The 3 Business Hats

Meet your Characters

Vanity is Revenue

Profit is Sanity

Cash is King

How we make money

Resources required to make money

Income statement

Balance sheet

The characters and the financial statements

When to use the 3 hats

New customer with non standard requirements

New service or product offer

Capital expenditure program

New technology deployment

Business acquisition

New branch or business unit

Pricing policy changes

Promotional or marketing campaigns

How we make money

Resources required to make money

Income statement Balance sheet

Resources require

cash

If the resources required is greater than the amount of profit how do we pay for them

Or by increasing

debt

With existing cash reserves

GoalTo make more money than the required resources

How do the hats work

Allocate a hat to the individuals within the team who represent Vanity Sanity and King

Each individual is required to evaluate the business case based on their perspective

Role responsibilities

Vanity and Sanity How do we make money

KingResources required

Inputs

Vanity and Sanity

Healthy conflict that drives the performance of the income statement

KingConsiders the impact on the balance sheet

Inputs

Outcomes

Integrated focus on how any business proposition influences both the income statement and balance sheet.

Benefit

The 3 hats reduces the risk of any decision being unduly influenced by whoever has the dominant power