The older I get, the more analogies jump unexpectedly from random dark alleyways and take me prisoner at gunpoint. Perhaps it’s a function of age; after all, I’m now a card-carrying sexagenarian, which is in no way as fun as it sounds as though it ought to be. More likely it’s just the way my head works, a concept frightening enough by itself to send that analogy scampering back into the darkness if it had a shred of sense. Since it’s unquestionably the height of bad form to anthropomorphize a literary device, I’ll go no further. Suffice it to say that the analogy is here to stay, so perhaps I should explain. First I offer a word of warning; there will be math involved.
Immersion in writing the lecture notes for my business analysis class has already heightened my consciousness for all of the available materials around me. In and of itself, it is a fascinating process of which to be cognizant as I go about learning (or relearning) the subject matter I will teach, along with the requisite teaching techniques. When the stress of interlacing this effort with my day job reduces my productivity to a trickle, I will either head to the piano or to the wood shop to reboot my noggin. It was in the latter venue that the triggering epiphany assaulted me.
For the past two years, I have been moving a lifelong passion for woodworking up to a new level by acquiring some advanced skills. One of these involves woodturning and I had retired to the shop to create a set of drawer pulls. The first step was to make a tool called a “screw chuck” that was going to hold the stock that I would be carving. While I was turning the block of poplar into a perfectly round disk, it struck me that I had made quite a number of tools during the past year. Each was custom made and reusable. And because the process of writing lecture notes was fresh, I saw clearly how many of the business tools I had built over the years were coming in handy in that effort.
We probably all make tools of one kind or another for use in our respective jobs. The question is, how many of us hang on to them? When it comes to tools, I am a packrat. I save everything whether it is from work or for the shop. If it is of any potential use, I categorize it and store it because sooner or later I will need it again. Business tools I have created and kept over the years run the gamut from simple document templates to sophisticated cost-benefit analyses and weighted prioritization tools. This has saved me many times from having to reinvent the wheel.
There is more to the do-it-yourself tool than merely collecting it. The thought process that goes into crafting it teaches one more effectively how the tool actually works, along with other truths about the process for which it is being used. This is as true for the logic behind a kerf jig as it is for the math underlying net present value in a cost-benefit template. In fact, making your own tool is just about the best way to learn because it is not merely the principle that one has mastered but an objectification of the principle. To demonstrate, let us look at these two examples side by side, starting with cost-benefit. Both explanations are a bit technical, but demonstrate the point clearly.
In a cost-benefit analysis, one seeks to understand the net of costs and benefits (cash flow) expressed in some common measurement (usually a currency such as dollars) of a project or product over a specified period of time. In other words, add together all of the direct and indirect costs of a project over x years and subtract those from the financial benefits of the project over the same time period. But there is a catch. One hundred dollars in cash flow today is worth more than the same amount a year from now. This is due to factors such as inflation or what that capital might have earned had it been invested (opportunity cost). Thus, a true cost-benefit analysis looks at future cash flows discounted into today’s value (present value). Moreover, later years are weighted less heavily than earlier years as uncertainty increases.
Now, you could just pop some numbers into a spreadsheet and use the spreadsheet’s functions to do the heavy lifting for you, but where is the fun in that? Instead, let us build our own. The formula for Present Value (PV) is:
Assume that you have a project that will take two years to complete and you want to look at the cost-benefit over five years. This year is year zero, next year is year one, and so forth. Your director of finance has informed you that the discount rate is six percent. Rather than use the spreadsheet function for PV, I have manually input the above formula into cell B11 as =B9/(1+$B$5)^B7 where cell B9 is the cash flow for year zero, $B$5 is the discount rate, and B7 is the time index (year number). I then copy that formula into cells C11 – G11. Net Present Value (NPV) is then the sum of the six PV values in the analysis. In this case, benefits outweigh cost.
What you learn by building the tool from scratch in this way is a better understanding of how Present Value is driven exponentially year over year. For me, this also demonstrates the importance of how the passage of time impacts negatively the return on investment as well as how the heavier weighting is given to the earlier years where the cash flows are in the red.
The Kerf Jig
The kerf jig is used to create the “perfect” lap joint using a standard table saw blade. A lap joint is made by making a wide cut (dado) halfway through two pieces of wood and assembling them to look like this:
There are several ways to do this including mounting a dado stack (a composite wide blade created by “stacking” together a set of blades). The challenge is always to have the width of the cut precisely equal to the width of the piece of wood you are fitting into it. The wood worker must also take into account the width of the saw blade when making this kind of cut. (I told you that math is involved.) Enter the kerf jig. It guarantees a perfect cut every time.
The kerf jig is a very simple device and easy to make. It consists of two blocks of wood: one fixed and one that slides. A knob secures the slider. As you can see in the next photograph, when the end of the slider is precisely even with the end of the block, there is a gap left. This gap is precisely the width of the saw blade.
Imagine now that you are going to make this cut. You have two pieces of wood, piece A and piece B. You are going to cut the dado in piece A first, so you insert piece B into the jaw of the jig and set the slider as shown.
The gap is now the precise width of the cut you want to make. At the opposite end, the distance between the end of the slider and the end of the block is equal to the precise width of the desired cut minus the precise width of the saw blade.
Then using a cross cut sled (another DIY tool) you align the saw blade with the inside end of the cut, add the jig using the long side (block plus slider) and clamp a stop in place. The sled (see picture) gives you a way to clamp a stop block to something that moves through the cut. It also allows you to move the stop block, the jig, and the piece of wood you are working on through the cut together.
After you make the first cut, turn the jig 90 degrees so that that the short length is against the stop. Butt the wood piece against the jig and make the second cut. Remember that the distance between the first cut and the second is the desired width of the cut less the saw blade.
By now, you may begin to appreciate the value of the do-it-yourself tool. Sure, I could buy a kerf jig online somewhere, but why would I do that? The jig I made cost virtually nothing since I made it from scrap wood in the shop. And because I now have a hands-on understanding of why it works, I will make fewer mistakes when I need to make a complicated set of lap joints (e.g., a wine rack). Similarly, having used the PV formula directly in my template instead of relying on a built-in function, I not only have the underlying concept more clearly in mind, I also will be able to teach it more effectively.
The business analyst in me likes this contact with the inner workings of things, the visceral connection to the underlying “why” and “how” of tools. I delight in how the underlying math of both tools reveals something about the nature of the processes being performed. Also, I love the correspondence between these very different business tools. In the end, it is a good thing that the analogy took me hostage, don’t you agree?
Do you make your own business tools? Do you save them?
By the way, if you are curious about the tools in the title photograph, they are from left to right a feather board, the kerf jig, a hand-held starter bit for hollowing out bowls or cups on a lathe, a screw chuck, and a push board for a table saw. All of these tools are sitting on a cross cut sled.