Think about what you do in your role and try to map the impact of what you do on the financial statements. Now think about one thing you could do to increase your contribution to the organization. Where would the impact from this initiative show on the financial statements?

To practice what we learned and begin to see how to map impact of decisions, problems, ideas, initiatives on the financial statements, describe a challenge that came up in your organization. Then identify which sections of the financial statements it has in impact on and how it can impact those areas of the business.

Now describe a possible solution to this challenge. Identify sections on the financial statements this solution will have an impact on and how it will impact them. Repeat this exercise for any other challenges or opportunities, or ideas and suggestions.

Now think about what you do in your HR role. Work with one part of your role at a time. Map the impact from what you do to the sections on the financial statements and describe how you impact that specific area of the business. Repeat this exercise for all other parts of your role.

Think about a market trend that is impacting your organization. Map the impact of this trend on the sections of the financial statements and describe how this trend impacts that part of the business. Would you make any suggestions on how to respond to this market trend?

Let’s review the building blocks we covered. Understanding how business works is the foundation of developing our business thinking.

What do we sell?

Who our customers are?

What we need to have in place to sell our products and services?

Who are our suppliers?

What is the value map of our organization? Or what is the path of value creation in our products and services?

Once we understand how our business works, we can describe what goes under each section of the financial statements in our organization.

From there, we can begin to map decisions, challenges, risks, opportunities, ideas, suggestions and what we do day to day to the sections of the financial statements and describe their impact. It is by understanding possible impact we can achieve a meaningful contribution to the organization and our own sense of fulfillment as well.

I encourage you to continue enhancing your business thinking. Learning financial metrics like ratios and growth rates will take you to the next step of identifying impact of challenges and opportunities. The good thing about ratios is that we don’t need to memorize them. All we need to learn is how to interpret them. Cash flow statement can the be the next step in advancing your business and financial acumen leading to performing financial analysis to identify red flags and opportunities and support your ideas, suggestions and solutions.