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    Entries in words (2)


    Learn a new word: Goodwill Impairment

    If you follow the tech and finance news at all, you will no doubt be familiar with the recent and ongoing troubles and challenges being experienced at Yahoo.  

    Yesterday the 'old school' internet company announced some strategic shifts, including the plans to reduce its workforce by 15% in the coming months, resulting in an employment count of about 9,000 -  42% below the level in 2010.

    Part of the earnings announcements included this statement, about on-paper losses totaling about $4.4B due to an accounting exercise known as 'Goodwill Impairment'. Here is the language from Yahoo, then we'll break it down a little, because well, that's what we do here on the blog:

    We concluded that the carrying value of our U.S. & Canada, Europe, Latin America and Tumblr reporting units exceeded their respective estimated fair values. The goodwill impairment resulted from a combination of factors, including decreases in our market capitalization, projected operating results and estimated future cash flows.

    Seems kind of boring, almost normal accounting-speak right? Let's look at the definition of a 'Goodwill Impairment', courtesy of our pals at Investopedia:

    Goodwill that has become or is considered to be of lower value than at the time or purchase. From an accounting perspective, when the carrying value of the goodwill exceeds the fair value, then it is considered to be impaired. Negative publicity about a firm can create goodwill impairment, as can the reduction of brand-name recognition.

    And in the notes about the accounting requirements related to Goodwill Impairment for companies, Investopedia says this:

    Generally accepted accounting principles, (GAAP), require businesses that have the type of assets that might be impaired to make periodic tests to see if those assets are, in fact, impaired.

    So the accounting rules require if your business has a potentially 'impaired' asset like Yahoo's $1.1B Tumblr division, that you must from time to time evaluate (and likely have audited), the 'true' value of the asset. And in the case of Tumblr, it turns out that it really isn't worth $1.1B and the true value is something like $300M, then you have to take a charge for the difference, ($800M), in the financial statements. And that stings investors a little bit. Ok, maybe a lot.

    Why the mini-accounting lesson?

    Because the periodic review, valuation, and write-down of financial assets in the accounting sense is probably an exercise we can and should apply to all kinds of projects, technologies, programs, even personal relationships. 

    Does that 'progressive' and high-tech performance management system and process you implemented in 2012 still have value today? Or does it need some kind of 'impairment' write-down as well?

    Does the new employee orientation guide that you spent big bucks developing and printing up in 2010 still have relevance today, in light of all the changes in business, technology, employee expectations, and more?

    Does your 'best work friend' that you have had since 2008 remain the 'right' person for you to pal around with, or are they kind of holding you back at the office?

    As Yahoo's experience with it's Tumblr acquisition remind us, things can change really, really fast. And an asset that was worth $1.1B just a couple of years ago suddenly is worth less than half that amount today. But the 'Goodwill Impairment' while painful, at least provides financial types a mechanism to recognize these changes, attempt to make them right on the financial statements, and give leaders a chance to move forward from a new starting place. And when times are bad, that at least offers a little bit of hope moving forward.

    If you could take a 'Goodwill Impairment' charge in your business or life today, what would it be?


    Learn a new word: Face with tears of joy

    At the risk of sounding a little too much like the 'get off of my lawn' old codger that I am fighting against becoming, please take a look at the image on the left, your Oxford Dictionaries 'Word of the Year' for 2015 and try hold back your tears for the future of humanity while you contemplate the same.

    The 'Word' of the Year for 2015 as you have certainly deduced is not really a word at all, but rather an emoji, and to be precise, it is the 'Face with tears of joy' emoji. And if the folks at Oxford are correct you have doubtless seen this particular emoji plenty of times this year as their research claims 'face with tears of joy' to be the most-used emoji of 2015. I guess 'smiley-face' is just so 2012. Note to self: I probably need to up my emoji game.

    Just why did Oxford Dictionaries go with an emoji, never mind this particular one as its Word of the Year? Let's take a look at the reasoning from the blog post announcing the selection:

    Emojis (the plural can be either emoji or emojis) have been around since the late 1990s, but 2015 saw their use, and use of the word emoji, increase hugely.

    This year Oxford University Press have partnered with leading mobile technology business SwiftKey to explore frequency and usage statistics for some of the most popular emoji across the world, and 😂 was chosen because it was the most used emoji globally in 2015. SwiftKey identified that 😂 made up 20% of all the emojis used in the UK in 2015, and 17% of those in the US: a sharp rise from 4% and 9% respectively in 2014. The word emoji has seen a similar surge: although it has been found in English since 1997, usage more than tripled in 2015 over the previous year according to data from the Oxford Dictionaries Corpus.

    Admit it, you have used an emoji(s) in some kind of 'business' correspondence in the last month or so. Even if it was not a full-fledged 'image' emoji, you have definitely dropped a :) (technically, an emoticon, not an emoji, but you get the idea), somewhere in an email or a text to a business contact. It is ok, I have to.

    And I suppose with recognition of the rise in popularity and increase in common usage of emojis by organizations like Oxford Dictionaries it is becoming a little less troubling to admit that you have been peppering emails and other messages with those cute little characters. And why not? A picture is worth a thousand words and all that, and NO ONE wants an email of a thousand words, or even half that.

    But the larger part of the story, and the reason why I have submitted 'Face with tears of joy' as the latest in the 'Learn a new word' series is that it reminds us (again, as if we needed reminding), that methods, manner, and styles of communication, even 'serious' communication, change and morph over time. We are not writing long-winded memos any longer, no one has tolerance for lengthy emails, voice mail is just about dead as a business tool, and so on. 

    With the growth in popularity of short messaging services, (SMS, WhatsApp, Facebook Messenger, Snapchat, etc.), the style of interaction on these services are changing and adapting to the medium. Throw in the seeming information overload/time crunch that almost every professional you know will claim these days, and the ability to convey complex information in the shortest, most succinct way possible is a skill that is at a premium.

    And since this post has already gone on too long for a post that is more or less about getting your point across more quickly, I will leave with this - it is probably time to step up your emoiji game. As much as I cry a little inside to say that.

    Have a great week!