After graduating with MBA from The College of William and Mary I began working at a top consulting firm in Washington, D.C. and was surrounded by PhD economists and experts who had written multiple academic papers and articles for government and other prestigious publications. Much of my job was taking their highly technical work and communicating it in writing to lawyers and corporate leaders so that it could be actionable.
After several months I realized that this was the exact same work I had been doing in my prior positions and if this was needed at such a well-known and respected organization, who else was confused by the complexities of business jargon and overworked mathematical formulas? Who else was just struggling for actionable information to run their business, help their career and improve their lives?
Knowing I needed to start somewhere and being a CPA, I reached out to the first publication I read diligently every month, the Journal of Accountancy and contacted the Senior Editor about on how accounting drive profits in through securitization, a hot topic at the time and one in which I had spent the past several years of my career focused on.
The published article, Securitized Profits, was the first of many and the one I still remain most proud of.
Where Does The Name Pierce The Fog Come From?
The term, Fog of War, is credited to fame Prussian military strategist Carl von Clausewitz in his book On War, published by his wife posthumously in 1832. In Chapter 3 of book I, von Clausewitz writes:
“WAR IS THE REALM OF UNCERTAINTY; THREE-QUARTERS OF THE FACTORS ON WHICH ACTION IS BASED ARE WRAPPED IN A FOG OF GREATER OR LESSER UNCERTAINTY.”
Business, like war, is uncertain and most frequently places those in a position of influence and power in a state of ignorance as to the strength and weakness of their own, their friends and their opponent’s positions.
So what does the fog of business look like? It can be best visualized through the lens Porter’s five forces. Michael E. Porter is a Harvard business school professor who first developed the five forces of competitive position analysis in 1979 which were he featured in his book: “Competitive Strategy: Techniques for Analysing Industries and Competitors” published in 1980.Porter’s five forces help to identify where power lies in a business situation and helps to identify the strength of an organization’s current competitive position or a position in which they seek to move. The five forces are:
- Threat of new entrants – Large economic profits attract new entrants which will eventually erode profit margins, bringing total returns down.
- Bargaining power of buyers – The strength of the buyer’s position. Can buyers work together to order in large volumes, or conversely, if there are few buyers but many suppliers can they set prices (for example in the defense industry).
- Threat of substitutes – Substitutes refer to products in other industries that weaken the pricing power of suppliers. For example, the internet via fiber optic cables is a substitute to internet delivered via cable.
- Bargaining power of suppliers – This is a function of switching costs, number of suppliers, substitutes, competition, degree of differentiation, and virtually all the forces that effect your business and your customers but further down the supply chain.
- Rivalry among existing competitors – For most companies, this tends to be a main focus that drives the level of marketing and advertising expenditures as well as determines overall net profit profits. If there are many competitors who are offering hard to differentiate products or services, then a high volume, low margin business may be the best strategy.
More recently in addition to the five forces above, I have heard of 1 more force that have become common in business circulation which is:
- The availability of complementary products/services – complementary goods/services offer more value to the consumer together than apart. Think of what would happen to the sale of ketchup if there was a shortage of mustard. This theory can to prominence in the 1990s by two Yale School of Management professors Adam Brandenbuger and Bare Nalebuff and can be found in more detail on page 17 of their book: Co-Opetition.
In addition to the above, Porter himself has been quoted as saying that both government and the public are factors that affect the five forces.
All of the above factors and more make forecasting, planning, and business analysis nearly an impossible job especially at today’s ever increasing pace of business velocity. Add to that the fact that the accounting function is rapidly being transactionalized through cloud-based systems, while regulatory compliance burdens are increasing the need for finance and data analysis professionals who can thread the needle and partner with operations, marketing, HR, IT and other senior leaders to pierce the fog of business and deliver better forecasts, better analysis, and better results is greater than ever.
As part of this trend, senior finance leaders are being asked to lead business operations, mitigate compliance risks, partner with other divisions and departments to enhance enterprise value as well as many other tasks not traditionally undertaken in the past. Finance professionals don’t have time to be experts in everything. They need help now more than ever.
“Pierce the Fog is a platform designed to help finance professionals get the critical, real-world insights they need to make them a rock star to their peers, the boss, and their board.”
Pierce The Fog was created to be a help the finance professional to kick-ass at their job, by giving them the resources, products, training and guidance they need to help take their careers and businesses to the next level of profitability and growth.