Let's begin by asking the question, what should you expect to get out of this course? As a technical person in industry, you generally have two career paths. One path is to become a highly sought after subject matter expert, your company's most knowledgeable person in say, structural dynamics. Alternatively, you can take the path of management. Many of you are interested in becoming leaders in your organization and that is what we're going to focus on in this course. Building the skills and knowledge that allows you to differentiate yourself from your peers and prepare you for your next big assignment as a manager. For me, I'm a very practical person and that carries over to what we'll talk about. We won't get bogged down in theory, but more on how to apply the theory in your day job. I want you to become comfortable with the tools and techniques that we're going to develop. I also want you to learn the terminology behind what we're talking about so you can communicate effectively with other members of your organization, especially the financial team. And that's my goal for you in this course. How might you be involved in financial matters at your company? Imagine that you're an engineer working at new-hip orthopedics and you are responsible for manufacturing a highly reliable titanium based hip implant. The current process requires extensive machining from a block of titanium. You are proposing an alternative process that uses new metal based 3D printing technology. In fact, your idea is to couple the 3D printing model directly to the patient's CT scan as a way of achieving better patient outcomes. The idea will take several million dollars to evaluate and to implement. How do you propose this idea and all of the financial benefits to upper management and secure the funding to develop and implement the new process capability? That's what we're going to talk about. Or maybe you work for an electric vehicle company and your job is to design and engineer the battery packs on the company's new model. If your boss asks you to determine the cost of the two battery packs, one designed for a 500 mile range and one for a 300 mile range, how do you determine the cost of each alternative? A very important part of this course is this particular issue, it's budgeting time and your company has $1 million dollars to spend on new projects. You propose an $800,000 project that represents engineering, perhaps a new product development project. And you go to your bosses and say I need 800,000 of that one million dollars to develop this new product line. Of course, at the same time, the manufacturing people say they need new equipment to manufacture products more efficiently and they propose an $800,000 product. And marketing wants to fund a new marketing campaign to sell more of the company's products and they propose an $800,000 project. All of these groups are asking for a large chunk of the available $1 million. The question is, how does management decide which one to pick, 99% of the time it's going to be the project that provides the greatest financial returns for the company. We're going to learn how to determine financial viability so that when it comes time for you to pitch a project, you'll know what management is looking for and you'll be able to communicate the benefits of your project very effectively. One other valuable aspect of this course is that all the financial tools that we're going to look at, such as time value of money, compounding interest and rates of return also applied to your own personal finances, especially when it comes to looking long term to your retirement. Many of you are in the early stages of your career and we're going to show you how to start building a financial strategy for your future retirement. And will also point out that the sooner you get started, the more secure your financial future will be. Some of you might be interested in starting your own company and you need to know more about business and especially finance and the whole concept of cash flow. One thing I've learned when I talked to engineers that turned themselves in to entrepreneurs is that they thought they would be still doing all the technical work that often lead to the formation of the startup. Yet once they started their company, these new CEOs very quickly found out that they spend most of their time asking people for money. If your goal is to launch a company based on technical developments that you've made you need to understand finance because that's what investors want to hear about. And there's nothing better than a very savvy technical person who understands the details behind electric vehicles and solid state lithium ion technologies, but who can also communicate critical financial information to investors that are going to be giving them the money and few people can do both of those things very well. Financial management is about evaluating historical data and building future economic forecasts and scenarios based on long term financial projections. All with the goal of making the right decision for the company to achieve its financial objectives. To me, financial management is a lot simpler than what you might find in an 800 page textbook. It's a lot of interesting number crunching that identifies the optimum path among many alternatives using equations that are not terribly complex and input values based on historical performance, all with the goal of making your best estimate of what the future outcome might be. That's it, now, admittedly the hardest part for engineers is forecasting the future because it involves estimating what the future will look like and we hate estimating things. We love to look up data in a handbook, say he transferred coefficients for a specific material and then plug it into a complex equation to come up with highly accurate heat loss figures. But with finance, we flipped that around the equations are straightforward, but defining the values to put into those equations can be frustrating and the results turn out to be our best guesses of what is going to happen. And we're not trained to make guesses. So we're going to talk about estimation techniques that lead to a very reliable result. In this course, we'll cover topics such as costs and how to estimate them. This allows us to talk about product and process costs and how to determine them. Time value of money relates to the important concept of compounding interest and whether an investment today will give us what we want in the future. We'll also take a look at a project and forecast its future cash flows, then conduct what is known as a discounted cash flow analysis to see if the future benefits are greater than the investment that you have to make today. The way one evaluates financial viability of a product development project turns out to be applicable to how you might invest for your financial future. We'll show you that retirement today is your responsibility, your company will certainly help out in many cases, but it expects you to do the heavy lifting. And while this course won't turn you into a certified financial planner, you will become very familiar with the idea behind 401K plans, IRA plans, Mutual funds, ETFs, asset allocation and why all of this matters when creating a sound financial plan. By the end of this course, you'll know how product costs are determined. You'll understand and be able to apply the principles of time value of money to some very practical business types of problems. You'll be able to communicate with your financial colleagues with confidence because you're going to understand the language that they speak, the language of business and finance. And we're going to use those same tools and techniques to build a very solid foundation for your financial future to achieve your own financial objectives. That's a lot to learn in a short period of time, are you ready? Then let's get right to it. Next time we'll go over how the course will work what I call course, mechanics. We'll learn more about the topics will cover the assessments that you'll have and how they'll be graded all of the details you will experience over the next several weeks of the course. I'm hoping this is what you signed up for. From my part I'm excited to be a part of your journey into the world of finance. It will be fun and an important part of your development as a technical person preparing to become a business leader. I'm Michael Reedy and I'll see you next time.
