Fish, without disagreeing with anything you said I would make explicit a nuance about the balance sheet. It is indeed a snapshot of the present and some of the balance sheet components like the balance of a bank account are nothing more than that. Some balance sheet components also express a belief about the future (grounded in facts that can pass an audit) such as the value of intangible assets and inventory. For inventory it's a belief that it will be sold at more than it's carrying cost. For intangible assets like goodwill related to acquisitions it's a belief that the acquisition was worth more than you paid for it.
Fish, 100% agree with you on the importance of speaking finance. I also endorse your point that becoming conversant and knowledgeable in this doesn't require the investment of an MBA. Due to the my own circumstances, when I was transitioning from the military into consulting, I couldn't afford to take two years to immerse myself in getting the official degree, but I could commit to going through dozens of books on operations, financial statements, business finance, and other financial topics. I also invested in taking key members of the finance team out for lunch or a drink to get some tutoring and clarifications on topics that didn't fully make sense to me. I always found them eager and willing to share the nuance and details when asked. It's one thing to learn it from a book, it's another to actually sit down with a 10-Q or P&L and walk through it with someone in finance. Connecting financial concepts with business reality was a great learning experience. In addition to learning about what the numbers mean, I found the most valuable knowledge was getting a better understanding of how finance thought and what their priorities were.
Mike, I loved the quote "I started my career writing code, and ending my career writing messages to executives (a new type of code!!).", so true! Another version I've heard is "My CTO programming language is PowerPoint!".
Thank you for writing this, Mike. I've felt this tension for some time as a mid-level Product Leader and have debated getting an MBA countless times. Do you have any specific books, courses, etc. that help with this?
Fish, without disagreeing with anything you said I would make explicit a nuance about the balance sheet. It is indeed a snapshot of the present and some of the balance sheet components like the balance of a bank account are nothing more than that. Some balance sheet components also express a belief about the future (grounded in facts that can pass an audit) such as the value of intangible assets and inventory. For inventory it's a belief that it will be sold at more than it's carrying cost. For intangible assets like goodwill related to acquisitions it's a belief that the acquisition was worth more than you paid for it.
Thanks for the comment and for pointing out some of the more nuanced nature of balance sheets.
Fish, 100% agree with you on the importance of speaking finance. I also endorse your point that becoming conversant and knowledgeable in this doesn't require the investment of an MBA. Due to the my own circumstances, when I was transitioning from the military into consulting, I couldn't afford to take two years to immerse myself in getting the official degree, but I could commit to going through dozens of books on operations, financial statements, business finance, and other financial topics. I also invested in taking key members of the finance team out for lunch or a drink to get some tutoring and clarifications on topics that didn't fully make sense to me. I always found them eager and willing to share the nuance and details when asked. It's one thing to learn it from a book, it's another to actually sit down with a 10-Q or P&L and walk through it with someone in finance. Connecting financial concepts with business reality was a great learning experience. In addition to learning about what the numbers mean, I found the most valuable knowledge was getting a better understanding of how finance thought and what their priorities were.
Excellent suggestions. Thanks Mike.
Mike, I loved the quote "I started my career writing code, and ending my career writing messages to executives (a new type of code!!).", so true! Another version I've heard is "My CTO programming language is PowerPoint!".
Thank you for writing this, Mike. I've felt this tension for some time as a mid-level Product Leader and have debated getting an MBA countless times. Do you have any specific books, courses, etc. that help with this?
I have countless books on finance, being a CEO, etc. but have yet to find many of them helpful in learning to speak the language of business fluently.
Hi Chris, I had a couple of people recommend resources for folks on this topic:
https://www.harrisonmetal.com/classes/basics-of-finance-self-study
https://www.amazon.com/dp/1422144119?ref_=cm_sw_r_cp_ud_dp_MCJ0QRM1N9XY8KYHKCKF
Thank you!