The Shareholders Report

In the boardroom that morning it almost seemed as if our company was staging a re-enactment of a Stalinist show trial. Across from me sat my beleaguered colleagues, their sullen and despondent faces trembling in terror as my CEO digested the dismal sales figures for the financial year. As he raised his bloodshot eyes from the sheet of paper in front of him, we saw to our dismay that his face had turned a violent shade of purple. There soon followed the inevitable recriminations and accusations. One by one my co-workers were reduced to quivering wrecks; confessions were extracted and blame was liberally distributed down the company food-chain. I sat there silently, awaiting my turn, hoping that by some miracle he would mistake me for a piece of furniture. Alas my hopes were in vain.

“Dionysus!” he bellowed, casting a disapproving eye over in my direction, “this year you will have the responsibility of putting together the shareholders report!”

I initially felt relief, and something akin to pride. This would mark a considerable step up from my usual activities, which mainly involved removing blockages from the photocopier. However, this buoyant mood was almost instantly replaced by a sense of deep, impeding doom. He must have detected my despondency because he shot me a piercing glance and snarled

“…and you had better do a damn good job, because heads are on the line here!”

His menacing tone of voice made it clear that if I didn’t play my cards right, it would be me playing the role of Marie Antoinette in the company’s next performance.

I sat glumly at my desk the following afternoon, struggling to come to terms with the sheer scale of the task in front of me. Like a latter day Joseph Goebbels I would somehow have to turn a humiliating financial debacle into a something akin to an honourable retreat. Examining the sales chart in front of me for the last financial year the prospects did not look good. To begin with, the line of the graph rose buoyantly, capturing something of the optimism and sales success we had experienced at the beginning of the year. A flurry of meetings had ensued with much slapping of backs and invitations to expensive corporate outings. My colleagues and our partners became intoxicated with an inflated sense of our own importance and quickly worked themselves up into a capitalist feeding frenzy. They spent long hours in the boardroom conjuring up extravagant financial models, depicting impressive but implausible streams of revenue washing into the company’s coffers through an intricate network of coloured boxes.

We had fallen firmly under the spell of our own hubris and, seized by an unquenchable desire for the ultimate profit margin, the decision was taken to develop one of these models into a ‘groundbreaking’ subscription product for consumers. The basic idea was that customers would pay a monthly fee for the mere privilege of being able to purchase services from our site. The sheer lack of value in the product would be somewhat mitigated by sending the customer a glossy welcome pack peppered with inane marketing text. This ‘offering’ would then be sold to the ‘low net worth demographic’ by an ‘outbound telesales campaign’. In other words, poor people would be bullied into purchasing it by a bombardment from Indian call centres.

The result was an unmitigated disaster. The call centre workers had serious problems articulating their sales script, the ‘low net worths’ proved far less gullible than our marketing data had suggested and our corrupt and decadent marketing department allowed our budget evaporate into thin air. The result was a crippling lack of sales, which on our annual sales chart resembled a cross between the Wall Street Crash and the collapse of the Soviet Union.

I opened the internal memo that accompanied the sales chart. The informal summery at the beginning began by saying that results had been ‘frankly catastrophic’. I deleted this phrase and, after a pause, replaced it with “modest but encouraging”. I then used the find and replace function to weed out every instance of doom-laden language. Thus “bad” became “respectable”; “disappointing” became “promising”, and “collapse” was altered to “softening”. I re-read the document and realized that just by this simple act of manipulation, I had taken much of the sting out of the document. In fact, it was beginning to make the incompetence of the last year appear to be a Herculean effort in the face of overwhelming odds.

before.jpgEncouraged by this modest success, I returned my attention to the sales graph and the challenge of making such a disastrous set of results appear even remotely positive. Language can be easily manipulated, but numbers are harder to dictate to. In this particular case the problem was the size of our impressive initial sales at the beginning of the year relative to the disastrous decline which followed. Deciding that the line graph looked rather too much like the descent from Mount Kilimanjaro I decided that a column graph might be a better option. This proved no better. The initial sales columns towered over the neighbouring columns in the graph, making them look utterly pathetic in comparison. If I was to have any effect on the presentation of the results I would have to find some way of castrating the initial columns.

It was time to use the ‘underlying trend’ trick. I dug out the spreadsheet the graph had been produced from and brought the sales levels for the first three months down to be more “in line” with what had followed. I then marked these data points in a subtly different colour and placed a small note in the report to the effect that ‘the skewing effect of the sales ‘spikes’ in Quarter 1′ had ‘been removed from the graph in order to reveal the true underlying trend’. Thanks to this bit of surgery the column graph on the screen before me looked a lot healthier, but there was still no disguising the overall atmosphere of decline. The collapse across the year was simply too pronounced for even the most drastic methods of camouflage.

after.jpgChanging the graph into 3D seemed to improve matters slightly. Inspired by this I began to fiddle with the various options. First I changed the minimum and maximum values on the axes scales, which immediately helped further disguise what was really happening. Then I tweaked the perspective, titling the graph backwards on the Y axis by 60 degrees so that the difference in size between the columns became less obvious. Now the tilted set of columns looked more promising, but at the cost of appearing as if they were being presented as part of the opening credits in Star Wars. Feeling there was no turning back now I rotated the graph on the X axis by 20 degrees so that the dwarfed sales columns at the years end now found themselves in a more honourable position at the top of a slope. I sat back and admired the result. Most people would be able to see through this illusion of perspective straight away but it was the best I could do and, backed up by my more carefully-worded report, I might just get away with it.

To seal the deal, I completely rewrote the report summary to better reflect the ‘true’ sales trend that I had managed to ‘uncover’. Luckily, the general disaster which had occurred in the wider economy meant our incompetence looked ‘respectable, relative to the overall market’. In the face of a difficult ‘negative upturn’ in the economy, the ‘solid results’ of the last year were ‘encouraging’ and presented an ‘ideal opportunity for ‘improving efficiency, bringing about cost effectiveness and reinvigorating activity levels’; or in other words, firing everyone responsible for the mess and launching a ruthless purge of our marketing team. I concluded with some Pseudo-Darwinian nonsense about how the disaster of the past year had helped us ‘come out stronger and fitter’, although ‘brought us to the brink of extinction’ would perhaps have been more accurate.

As I printed off several copies of the report, a few doubts about the graph began to enter my head. Had I got a bit too carried away in my efforts? Did it perhaps look a bit silly? My colleagues who read through the report looked somewhat quizzically at the chart as if there were something not quite right about it and then looked at me with a mixture of dismay and admiration. I could only shrug my shoulders in response. My CEO emerged from his office with alarming speed and grabbed a copy from the printer. Having read it through he looked at me and gave a rare smile; “Good work Dionysus”. I felt a wave of relief pass through me, until he remarked “So good, in fact, that I’m putting you forward to present this to the shareholders at the next annual meeting”.

I think it was Nietzsche who said that “There are no facts, only interpretations” and this is especially important to bear in mind when writing reports on your company’s performance. Failure will inevitably occur in the business cycle, but when viewed through the prism of a glossy pdf, some carefully crafted language and a tilted graph, even a year of ruin and misfortune can seem ‘modest, solid‘ and ‘respectable‘; and be an ‘opportunity for rebuilding standalone strength with integrity and transparency‘. In business truth is the first casualty; but good riddance.