You Should Know About: Garbage In, Garbage Out

A key concept that you need to understand as a financial professional or a business owner is the concept of garbage in, garbage out. This statement reflects the idea that unsuitable, subpar, or ill-prepared inputs will not produce quality results. Depending on your circumstances, the inputs could be coming from a client, a customer, or another team member. Your work tasks and goals will revolve around you taking these inputs and combining them with a process to produce an outcome, with the objective of obtaining the best outcome as efficiently as possible. This framework provides you with two ways to affect your outcomes: improve the inputs or improve your process.

Most people will first focus on improving a process because it's something that they can directly control, and not focus on the inputs as much. Today, I'm going to highlight some examples where focusing on inputs can make a huge difference in the outcome and provide you the context as to why that is. 

Example Number One: Personal Coaching

Some business owners that I work with are coaches, and they require their clients to track goals and other metrics that will support the coaching process. By tracking their progress and creating data points for the coach to use, the client is providing valuable insights (inputs) which the coach can absorb and process into tangible next steps and support for the client, which will ultimately produce the desired outcome. In this circumstance, the coach cannot provide effective coaching services if the inputs are not tracked effectively, and therefore the clients will not get the outcome they desire. It's important to remember that this is true no matter how good the coach is. A world-class coach cannot apply their skills and many years of experience without proper insights provided by the client. A coach looking to improve the outcomes that they provide for their clients may end up focusing more on improving the inputs by creating a system where the client will have an easier time tracking their metrics instead of obtaining another certification. 

Example Number Two: Auditing Financial Statements

When an auditor meets with a client to perform a financial statement audit, the client will be required to provide many schedules and supporting documents for the company's financial position. If these schedules are well-prepared and the client is prepared to respond to questions, the audit can go very smoothly. Conversely, if the client is not prepared to provide the schedules or the schedules provided are not entirely correct, the audit process becomes more difficult because the client and auditor may need to do more work to finish the audit. 

In this example, the inputs are the financial data and supporting documents that are provided by the client, and the process is the auditor's work and methodology. When combined, these will produce a set of audited financial statements (the outcome). If you are the auditor in this circumstance, you can improve the outcome by either improving your process, or somehow improving the quality of inputs from your client. When working with smaller businesses, I often find that I get a better return on investment from sitting down with my client to improve the inputs first. By taking this approach, I am indirectly influencing the quality of the inputs (what could otherwise have been "garbage") to produce a better outcome. 

After examining these two examples, I encourage you to look at your work and see where improving the inputs (hopefully not "garbage") may have a significant impact on your outcome. If you find something, I challenge you to go out of your way to try to improve the inputs instead of improving the process where you work with them.