Blog Article:

“Simplicity is the Ultimate Sophistication” Leonardo da Vinci

“Simplicity is the Ultimate Sophistication” Leonardo da Vinci

I found a formula in a financial model once which had 62 sets of brackets, 16 functions and 60 cells (there are plenty like this around).

I viewed this as a challenge (this is what I like to do in my spare time) and reduced it to one with 2 sets of brackets, 1 function and 7 cells.  This new formula was achieved without any additional lines and the solution was not complex, it was just a question of logic and using the correct function.

Dan Ariely, Professor of Psychology and Behavioural Economics at Duke University, relates a conversation he had with a locksmith. The locksmith told him that when he had just begun his trade and took a long time to open locks, clients were impressed and happy to pay him a handsome sum.  However, when he became more efficient and came up with quick solutions, clients had a greater tendency to quibble with the fee.

It seems to be human nature to be impressed with complexity and this applies to financial modelling too. However, like locksmiths, financial modellers who can find efficient solutions are far more useful than those who overcomplicate the process.

As Einstein advised:

“Everything must be made as simple as possible, but no simpler.”

 

More from the blog...

To find out more about Camilla Culley’s training courses or to set up a meeting, please get in touch.
+ 44 7932 186481
bookings@camillaculley.com
Camilla Culley © 2024. All Rights Reserved | Privacy & GDPR Policy | Terms & Conditions | Website Design Dorset - Good Design Works