The Number -Crunching Support for ExCos

SURESH KUMAR

Some professional (?) cynics may snigger at statistics per se using Bernard Shaw's famous words, "lies, damn lies and statistics" or Stalin's more macabre quote that "one death is a tragedy, a million killed becomes a mere statistic". Realistically however, the vital role of numerical analytics cannot literally be underestimated. The entire process of executive meetings, committees etc. at the corporate level or emarati and even the executive councils be it the new Dubai Executive Council (chaired by H.E. Juma Al Majid) or its counterparts (ExCos) in Abu Dhabi, Sharjah etc. can function best, when there is robust and reliable statistical support. Within corporate organisations, MIS sometimes is a proxy for a sinecure norm, but MIS is ignored by institutions, only at their own peril. At the national polity level, strategic planning or implementing Vision 20:20-type path-breaking initiatives, calls for a vital information back up. It is in this context that the Dubai Municipality has announced and commenced steps in the right direction i.e. generating a wealth of information in their proposed and previous surveys. Of course, surveys are not quite the data and forward-looking forecasts that are important for ExCos. All good business plans must have strong underpinning viability analyses. The establishment of the Dubai Healthcare City or the Dubai International Financial Centre or the expansion of the Saif Zone in Sharjah, would have required the decision-makers to engage consultants with proven expertise in data gathering, assessment of the cost benefits and the potential for scalability of such projects etc., in order to meaningfully reach the right conclusions. When it comes to deciding on creating social, physical, communication or economic infrastructure, decisions are often made at the highest level by authorities who would need to see executive summaries of the key factors, their pluses and minuses and hear directly from the experts (not read voluminous reports) before giving the green light.

It is likely that the McKinseys of the world and such other consultants, and the accounting firms usually get such assignments, as they bring to the tasks insights from other parts of the world. In such matters, there is no substitute for previous hands-on experience, to inform forecasts made by the financial and management accountants of the world. We all know that the launch of the Dubai Internet City, Media City and the Healthcare City were preceded by much diligent homework and carefully pieced together strategies and plans; even if these are finally articulated in a succinct fashion by the authorities. There is much to be said for such a structured approach to ensure that these are just leaps of faith but more of measured high jumps. Ultimately, residual risks and unquantifiable impact will always be present.

Real estate and the construction sector is becoming a tremendously important sector for Dubai. One element of this, the hospitality sector, receives excellent statistical support, from the Dubai Commerce & Promotion Marketing Department. The property sector will similarly benefit from getting periodic data from the concerned departments, including the land department in terms of land use, detailed analyses of registrations, plans approved etc. Working closely with the Dubai Municipality, forward-inducing statistics such as approvals, permits, even those under consideration (such as 'real-estate starts', as called in the U.S.), could be very useful. The Dubai Building & Civic Construction Group, meeting today for elections, is perhaps a good forum to encourage collation and consolidation of such statistical support, that can propel a focused development of this vital nation-building sector.

In all these cases, the information and data are possibly scattered. Similarly, the thought-processes may well have been articulated or documented in the higher echelons of the government. What is needed is a higher level organisation that is vested with the authority and personnel to pool in and get the information at an early date, analyse the sectoral impact and share the findings in a transparent manner; that businesses and organisations such as the Dubai Development and Investment Authority, can confidently, present to potential business partners.

Some organisations tend to equate budgeting with forecasting. Some accountants are dismissive of market studies and research done in the region as being spurious. Financial forecasts and number-crunching from a decision-making matrix point of view, and is not an extension of financial accounting that envelops itself with compliance with International Accounting Standards. Book-keeping and MIS calls for two different skills. The typical accountant that cannot look beyond the numbers, would be bogged down in balancing the books, reconciling them to the last fil / cent and arguing pleasurably as to how amortizations and fair valuations are the very purpose of professional existence! This species may worm their way up the corporate ladder, going beyond mundane number bashing or emerging out of an audit background, such accountants and auditors find that, apart from their numeracy and awareness of the disciplines of accounting, they are ill-equipped to do say project-appraisals. The latter work may call for a well grounded corporate finance professional who may have an accounting background (be it cost, management or financial accounting) or an MBA in finance. The latter brag that they have a broader vision and wider knowledge than the traditional FCA as to how business decisions are made and can throw in jargon ( ('Black-Scholes') or Harvard case studies to good effect. Ultimately, it is not so much the professional or post-graduate qualifications themselves, but the precise experience that the individual has had, that will hone him to be a decision-support. Thus financial accountants who need to be kicked upstairs may thus be at a loss in many corporate organisations or senior governmental bodies engaged in innovative products or incorporating clusters and new businesses. Number-crunching may be a harsh way of portraying the job that calls for maturity, intellectual challenge, vigour and a rare ability to think "outside the box". When each project outline is received, the numbers are stacked up, the viability established and reviewed and remedied at various levels to bring in good insights into such assessment. That is what will eventually prove to be invaluable. The MIS team need to eschew the tendency to rationalise a CEO's wish list, where a decision already made is then analysed superficially to find justifications, and skew the numbers to tell him what he wants to hear and to tell others, what a wonderful decision, the CEO has made! That would be rank opportunism and unprofessionalism. What is expected of a good corporate planner is the courage and cogent reasoning ability to say "no" firmly and politely.

This is not to say that ultimately, the CEO should be carried away by only the judgement and forecasts i.e. "what if" scenarios and numbers alone. Very often, huge strategic moves, may not add up and may indeed, prove to be unviable for a few years, atleast. If detailed calculations were to be the only basis of yes or no, then half the projects now highly successful and that have changed the face of this region, would not have been given the go ahead. They would not be alive or kicking, as do Jebel Ali Free Zone, Dubal, Port Rashid or airport expansion etc., which may have been amenable to number-crunching exercises but may have not passed the muster; if accountants were in charge of making investment decisions. That is where managerial and executive wisdom and / or visionary statesmanship and skills of the highest order are needed. Looking ahead and planting a seed that may grow into something of huge significance, call for leadership. I remember the chief minister of a province in India, was briefed with blue prints on a hydro electric, water and power project and was given a detailed presentation on financial costs and all the technical details. After keeping quiet through an elaborate presentation, he finally turned to the project managers and said, "tell me, to how many homes, offices and businesses, will you supply water and electricity? Please tell me the number of people to whom tangible benefits will flow. If positive, just go ahead". A leadership that absorbs a lot of complexities and then breaks it down into simple but perhaps stretch targets is a sine qua non for sound business, civic and political decisions.

[The author is a CMO (EFS) and General Manager in Emirates Bank. The views expressed in this article are not necessarily shared by the Bank].

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