Leafing through the tables and footnotes of an annual report, specified and analyzed down to the last decimal point, they appear to provide very definite and precise information. Much like mathematics, physics or chemistry.
That is a very dangerous misconception.
Because economics and business are actually behavourial science — as difficult to tame as any other expression of sociology or psychology. In real life those neat figure columns always rest on the somewhat shaky foundation of, and complex relations between, more or less enlightened, influential and motivated people. Not to mention the unpredictable effects of new, sometimes barely known and understood, challenges and solutions.
In this environment any decisions to buy a product, service or idea are particularly influenced by soft and liquid factors such as trust, hope, fright, loyalty, respect, self-esteem, and by the power of shared visions and values.
The very core of strategic management competence is to think ahead, and to apply the greater, holistic views. And when more and more people – including shareholders, employees, customers and other irelevant parties – adopt similarly strategic views, no CEO can afford to remain too long in the one-eyed trenches of conventional quarterly reports.
This is one reason why environmental concern, decent behaviour and other non-financial aspects are a strategic part of any company’s brand equity. And, consequently, why many companies are now beginning to integrate the various aspects of sustainability into their financial reporting systems too.
Today, this integration is admittedly partial at best, still presenting the fruits of their sustainability efforts side by side with their financial details. But it is certainly an inspiring preview of the exciting times ahead.
What do you think?
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