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It's Difficult to Learn Business by Reading Financial Statements

Don't Just Use the Scoreboard to Teach Business

"Individual commitment to a group effort, that is what makes a team work, a company work, a society work, a civilization work." ~ Vince Lombardi

There are three universal score sheets in business -- The Balance Sheet, the Income Statement, and the Statement of Cash Flows. All companies have them. They are used to determine how well the company is performing. That's a good thing.


Too often, professionals who mean well begin teaching business and finance by showing people these statements. They'll direct people to the annual reports online, or to a company's 10-K in order to teach them about the business. From there, they'll explain each line item in depth, with figures in the millions taken to the penny. Sigh. That's not a good thing.


Using this approach is not much different than teaching soccer starting with lessons in reading a scoreboard. Imagine: A dad coach brings his U8 team to their first practice, and brings the kids together around the scoreboard to train them how to play soccer. Right. That makes no sense. So, when we try to teach business by starting with those financial statements, we're doing the same thing.


We should engage people in playing a position on the pitch (to continue with the soccer analogy). We need simulations, case studies, engaging discussions, and scenarios to show how businesses work. Our learners should work harder than the instructor. Companies are a complex mix of people, circumstances, operations, and so forth. In order to see how it all works, and how to play the game, we need to play the game. Then, and only then, do the scoreboards make sense. We can more easily fill in the white space between the scores we earned and what we did to get them.


Let's focus on engaging in business learning to build business acumen. Let's save the scoreboard watching for some other time. When it's time to learn the business, the best thing is to learn by doing.

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