May/June 2025 | Fortunate are Those Who Report Way Less and Way, Way Less Often…
Let’s simplify financial reports. In fact, let’s just get rid of them, at least quarterly guidance reports. Why? Because Warren Buffett said so.
An article from BCG describes today’s financial reporting efforts as focused 80% on report generation but only 20% on analysis and insight-generation. And that most financial reporting can be improved by taking a “quantum leap” in simplification. Here are some tactics from the article:
- Reporting only adds value if it informs decision making. What data is actually important? What can be left out?
- Motivate a “constructive discussion culture” because it’s the talk, not the report, that drives value.
- Remove biases from reports, such as a tendency toward over-optimism.
- Highlight patterns in the noise, utilizing big-data techniques and AI tools to identify what’s significant.
- Focus on the user-experience (UX) to tell a story, and organize reports so that users can quickly understand and contextualize the information.
- Simplifying reports is more art than science – but well worth the effort to drive value-backed decision making.
We hear BCG – in PriSim’s classes we urge participants to cut through the mountains of data and act on the subset that’s actually important to their decision making. Or, as one of our clients described it, to “ruthlessly prioritize” what they do. Several blog posts on PriSim’s website chronicle the evolution and simplification of financial reporting:
- Financial Reporting Reboot
- It’s The End of Accounting As We Know It
- It’s Accrual World
- The New Look of Financial Statements
And speaking of clearing the data clutter, Berkshire Hathaway, Walmart, and Chase are among the big companies that have dropped quarterly financial reports and guidance to re-focus investors and management on reports and data that actually matter for the long term. Even some companies in the guidance industry may stop offering quarterly guidance – Cisco, which makes components for GPS and navigation companies, is a member of FCLT Global, a not-for-profit organization founded to encourage “guidance with a long-term orientation”.