Strategy Survival Guide

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Step One: Define the problem explicitly Ask yourself: • What are the questions I need to answer? • Conceptually, how do I answer each of the questions? • What will the final output look like? Step Two: Understand the audience Determine who the target audience will be and keep in mind their background when preparing data to share. Pre-empting your audience and their needs, and designing Excel and other output to suit those needs will save 'low-value’ added time repackaging output. Step Three: Design, don’t type Having now envisaged the output and understood your audience, think about how to design your Excel analysis to best meet those aspirations: • Spend the time up front to design the spreadsheet • If necessary, write a brief work plan • Ask yourself: how accurate does the analysis have to be? How long do I have to generate the model? • Design the spreadsheet workbook • Always have an assumptions sheet, this will help with sensitivity analysis • Make other sheets flow logically from the assumptions sheet • Sketch out a classification of variables: • Static variable: variable that is unlikely to change. • Dynamic variable: variable that you do not know accurately and you are likely to want to test the sensitivity to a range of the variable • Calculated fields: variables that are derived as a direct result of static and dynamic variables First, it will be useful to classify variables according to type which will then help in writing the model, for example: Variable Household density Store reach Number of households per store Household penetration Annual spend per customer Annual revenue per store Gross margin Annual fixed costs Annual profits Initial investment NPV period Discount rate NPV Type Dynamic Static Calculated Dynamic Static Calculated Static Static Calculated Static Static Static Calculated Secondly, laying-out a workbook design will save you time in writing the model in Excel. In general, Excel workbooks should follow this generic design: Strategy Survival Guide – Strategy Skills Page 130
Assumptions • Single location for all static and dynamic variables • May contain a small number of variable fields • May want to use colour to clearly highlight input assumptions Calculations • Mostly calculated fields • Make each worksheet logically distinct • No static and dynamic variables Summary • All ‘camera ready’ outputs and charts • Few calculated fields • No static of dynamic variables Step Four: Document your spreadsheets It is very important to document the model as it is built. Such documentation will include information about sources of data or estimates, comments on non-obvious calculations and anything else pertinent. Any one looking at the model tomorrow or in six months time will find good documentation on the spreadsheets extremely useful. The basic rule here is that your spreadsheets should be self-documenting as much as possible. One way to test whether you have sufficient documentation as you go along is to ask the question "If my team leader had to take over my analysis tomorrow, could they understand what I’ve done?". There are two major alternatives for documenting spreadsheets, using either: • An additional Excel column • Comments attached to the cells Alternative Advantages Disadvantages Excel column Comment Easy to see, so when an assumption changes more likely to change the note as well Documents the spreadsheet when printed - can hide the column/set out of print area not required Discreet - less intrusive when using the spreadsheet Can feel intrusive - gets in the way Easy to forget to update columns when hidden Easy to forget to update In some cases, it may also be necessary to write additional documentation in MS Word or MS PowerPoint. Step Five: Use variables, never hardcode • By defining the variables up front and create the assumptions sheet you will have fewer problems when changing variable values • As you type a number into any formula, ask yourself: • "Is this number likely to change...ever?" • "Will I know what the number refers to in a year’s time?" • Rarely is it beneficial to hardcode variables into formulae. • Do not paste values as this significantly diminishes your audit trail. Step Six: Check answers – do they make sense? Having built your model and produced some answers, don’t show them yet to anyone. Instead, stop and sanity check them yourself. Ask yourself these questions: • Is the answer what you would expect? • Is this what your audience would expect? • If not, what drives the different answer – can you explain the differences to yourself and your audience? Strategy Survival Guide – Strategy Skills Page 131
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Strategy Strategy Survival Survival
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Strategy Survival Guide Version 2.1
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Building an Evidence Base 113 Data
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A Framework for Strategic Direction
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Recruiting a team In Practice: SU G
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Away-days A project away-day is ano
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WHY ...are you telling me this? SO
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Try to put into practice the princi
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Encouraging creativity In Practice:
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There are clear differences between
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Identifying key stakeholders and th
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For further material, see the Ratio
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Compelling vision for action - the
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Designing an implementation plan In
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Creating Public Value http://www.nu
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Driver trees 97 Econometric modelli
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management 17, 20, 27, 34, 45 outpu
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Strategy Unit, Admiralty Arch, The
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Strategy Survival Guide

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