Sep 17th 2010
By Michael Di Lauro
Advert Advertise with us
The playing field is evolving. Professional toolkits are morphing. And it’s all because of new discoveries in cognitive thought.
Spearheaded by the likes of Dr. Norman Doidge and Dr. Bruce Lipton, a new brand of new-world thinking is beginning to blur the distinction between science and soul, resulting in modern frameworks that, in turn, are shape-shifting the application of science, education, health, and personal growth.
Why then, in view of all this, should the practice of accounting and financial management be left behind? For the last five years, that very question has been my burning preoccupation. And for the last five years, I have worked on transcribing these new concepts to the practice of financial management and consulting.
Financial management, like most professional disciplines, is based on mechanics; do the right things and the desired results can’t help but follow. But, modern cognitive science tells us there is much more to consider – a concept more crucial than the mechanics. And it’s this new knowledge that gives us the tools to understand and to work with those who cannot attain their desired results. Those who try and stumble. Those that desire but cannot execute. This is where new-world thinking comes in. This, to me, is where the steak meets the sizzle.
How, then, does it work? How can this new knowledge impact on our profession? Allow me this brief true-life example:
It was the other day a self-employed consultant called, looking for guidance. How could I help? I asked. He needed business advice, a strategic plan perhaps. He also told me he was broke and sinking into ever-greater debt. During our exploratory chat, he admitted, since starting his home-based business in 2002, that revenue was always an issue. He just couldn’t generate enough of it. With a sigh, he concluded his business had been a mistake and that he was a failure.
Failure is not a word I’m fond of. Where I come from, there’s no such thing as failure. There’s only feedback. But I said nothing, and got down to business.
He had brought some statements, a balance sheet, P&Ls. Looking at his numbers, I dismissed straight off his self-professed accusation of failure. Why? Because in the last eight years he had never generated less than $100,000. Some years he raked in twice that.
Money conversations are a funny sort of thing – tied, such as they are, to perception and belief. For example, some of you reading this might think $100,000 is all the money in the world. Others won’t be impressed at all. “$100,000,” you’ll say, “Yeesh, is that all?”
These things truly do hinge on new-word theories of belief, of position, of perception. And it was perception that had influenced this fellow. And his actions.
What his P&Ls told me (and what he had neglected to mention) was that no matter his revenue, he always spent, each and every year, something more than that. In 2009, with revenue of $112,000, his expenses totaled $119,000. His best revenue year was in 2007. He raked in $195,000. But he blew $210,000.
At this point, I could have lectured him on the importance of sound cash-flow management, on prudent budgeting practices. But he was a professional consultant and something told me he didn’t need a lecture.
Instead, I led with a question. Did he purposely cut it so close? Did he deliberately keep expenses so intrinsically tied to revenue? No, he replied. He never gave it much thought. He never looked at his statements and he never really tracked his expenses. He admitted to just spending when it seemed he could afford it. And yet, I said, in some years he spent almost twice as much as other years. Even more curious, though, was that in every year he always spent an amount just north of revenue. He agreed that it was a curious thing.
How does a person, I remember wondering, pull that off? How does someone, without paying attention, manage his expenditures so precisely?
I asked him about money, what it meant to him, what it represented. Not much to tell, he said. He grew up in a home with money always an issue. Try as they might, his parents never could find the trick to making ends meet. Coming up short, in fact, was something he was accustomed to.
Then he used the F word again, admitting that his parents were financial failures. It bothered him, he said, to watch them constantly kowtow to the money gods. His words: the money gods.
What about him? How did he handle money? Not all that gingerly, he replied, as he admitted to taking a casual approach toward money. It was obvious, though, his attitude was more aggressive than that. He wasn’t casual about money. He was antagonistic. He thumbed his nose at money; flipped it the bird. Almost, as if, to prove a point.
Did he, I asked, care about money? With an indignant look he told me he had, growing up, witnessed enough of the disagreement and torment that money had caused his parents. And, he added, he decided long ago, that he’d never let money do that to him. In short, he had decided that, unlike his parents, he’d never kowtow to the money gods. So he ignored it, rendered it a non-issue, and he never, ever let it become the topic of every day frustration that it had been for his parents.
And yet, I said, he thought himself a failure. Why? Because, he replied, he didn’t earn enough, and he needed ideas, suggestions, recommendations. I reminded him I was an accountant, not a marketing type. And besides, I said, he earned between $100,000 and $200,000. Each year. Wasn’t that enough? I said. He just shrugged.
I shrugged back. Was he sure, I asked, it was his lack of revenue that led him to describe himself a failure? Was it possible, I added, that revenue wasn’t the issue? Was it indeed possible, I said, that even revenue of $300,000 or $400,000 dollars wouldn’t be enough? He asked if I was telling him to control his spending. I shook my head, no that’s not what I meant. We looked at one another until I repeated, was it possible that it wasn’t his lack of revenue that painted him a failure. He shrugged again.
To which I said: It seemed to me that, much the same way he had labeled his parents, he had long ago decided that he too was doomed to being a failure. And, having implicitly made that decision, he then set out to inadvertently and, subconsciously prove it was true.
The example above describes how principles of perception and belief are used in a money conversation. Explicit in this example is my first premise under this concept of new-world thinking. And that is: it’s never about the money.
About the author:
Michael Di Lauro, CMA, is a writer, business advisor, and instructor/speaker. When not writing on business, Di Lauro writes fiction. If you liked this article, you will enjoy his novel, The Net Present Value of Life, available online and in bookstores. For more information, please visit www.dilauro.ca or http://michaeldilauro.ca. You’ll also find Di Lauro on Twitter, Facebook, and LinkedIn.