Garreth Hanley:
This is Excel Tips, a podcast for accounting and finance professionals, brought to you by CPA Australia.
Neale Blackwood:
Welcome to the Excel Tips podcast. My name is Neale Blackwood, and in this episode I wanted to discuss how you can apply the Seven Habits of Highly Effective People to Excel. Now, Excel was released in 1985, and the book, Seven Habits of Highly Effective People by Stephen R. Covey, was released in 1989. So they both came out in the '80s. Now, I read the book in the early '90s, and that's also when I started using Excel. And recently, I was thinking about how I sort of use a number of those habits when I'm developing Excel models, and I thought that would be a good topic for an article and this podcast. I've read the book a few times over the years. Time Magazine listed it in 2011 as one of the top 25 business management books.
Now, funnily enough, the book can be applied to almost anything, and that's what I wanted to do in terms of applying it to Excel. The first habit that I use when working with Excel is seek first to understand, and then be understood. Now, what this means to me is you need to ask a lot of questions. So if you're building an Excel model, you need to ask who's it for? What's it for? How often is it required? Are comparisons required? What are you comparing to? Are you comparing to budget? Are you comparing to last year? Are you comparing to a forecast?
Is it gonna be a report, a dashboard, or both, or something else? Do you require some sort of flexibility built into it? Do you need interactions? Do you need the users to be able to change things? Where will it be used? The where can be important because if you're using Excel on the web, that's got a lot of limitations, in terms of features, so you need to be aware of that.
So all those type of questions help you understand what is required. And once you understand that, then that helps you go to the second habit, which is first things first. The author actually wrote a book titled First Things First. That's how important he thought that particular habit was. And first things first is about getting your priorities right.
So there was a matrix shared as part of the first things first habit. And that matrix had urgent and not urgent as one scale, and important and not important as another scale. And that created four quadrants. So one quadrant is urgent and important. Now, that one's pretty much a no-brainer. You do those things.
Another quadrant was not urgent, but important. And that's the one where you do planning, and that's the one where we don't spend enough time. And the beauty of spending more time planning and getting ahead of things is that you might reduce all of those urgent things that take up your time. There was another one that was urgent, but not important, and that quadrant is where you need to delegate.
Now, that's something I'll talk about later, is that Excel has a lot of features that make delegation a lot easier. Now, the fourth quadrant is the one you wanna avoid, and that's where it's non-urgent and not important, okay? So you shouldn't be spending much time there at all. So you need to avoid that quadrant. And the idea is to move towards the planning and doing quadrants because they're the ones that are the most important.
So once you've prioritised what you need to create, you might need to go back to the seek first to understand habit, and there could be some iterations there where you might need to ask more questions. Now, once you're happy that you've locked in what's required and what you need to do, then it's a good idea to create a detailed specification.
Now, with artificial intelligence, AI, so it can be a good idea to pass that specification through AI and ask it if it can suggest anything else that you might need to consider, or take out, or put in. And then, again, that could maybe create some more questions for our seek first to understand habit.
Okay, so once you've locked that in, the next habit is sort of the one that I use the most in Excel, and it's begin with the end in mind. So this is sort of like working backwards. So you start with the report. So what do you need to go in the report?
And then work backwards, basically towards the data, because you might find out that you don't have the data that you need. And that's, again, something else that you might have to find a solution for. Maybe you thought there was a statistics that was captured and it isn't, and so you'll have to create a process or a system that captures that statistic that you need.
Now, something else that can come out of this is that Excel may not be the final solution. Possibly Power BI could be the final solution. Power BI is, and the BI stands for business intelligence, and Power BI is better at dashboards, it's better at interaction. It's also better on security and better with sharing. So that may be the final solution. Now, even if it is, Excel could be part of the solution. You could maybe prototype in Excel, or provide a proof of concept to make sure that you can get the data into the correct layout, but then you might transfer it to Power BI to actually provide the final solution.
So the next habit is called be proactive. It was actually the first habit in the book, but being proactive in Excel means you've got to identify the features and functions that you need to provide the solution. This habit means you need to be proactive in thinking about what could go wrong, and to make things easier for users. So for example, using dropdown cells so that users don't have to type as much, including instructions, documentations.
You got to also try and anticipate errors and handle them. So Excel has the IFERROR and the IFNA functions. Both of those can be used to handle the errors a little bit more elegantly than displaying a message. In terms of using macros, you need to build in error handling into macros, and also testing. You need to do a lot of testing.
Now, Excel has lots of functions and features, and you need to think about how you can apply them to building your model that you're building in Excel. One of the ones that can actually help speed things up is the VBA side of it. So that's visual basic for applications, and that's macros. So macros aren't dead. There's a lot of social media about you don't need to use macros anymore, Power Query does everything.
Power Query has replaced a lot of macros. Power Query is the best practise way to import data into Excel, but Excel is so much more than just importing data. And so macros allow you to control basically the whole of Excel. And you can build in a lot of automation into your files using macros, and that makes it a lot easier to delegate, which we discussed earlier.
So macros can help you create systems that are delegatable and much easier to use as well. But as I mentioned, you do need to include the error handling when you're using macros. Also, AI can help in a lot of Excel's features. Macros are one of them. You can actually ask AI to write macros for you. You can get AI to help you create functions and formulas. You can even get AI to help explain functions and formulas to you. If you've got an existing file and you're not sure how a function works, you can ask AI to explain the formula to you. So AI can help with developing power queries as well. So that's sort of the things you need to look at in being proactive.
The next habit is called synergize. Excel's features and functions all work pretty well together, but you might find also that what you create could be used for something else. So the data that you're getting together could be used for other reports as well. Also, you could create custom functions and macros that may have other applications as well, and they're easy to share within Excel. So macros are easy to share, and also custom functions are easy to share.
The next habit is called sharpen the saw. Now, this one requires a story. There's a story in the book. There's a guy walking through the woods, and he spots a guy who's sawing a tree down. This was before chainsaws. He asked the guy, "How long have you been sawing?" And he said, "Oh, hours." And he said," Well, shouldn't you sharpen your saw?" And the guy said, "I haven't got time. I'm too busy sawing this tree down."
And we all get caught up in this. We get so busy doing what we're doing that we don't look for easier ways to do it or other tools that might make it easier. And definitely a sharpened saw is much more effective than a blunt saw, and that applies to your skillset as well. So you do need to look at training. Consider AI here as well. AI is pretty good at taking a manual, for example, a training manual, and you can ask it to then ask you questions. You can create flashcards or multiple choice questions to help you understand if you've grasped the training in the training manual.
The fact that we're talking about tools as well brings up a fairly famous hammer quote. So Abraham Maslow, who was pretty famous for creating the hierarchy of needs, he had a quote that, "It is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail." A common paraphrasing of that quote is that if you only have a hammer, all your problems tend to look like nails. And you can see that in Excel. Sometimes people will use the IF function to try and do everything, when there are lots of other functions that are a little bit more flexible and a better solution than the IF function.
So far, we've covered six of the seven habits. So the last habit is called think win-win. Now, I couldn't really think of an application to Excel. This particular habit is more about interpersonal relationships and negotiations. So if you did need to negotiate for resources for your Excel project, then you might use this win-win philosophy where you're trying to set up the negotiations so that both people win out of it. Rather than a win-lose or a lose-win, you're aiming for both people to get a win out of the negotiation. It's not always possible, but it's a good target to have.
So The Seven Habits of Highly Effective People is a classic self-help book. I recommend you read it, if you haven't already. And hopefully I've shown you how you can apply some of the habits to building better Excel models. I hope you found that useful. Thanks for listening.
Jackie Blondell:
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