Why numbers matter

Many companies lead with numbers. They should lead towards numbers.

Numbers are not the starting point of a business but its outcome. First comes the strategy. Then the plan. Then the daily work. Only at the end come the numbers. Behind every figure there are people’s decisions, sales calls, product development, recruitments, and sometimes things left undone.

Bookkeeping, the income statement and the monthly report always tell about the past. They are the consequence of what the organisation has already done. The board’s most important task is not to look back but ahead.

That is why every good company needs a concrete plan. For me that means a thousand-day growth plan and an annual plan derived from it. The plan answers four questions:

  1. What will be done?
  2. Who will do it?
  3. When will it be done?
  4. How will success be secured?

Once the plan is built, a forward-looking management system emerges. Each goal gets milestones, metrics and waymarks. We do not lead only the results but the journey towards them. Numbers are the navigation instruments of the journey.

In Finland numbers divide people. For some they are a foreign language; others build their whole world view on spreadsheets. Neither extreme is enough. Numbers do not replace thinking; they support it. They help to spot deviations, understand cause and effect, and make better decisions.

AI lifts the importance of numbers to a new level. We are no longer dependent on history. We can build scenarios, forecast, and assess how today’s decisions will show in next month’s, next year’s or the three-year result.

Leadership changes from reporting to foresight. The conversation moves from what happened to what will happen, and what we should do right now.

That is why I believe the most important leadership tool of every company in the coming years will be an AI-assisted situation room. It brings strategy, the annual plan, metrics, finance, market information and forecasts into one view. The board and management weigh options and make decisions before the problems show in the income statement.

The machine calculates, the human decides.

History tells what happened. Numbers tell where we are. AI helps us understand what happens next.

What is your company led by: the rear-view mirror or the forecast?

By Ville Tolvanen. Originally published in Finnish: Miksi numerot ovat tärkeitä?. More in English: Aura Boards — start here.