By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
SmartData CollectiveSmartData Collective
  • Analytics
    AnalyticsShow More
    football analytics
    The Role of Data Analytics in Football Performance
    9 Min Read
    data Analytics instagram stories
    Data Analytics Helps Marketers Make the Most of Instagram Stories
    15 Min Read
    analyst,women,looking,at,kpi,data,on,computer,screen
    What to Know Before Recruiting an Analyst to Handle Company Data
    6 Min Read
    AI analytics
    AI-Based Analytics Are Changing the Future of Credit Cards
    6 Min Read
    data overload showing data analytics
    How Does Next-Gen SIEM Prevent Data Overload For Security Analysts?
    8 Min Read
  • Big Data
  • BI
  • Exclusive
  • IT
  • Marketing
  • Software
Search
© 2008-23 SmartData Collective. All Rights Reserved.
Reading: Want to Disprove a CEO’s Wishful Thinking? Use Analytics.
Share
Notification Show More
Aa
SmartData CollectiveSmartData Collective
Aa
Search
  • About
  • Help
  • Privacy
Follow US
© 2008-23 SmartData Collective. All Rights Reserved.
SmartData Collective > Data Management > Culture/Leadership > Want to Disprove a CEO’s Wishful Thinking? Use Analytics.
AnalyticsCulture/LeadershipDecision ManagementInside CompaniesPredictive Analytics

Want to Disprove a CEO’s Wishful Thinking? Use Analytics.

GaryCokins
Last updated: 2011/08/09 at 5:14 AM
GaryCokins
4 Min Read
SHARE

How often have you heard executives proclaim that next year the target for financial results will be a substantial lift from the current year? For example a CEO may state, “Next year we expect to improve from a 10.3% to 15.4% rate of return on shareholder equity.” Is this leadership or wasted words? Where did the 15.4% come from? How is it substantiated with facts? Is this expectation a goal or a wish?

How often have you heard executives proclaim that next year the target for financial results will be a substantial lift from the current year? For example a CEO may state, “Next year we expect to improve from a 10.3% to 15.4% rate of return on shareholder equity.” Is this leadership or wasted words? Where did the 15.4% come from? How is it substantiated with facts? Is this expectation a goal or a wish?

In my opinion such a high-level aggregate target, typically stated in financial terms, is not a goal – it is a result. That is, highly aggregate targets are a consequence of collectively accomplishing lots of other outcomes. Similar to a track and field pole vault athlete who must have so many things come together to clear the bar – speed, knee lift, arm push-off and body form – an organization must also collectively get it right to optimize the use and strategic alignment of its spending and resources.

But even if an organization can get it collectively get it right, how does the CEO know such a precise financial target – or any target number? The financial return is a dependent variable, not an independent one. That means there can be dozens, arguably hundreds, of interrelated factors, the inherent variables, that can collectively contribute to the financial results. The good news is there is now a way to optimize an organization’s performance.

More Read

football analytics

The Role of Data Analytics in Football Performance

Data Analytics Helps Marketers Make the Most of Instagram Stories
What to Know Before Recruiting an Analyst to Handle Company Data
AI-Based Analytics Are Changing the Future of Credit Cards
How Does Next-Gen SIEM Prevent Data Overload For Security Analysts?

The heralded solution to aim for maximum financial results is to use strategy maps with a balanced scorecard. Together they serve like a GPS navigation instrument in a car. Although a strategy map and its companion balanced scorecard do not alone provide the power to optimize financial results, when correlation analysis among its KPIs is applied, the maximum achievable return on shareholder equity can be tested and validated. Trade-off analysis can be applied. The amount of spending can be examined to assess when any exceeds a limit that aggregate profits begin to decline.

A strategy map and its scorecard with KPIs set direction and determine projects and core processes to improve. The underlying power to achieve results comes from the integration of the many enterprise performance management methodologies that I so regularly write about. When the methodologies are integrated and infused with reliable analytics – particularly predictive analytics – then the maximum financial returns can be determined.

Goal or wish? Summary, aggregate enterprise measures are not goals but rather aspired results. The true target setting must shift to project selection and core process improvements – independent variables.

GaryCokins August 9, 2011
Share This Article
Facebook Twitter Pinterest LinkedIn
Share

Follow us on Facebook

Latest News

Shutterstock Licensed Photo - 1051059293 | Rawpixel.com
QR Codes Leverage the Benefits of Big Data in Education
Big Data
football analytics
The Role of Data Analytics in Football Performance
Analytics Big Data Exclusive
smart home data
7 Mind-Blowing Ways Smart Homes Use Data to Save Your Money
Big Data
ai low code frameworks
AI Can Help Accelerate Development with Low-Code Frameworks
Artificial Intelligence

Stay Connected

1.2k Followers Like
33.7k Followers Follow
222 Followers Pin

You Might also Like

football analytics
AnalyticsBig DataExclusive

The Role of Data Analytics in Football Performance

9 Min Read
data Analytics instagram stories
Analytics

Data Analytics Helps Marketers Make the Most of Instagram Stories

15 Min Read
analyst,women,looking,at,kpi,data,on,computer,screen
Analytics

What to Know Before Recruiting an Analyst to Handle Company Data

6 Min Read
AI analytics
AnalyticsArtificial IntelligenceExclusive

AI-Based Analytics Are Changing the Future of Credit Cards

6 Min Read

SmartData Collective is one of the largest & trusted community covering technical content about Big Data, BI, Cloud, Analytics, Artificial Intelligence, IoT & more.

AI and chatbots
Chatbots and SEO: How Can Chatbots Improve Your SEO Ranking?
Artificial Intelligence Chatbots Exclusive
giveaway chatbots
How To Get An Award Winning Giveaway Bot
Big Data Chatbots Exclusive

Quick Link

  • About
  • Contact
  • Privacy
Follow US
© 2008-23 SmartData Collective. All Rights Reserved.
Go to mobile version
Welcome Back!

Sign in to your account

Lost your password?