by Andrew White | January 14, 2020 | Comments Off on Beyond Single Version of the Truth
The single version of the truth can be anathema. It does not really exist and it’s not really worth the effort. But then again, what we mean by that phrase has changed. The original idea of a perfectly defined, universally agreed and accepted piece of data, or golden record, proved too expensive to maintain; if it was ever even achieved. Costs were saved with silver copies (somewhat less agreed; candidates for golden level etc.) and other variants.
Over time rational behavior kicked in and finally we have collectively centered on, “Generally acceptable aspects of some version of truth, not assuming that even that exists but not really caring if it does or does not, that allows us to get on with our work.” But that does not sell or sound convincing, so many folks still talk about single version of the truth, or golden copy. More practically we might talk of trust over truth. See Reset Your Information Governance Approach by Moving From Truth to Trust.
The “work” here defines the scope of boundary of business processes, applications and users who need to agree what is agreed. Any variant outside that boundary is not included even if you and I could look at both pieces of data and determine that they should be identical. That does not matter. What matters is the work, or the outcome, that dictates or self-describes the boundary for what does matter. After all, we will continue to run our organizations well with crummy data. Even dominant firms in markets have crummy data,
But what happens if our leaders cannot agree on a ‘generally acceptable’ piece of data? Let’s look at profit. Surely a firm’s profit is easy to define and calculate. Right? Wrong!
There was a great article in the US print edition of the WSJ in December 16 2019. It was titled: Disparity in Profit Data Hints at Possible Trouble. The article starts by asking an innocent question: are US firms making more many than ever before or are they mired in a long running slump? This sounds like an important question that could influence not just CEOs and CIOs but also public policy makers.
However, the article compares two methods that measure profit:
- Pre-tax domestic profit as measured by the Bureau of Economic Analysis
- Earnings as reported by the S&P
In the case of the former, so the article reports, profits are down 13% in five years, “the biggest drop outside a recession and since World War II.” Profit margins are down too.
In the case of the latter, earnings per share are running at record levels in the 12 months to June, “up 31% in five years and forecast to keep rising. The after-tax profit margin is slightly down from a record last year, but still higher than any time before that.”
What does this mean? Are firms doing well and everything is fine? Or are firms struggling and we need to plan for a slow down? The answer to which data you work with could impact big decisions from capital investment to tax or other public policy. Finally, the article highlights how, by taking tax out of the analysis, the two metrics were more closely aligned in the 1970s. It seems tax rule changes since then play a big role in how profit is realized and/or reported.
So back to the original question: are forms enjoying the best of time or are they on the wrack? I don’t know. The data is not conclusive. I’ll leave that up to you to decide.
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