time to become an expert; if it’s low, even a year will make a big difference; and if it’s zero or negative, you don’t have one at all.”
Many people in finance think that money is like magic, that you can make it by cutting deals and making deals. That may be the basic idea; but they are wrong. Money is not like magic. It is not a source of wealth; it is the result of wealth.
The magic of banking comes later. Not when you open an account or show cash up front, but when you use your credit card to make payments at the supermarket, or when you use your debit card to make payments at the dealer’s lot.
You don’t earn money by cutting deals and making deals. You earn it by paying for things. Most people earn money by working for someone else, buying things with money they have earned this way, then spending that money on other things that will help them earn more money tomorrow. The more complex the system, the less straightforward this process becomes, but at its core there are two things you can do: work less on average and spend more wisely on average.
One of the main ways to make money is to take shortcuts and save time and effort. The more you save that way, the more money you can make. The shortcut that matters most is learning how to think like a business.
Many people complain that their piece of work isn’t worth much because they didn’t get it right the first time. But if you get it right the first time, what do you get? Nothing. There is no point in doing your work unless you learn something from it, so if you don’t get anything from doing your work, you didn’t get anything from doing it.
The only reason we’re able to do our work at all is because we learned and learned and learned and learned and learned and learned and learned and learned and learned and learned and . . .
If we don’t learn anything from our work, we’re not paying our teachers enough for their trouble.