Management Dashboards and Leading Indicators

In my career one thing that always occurred to me is the limited and timely reporting of information in conformance to expectations, or changing conditions.

In one large financial corporation, by the time they’d prepared the next quarter forecasts, it was already the next quarter… and so it went, a mechanistic process that wasn’t about solving the fundamental business requirements. If you can’t define the requirements, then you can’t likely define the best solution. The solution being useful and timely information with respect to cost. Yesterday’s newspaper isn’t sold for today’s price for a reason.

Then I asked a question that flowed from this process; Do your recipients use this information? and would they be prepared to pay for it? Obviously, the question was unanswerable as it had never occurred to them. The next question/advice was why don’t you calculate the cost to prepare those reports? and then to ask whether the recipients think it's value for money? or if they’d prefer to not have the reports and a corresponding increase in budget to spend elsewhere?

This eventually resulted in the loss of significant amount of accounting and finance staff.

It seems in many larger corporations during periods of economic growth, tend to overly focus on expansion while underlying cost structures are relaxed and not adequately pruned to keep cost creep under control. Then after economic conditions have deteriorated and are sufficiently self-evident, expansion plans are suddenly curtailed/cut mid-stream, and communications are distributed to cut staff by X%. Better decision making would show more congruence with market conditions, and ideally precede them. This would result in better financial performance.

Other corporations were more savvy and had things such as Flash reports which were prepared monthly (Within a couple of days of (or even preceding) month end), and focused on reporting back to head office key performance metrics. The same logic still applies though, what is the cost to produce this information and how useful on a cost benefit basis to the business?

Ideally within a large corporation there should be an effective pyramid of financial/management control information, at its apex (Board level) would be appropriate leading economic/industry indicators (which appear often insufficiently orientated given the lag in course correction) coupled with summary operational performance indicators that can be drilled down into, and cascade into the lower levels of the organization.

However, depending on the orientation of the Board/Senior Management it will dictate the type of information sought, perhaps this can be tied back to a type of psychological matrix. Where senior management is more focused on Strengths, Opportunities and Threats rather than self-reflecting improvement of Weaknesses (In the classic SWOT context). This is then blended in with promotion to senior management based on certain attributes… generally Technical, Interpersonal, Entrepreneurial. In my experience, promotion is heavily focused on Technical and Interpersonal. But aren’t Technical and Interpersonal skills more operational level skills? Two of those three should generally be sufficient, but one should always be the entrepreneurial attribute.

Show me a wealthy self-made billionaire that isn’t entrepreneurial.

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