Thinking About Change: A New Fixed Point
Whoever wants to observe change needs a fixed point.
Fixed points are everywhere and indeed, they are essential when one thinks about it, whether it is a date in time like one’s birth date, or any place from which we judge distance and speed, or any value or objective according to which one judges about one’s actions and their success.
A good and simple example of a fixed point is any starting point in time, and in the case of an entreprise, the start of the business, which offers a fixed point to judge on the progress and performance of the enterprise.
That fixed point and the fixed and well-defined economic and accounting parameters of the business allows change to be observed over time. Accounting of revenues and expenses in each calendar or fiscal years following the business foundation allows to measure the profits realized in each of those years. It allows also to compare numerous metrics and ratios that serve to benchmark and improve the performance and results of the business.
Also, from the start of the business going forward, the accounting of the capital investments, as well as of the value of assets and liabilities and also of the cash flows allows to measure the growth of the enterprise’s value and the relative success of its strategy.
This guides the shareholders and all of the enterprise’s stakeholders in determining the relative performance of that business relative to its peers, whether considered from the point view of an industry or sector or from the point of view of a city, a region or a country.
Without a fixed point, no change can be measured, no clear observations can be made, no definite reflections can emerge and ultimately, no strategy can be devised. As the saying goes, only what gets measured can be improved upon, and only what can be improved upon can be strategized about.
Archimedes would have said “Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.” Well, maybe. Maybe not.
But give me a fixed point, and from and out of that fixed point, I shall observe the world’s variations, observe how it changes and, after a while, somehow figure a way to transform it, starting the unending enterprise of improving upon it.
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