Numbers Never Lie! (But liars do numbers)

It has been awhile since my last post, but I am unashamedly proud to say the reason for my writing absence is: we’ve been extremely busy helping our clients sort through the current quagmire some call an economy.  We do run a business here and like most companies that make a living helping other businesses, we’ve been a little busy lately. 

Because of this recent experience I, of course, have to add my two-bits to the dialogue of what’s happening.  Hence, this post.

Wow!  What a ride huh?  Are you scared yet?

I hate to say I told you so, but if you’re a reader of my blog you will recall I was using the R word (recession) well before it became en vogue in the media to recognize we are deep in one.  In fact the press (and presidential candidates) has now one-upped me with their gratuitous use of the D word (depression). 

Faced with declining workforce growth since late last year (2007), it’s amazing to me that no one raised the truth of the economic maelstrom facing us until it absolutely, positively could not be spun anymore.  I mean, is it only me that realized we went negative job growth in January of 2008 (of course not, my clients knewJ)!  That fact is being treated in the media like they just discovered it – unbelievable!

Much of what is occurring now among Wall Street and Financial aficionados is simply paying penance for keeping the inevitable at bay for an interminably long time with help from election year halo and media quietness about truth.

But, that gets me to my point.  Early on in my career, I had the opportunity of working with an accountant who was extremely human savvy.  A quality not usually seen among those in the bean-counting business.  She impressed upon me the tenet I am about to impart to you: “numbers never lie!  But liars always do numbers.”

Her point, related to me as fact long before Enron, Arthur Andersen and the current Fannie Mae disasters: numbers absolutely positively NEVER lie!  They are inanimate representations of a current, past or potential future situation that result from simply plugging input into algorithms and reporting the output.  They have no inherent power alone, sitting quietly on a page of computer output or within a report. 

It is only in the belief, trust and faith given to numeric output by decision-makers where numbers become enormously influential, almost larger than life.

Because of this, the entire arena of numbers, from accounting to ad spend analysis to ANY numeric metric of a company’s success is heated battle ground between honesty and integrity and the most base human nature components of greed and selfishness.

In the case of the financial industry, greed and selfishness won!  That’s the reason we are where we’re at economically – plain and simple.  Any other analysis of the situation is merely attempting to put a ribbon of some comprehensibility around the otherwise unbelievable fall-out effect from basic human nature.  Once people realized greed and selfishness would be rewarded – liars “did” the numbers.

Having been a marketing information and consumer research consultant to financial institutions for over two decades, I operate in that rare world of knowing the industry while not being obligated by the industry’s peculiarities.  Let’s think through the basic premise of banks, savings and loans, and credit unions – you know, those guys we’re bailing out here recently.

It’s a very boring business really, when you think about it. People give them money.  They loan against a certain percentage of it (making fees at the same time) and there you have it.  Pretty much a guaranteed system for making an easily forecastable return on assets. 

Let me put it very bluntly.  The banking/savings and loan side of the financial business is one of the most easily understood and operated industries that exists in the world.  It has to be, otherwise there’s too much at risk.  The industry would love for you to believe it’s more complex than it is so it can justify the fact they get paid a fee to push paper in order to meet regulatory requirements.  You don’t need to be an economist to be a leader in banking and financial institutions, heck you don’t even need to be a math major – at least you didn’t used to be, that may change moving forward – a fact easily recognized by anyone who has worked within the industry.

There are only two ways to go toes-up in the banking sector of the financial world. 

1) You’re an absolute loser of a manager – totally inept and utterly incapable of running the most basic of excel spreadsheet equations.

2) You’re a thief.

From a legal perspective, what most banking institutions did with our money is something not allowed in any other setting – they embezzled.  You can define that action by one of the ways to go toes-up yourself.

The fact they did so under the protection of “new and revised legal operating frameworks” only brings other entities under the auspices of a “guilty as charged” verdict as the gavel crashes down in a court of law.  

Alas, I did not start this piece only to point out the obvious to my well educated, research-oriented readers.

I did want to add my two-bits and now feel slightly better having added them to the ether out there.

Here’s an interesting outcome I already see happening from the fall-out of this fiasco.  Understanding your customer is even MORE important than it was before.

AND, those who understood their customers better than competitors at the start of this fiasco are weathering it better than those who did not.  This, despite the fact the definition of success has changed (see earlier post – Sometimes Survival is Success).

Good luck everybody on the times ahead of us!