A fun and most effective way to consider the endless business decisions that are made.

1. The 3 Business Hats

2. Meet your Characters
Vanity is Revenue
Profit is Sanity
Cash is King

3. The characters and the financial
statements
How we make money
Income statement
Balance sheet
Resources required to
make money

4. 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

5. Income statement
Balance sheet
Goal
How we make
money
To make more money
than the required
resources
Resources required to
make money
With existing cash
reserves
Resources
require
cash
If the resources required is
greater than the amount of
profit how do we pay for
them
Or by
increasing
debt

6. 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

7. Role responsibilities
Vanity and Sanity
King
How do we make
money
Resources required

8. Inputs
Inputs
Vanity and Sanity
King
Healthy conflict that
drives the
performance of the
income statement
Considers the
impact on the
balance sheet

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

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