What executives say...matters. - SmartData Collective

What executives say…matters.

The November 3, 2008 edition of Businessweek (p. 106) has a very insightful article by Frank Luntz. He lists five terms that resonate in the business world and should become every executive’s lexicon. I’ve listed them here along with their connection to Enterprise Performance Management (EPM):

Consequences
Thinking through the potential results (good and bad) of decisions naturally puts you in an accountability mindset.

When you base your decisio…

Consequences
Thinking through the potential results (good and bad) of decisions naturally puts you in an accountability mindset.

When you base your decisions on believable facts and known assumptions, you have more confidence in what you’re being accountable for. Rigorous financial and operational models (with built-in assumption management) and predictive analytics will help you anticipate potential results with more confidence. Tracking your decisions (in forecast commits for example) and going back to analyze your forecast accuracy will help you improve your models and forecasts.

Impact
What’s the measurable difference going to be? This is more rigorous than talking about effort or solutions.

Seeing the entire value-chain of your enterprise let’s you understand the impact of your decisions. For example, should you decide to consolidate contact centers, you should know the measurable impact not only on operating and capital costs, but also on call capacity and customer satisfaction.

Reliability
In our world of Enterprise Performance Management, we refer to the reliability of numbers as “believe-ability.”

As Frank Buytendijk mentions, it’s not really “one version of the truth,” but rather “one context of the truth.” Meaning you want everyone to use the same numbers, but the numbers have different meaning in different places. A good example is Revenue. If you’re the head of sales, you want to know commissionable or booked revenue. The CFO wants to know recognized revenue, the CMO wants to know gross revenue, and so on. When they look at each of those numbers, they may be different (adjusted for currency, returns, contract reasons, etc.), but they are all based on the same root transaction numbers and hierarchies (master data).

Mission
Not the mission statement that consultants help you write, but the cultural calling of the organization – what it actually stands for.

Sometimes this is propagated in an organization through a Balanced Scorecard (certainly a component of EPM), and it can also show up as how all layers of the business use their management operating system to make decisions, allocate resources, hold people accountable, plan for the future and “own” being a learning organization.

Commitment
Not a pledge, not a promise, but the speaker putting their “credibility on the line to achieve a successful outcome.”

What better way to record a business commitment than through a forecast? Most forecasts have multiple scenarios: worst-case, probable-case, best-cast, and maybe even stretch-case. Many organizations have a “commit” case in their forecast – that’s the number the management chain really focuses on. Today, organizations usually deliver a committed forecast for sales revenue and operating expenses (predominantly weekly or monthly). What about adding other operational drivers to your commit? What if you committed to a specific number of customer touch points (or support cases closed, or proposals submitted, and so on) in a week and were measured on the actuals, then rewarded on the variance?!

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