Strategy Survival Guide

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