Learn like a genius
Yes, Elon Musk uses a method of learning which he calls a “semantic” tree.
Conceptually it is very simple – first you grasp the big picture – the basic principles – and then you add all the surround sound – all the issues that flow as an extension of the basics.
A good mental image to illustrate this method is a tree.
Interpreting the picture – first come the roots, then the trunk, then thick branches, then thin branches and finally the leaves. The tree is the complete picture
And therein lies an analogy. Between the tree- the complete entity – and a financial model – the composite business case.
The roots are the input assumptions – the drivers of both.
The trunk is the complete modelling conventions..
The thick branches comprise the modelling methodology, the thin branches are the support schedules and the leaves the final result – the financial statements.
The tree is the completed model encompassing the overall business case, the required results, and the model analysis.
When I came across the Elon Musk interview, and his learning philosophy, It occurred to me that understanding the function, benefits, and significant advantages – the big picture – is a critical issue which serves to motivate the desire to develop modelling capability.
Simplistically, as a businessman, why do I need a financial model? What’s it going to do for me?
How am I going to benefit? And how do I go about it?
Well, if your business has financial challenges and requires
- a flexible predictive tool to provide answers,
- a method to evaluates possible strategies,
- investigation of different scenarios,
- an ability to facilitate “what-if” alternatives
In other words – models provide solutions – all within a framework of integrity – and you can definitely benefit by having a tool to assist you in making informed decisions.
As a provider of corporate financial consulting services, there are three ways to proceed:
- Get Goalfix to build a model for you, or
- Get Goalfix to teach you (or your staff) how to build a model based on international best practice methodology.’’ or
- Build a model with Goalfix – learning on the job.
And like all choices in life, the right choice depends on the circumstances.
If your human resources (staff) are limited, and time (or lack thereof) is an issue, the quickest and probably the most effective choice is to consult with Goalfix.
On the other hand, if you have staff and time and wish to develop the capability of building a financial model in-house, then sending the appropriate staff to a Goalfix training course, may be the best option.
A hybrid version of the above, involves consulting with Goalfix to build the model – and at the same time – appointing a suitable financial staff member to execute the task in tandem with Goalfix.
i.e. the concept of “learning on the job.”
This option has a number of significant benefits:
- The model that you require is created incorporating all your company/ project specific requirements
- The staff member assigned to work in conjunction with the Goalfix modeller gets exposed – in a meaningful hands-on fashion – to international financial modelling best practices.
- The art of building models becomes an in-house capability and in the event of developments in the company such as, geographic expansion, introduction of a new product, acquisition of a competitor and other possible scenarios, the models required to analyse and predict financial outcomes, can be built in-house.
“Challenges are what make life interesting and overcoming them is what makes life meaningful” is a well- known quote.
While there may be some challenges – essentially learning a new skill – the rewards of having a relevant useful financial management tool are truly significant,
Feel free to email me or call me – +27 82 888 1900 – if you would like to have a discussion about financial modelling and how it could benefit both you and your company.
Colin Human CA(SA)
Goalfix Financial Modellers
