Ed’s digression here is IMO the single most overlooked/forgotten/misunderstood aspect of business/finance/investing. Forecasting and modeling are processes, not outputs. 1/n https://twitter.com/ed_crooks/status/1305904645785747456

In banks and consulting shops, grunts get a ton of practice model building, but at least on the sell-side this is largely single scenario, impeccably formatted crap. 2/n

In b-schools, it’s a mix of the above and then reading the “outputs”. Some discussion of key variables/drivers, but at least in the core curriculum the focus is more on knowing the terms and mechanics vs systematically breaking down the “process” 3/n

In business, decision makers mostly see the modeling/forecasting as a ppt slide of outputs, sometimes multiple cases, but almost always in a static state. 4/n

The real value in the process is the deep understanding gained by building and iterating yourself, understanding the linkages of operational and financial inputs and flows through the entire value creation mechanism of a company. 5/n

Perhaps it’s on the mid-level staff to serve as the link between grunt and decision maker, and distilling those learnings down to a clear message, but based on all of the above we really aren’t preparing these people to think/act in that way 6/n

There are lots of great PE associates and VPs out there that have the skills and knowledge to do this, but from what I’ve seen it’s often more fluff than substance and missing the forest through the trees. It’s all well and good to be able to break down your return to the 7/n

Third decimal across multiple baskets of business risk, but who TF really cares if you don’t realize your actually just making a pretty binary bet on commodity prices, a contract, 3rd party behavior, or an exit? 8/9

Modeling/forecasting is really just an exercise in learning the levers that truly drive value, and better understanding the true nature of your bet. A ppt slide summarizing those efforts will never be enough /fin

PS - the current state of public markets makes all of this irrelevant, so carry on grunts!