Why CEOs Should Care About Open Financial Data (And How to Use it To Their Advantage)
CEOs are often the “big-picturists.” They’re entrepreneurial, strategy-driven decision-makers. They don’t concern themselves with small details, particularly when it comes to corporate finance. But the truth is, public corporate financial data provides a wealth of strategic insight.
There’s a big-picture perspective hidden behind the performance metrics and footnotes reported to the SEC. The data included in public filings can tell chief executives more than they ever imagined about their industry, competitors and marketplace. Insights like:
What the competition is doing.
CEOs should care about public financial data because it can give them a 360-degree view of competitors. And even though every public company tracks its finances differently, following the changes within a particular company’s financial reports from period to period can reveal valuable competitive insights into their R&D, cost of revenue, acquisition strategy, growth pattern and profitability. More modern analytical tools can actually make data easily comparable and quickly highlight anomalies or opportunities.
Where opportunities are hidden in the marketplace.
Imagine you lead a pharmaceutical company. Would you be interested in the financial breakdown for every single drug released by Pfizer or Merck? Would you like to see how these drugs have affected revenue and expense? Or how much they’ve cost to market? Even information buried in footnotes, such as a disclosure of how research and development is spent on certain products, might expose company insights you didn’t know were available.
How your company stacks up against your industry.
Structured financial data lets you see average financial ratios across a whole industry and compare your own performance. Elevating details to the surface regarding what your competitors are spending, what products they’re launching, and whether they are acquiring other businesses provides a quick sense of what drives their revenues.
Possibilities for expansion.
A quick scrub of the intangible assets belonging to a competitor or potential acquisition can highlight your own growth strategies. Are other companies investing in R&D? Are they purchasing trademarks? Are they acquiring companies in new markets? Maybe there’s a gap in their expansion plan where you can grab a foothold.
Big data represents a foundational shift in how businesses plan, think and act. It means there’s no longer any excuse to act without due diligence. The smarter CEO recognizes the power behind the availability of information. Many public CEOs have longed for the day when global financial data is finally usable, accessible and can do more than live in a database somewhere. That day is today, and it means it’s time to realize every big picture is made up of small details that matter.
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