In 1978, Clarissa Baldwin, Chief Executive of the Dogs Trust, created the slogan “A Dog is for life, not just for Christmas”. After 25 years in financial modelling and a fair few as a dog owner, I have come to realise that some dogs are models and some models are dogs so I hope Clarissa will forgive me for hijacking her well-meant slogan.
Of course there are many kinds of model and in coining this phrase I am not thinking of that casual affair with a spreadsheet that is redundant as soon as you have finished it. If you are going to live with a model (or a dog for that matter) it’s probably worth spending a little time making sure it is compatible with your way of life.
So, what makes model easy to live with?
Given the tendency for models to be looked at in some detail, appearance can be important. However stunning beauty might be a distraction and may conceal a darker side. In practice the model needs to be easy on the eye so loads of garish colour and multiple fonts or random blocks of code scattered around the sheets are not easy to live with. It may be ‘in the eye of the beholder’ but good looks can certainly help.
Unless you enjoy life on the edge, behaving badly is pretty tedious. A certain predictability in behaviour and a consistent response to your questions makes the relationship far more sustainable. However taken to extremes, this can become boring, so the occasional surprise can be worth its weight in gold. Given the complexity of some models a surprise outcome can be truly enlightening, providing you know your model is behaving properly.
At some stage you will probably want to introduce other people to your model. Knowing your model has good manners makes this a lot less risky. There is nothing more embarrassing than a model that flies of the handle at the slightest provocation, crashes out or simply takes so long to answer that everyone goes to sleep half way through the conversation. Good manners are learnt at a young age so make sure your model has good manners from the outset.
George Bernard Shaw could have been talking about financial models when he wrote. “The single biggest problem in communication is the illusion that it has taken place.”
In the end the ability to communicate is probably the most important quality for a long term relationship with your model but communication between you and your model is just the beginning. A model that can communicate with a wide audience has real value so make sure you model speaks the same language as the intended audience and can be clearly understood.
“That’s a lot to ask of your model” I hear you say as you stare at a blank spreadsheet wondering how to work out if the company is going to run out of cash next month. You are not alone!
By adopting FAST as a standard F1F9 have been building corporate models that last a lifetime, behave themselves, have good manners, communicate brilliantly and even look good. We also train others so they can have a happy life with their models.