Did Somebody Say Strategy?

Enterprise Performance Management and Shared Value (upcoming roundtable)

I have the privilege of hosting a roundtable for expert network www.focus.com on Shared Value and Enterprise Performance Management - Tuesday March 15 at 11am PT/ 2pm ET.

Here's the link:

http://www.focus.com/events/finance/focus-finance-roundtable-measuring-what-matters/

I'm very excited as we discuss topics including

• Measuring what really matters
• How Shared Value focuses companies on the right kind of profits
• How to build a roadmap to measure and manage results across disciplines and throughout your value cycle

And we've lined up a stellar panel:

• Long time EPM practitioner Rick Cadman
• Change maker and Customer Experience Pioneer Dawna MacLean
• and Managing Director of fsg.org and Senior Fellow, Harvard Kennedy School, Mark Kramer.

Join us if you can!

Top Business Intelligence and Enterprise Performance Management Blog Entries

Here is a round-up of some interesting (to me) blog entries:

BI changes in 2011 – but to what?
The simple answer is that it’s about providing real-time business intelligence to people to support their decisions, not instead of, but in addition to traditional BI analysis of past success or trends. A more complex answer is that this is a completely new environment in every sense of the word mea...

Best-in-class BI – Display, Insight and Action
I was talking to a colleague about the benefits that an operational BI solution provides and we came to the conclusion there are three levels of increasing value: Displaying relevant, timely, accurate data based on the person’s role and responsibility within the context of a business process or valu...

Designing Your BI Competency Center
In which Jill talks about designing a competency center. (That’s right, we said “designing.”) In my vast experience as a BI and data integration consultant… (Okay now is when you think to yourself, “Wait, she looks pretty young, so how vast is it really? I mean, she can’t be more than 32 or 33…”) An...

Social Entrepreneurship, Corporate Social Responsibility and Shared Value
Anti-business sentiment may have increased in the U.S. with the Enron scandal in 2001. It further increased as income inequality started to get news coverage and reached a high degree of notice with the economic crisis of 2008. In response to this trend first social entrepreneurship emerged as a top...

BI Licensing &Lawsuits: A Sure Sign of Failure
Software licensing is never an easy topic, for either the buyer or the seller. For buyers, its so much easier to discuss features and capabilities and whether or not the product is a good fit. For the seller, its so much easier to highlight why their company and product is the best. So you do your p...

“Creating Shared Value”…
… is the title of the leading article in Harvard Business Review for January/February 2011. Given the article is jointly authored by Michael Porter, perhaps the world’s best known business school professor, it is likely to be very influential. It is an exceptional article about the need for capita...

All Work is Networked
Networks support every level of situational complexity The essential nature of work is humans interacting with other humans - the people behind the computer, the processes, and the machines. There is a big difference between the way real people work and the mechanistic approach of the production lin...

‘Stretch goals’ tend to stretch all the way into fraud
Goal setting works. Give your employees some concrete goals and they will work harder to reach them than when you just tell them “do the best you can”. There are ample studies confirming that relation...

Big Themes in BI for 2011
There is nothing like a fresh snowfall and a new year to reflect on the hot topics in BI for 2011. Here is my list of the five most important trends for the year ahead. 1. Advanced visualization a...

Is Your Consultant Enriching Your Judgment — or Retarding it?
by Brook Manville (Larry Prusak, Brook Manville, and Tom Davenport are at work on a book on judgment and how to cultivate it as an organizational, not just individual, strength. As their research prog...

The Strategic Reader - Dec 2010
Here is a quick summary of some interesting articles on strategy in late 2010: Ten Tech-Enabled Business Trends to Watch: McKinsey Quarterly . McKinsey has highlighted an earlier list of trends to w...

Seven counterintuitive truths for managers [Blog]
How do you get customers to send bouquets to staff for great service (literally) yet cut costs at the same time? By discarding (almost) everything you think you know about management and doing the opp...

Proposed Themes For BI Trends 2011
Business Intelligence remains a top priority for companies. A successful BI has a positive impact on business performance, helping companies make better decisions at every level of the business from c...

The Biggest Mistake On Sales Capacity Planning Models
I enjoy building capacity planning models. Yeah- I am weird like that. LOL. As you may know, we use capacity models to predict demand, predict productivity, predict costs and predict outputs (e.g. sal...

Seven Strategy Questions: A Simple Approach for Better Execution
Published: November 22, 2010 Author: Robert Simons Business leaders can't develop and execute effective strategy without first gathering the right information, says Harvard Business School professor R...

Overall Marketing Effectiveness (OME)
I was discussing marketing metrics with our CTO last week as we seek to define new performance measures or Key Performance Indicators (KPIs) that can help marketing professionals understand and improv...

The Job of an Innovation System in Your Business
I’ve written a great deal about idea and innovation management. But at the end of the day what is the job of an idea and innovation management system in your business? Let’s try to get clear on this...

Do Your Team a Favor: Stop Acting Like IT
(Caution: This blog may contain ideas that are hazardous to your career.) I’ve argued in previous blogs that business intelligence (BI) professionals must think more like business people and less li...

John Kotter: Four Ways to Kill a Good Idea
Published: October 6, 2010 Authors: John Kotter and Lorne A. Whitehead Someone is out to shoot down your best ideas. Do you know how to defend yourself? In their new book, Buy-IN: Saving Your Good Id...

Bridging Process Modeling and IT Solutions Design at adidas
Eduardo Gonzalez of the adidas Group talked about how they are implementing BPM within their organization, particularly the transition from business process models to designing a solution, which ties ...

Seven Characteristics of Key Performance Indicators - KPIs
"Performance measurement is failing organizations all around the world," says author David Parmenter in his new book " Key Performance Indicators: Developing, Implementing, and Using Winning KPIs " (2010, John Wiley & Sons Inc.) The reasons include a ...

Using Cynefin
I was on YouTube earlier today checking out on our new video on the Cynefin framework which is doing well in terms of hits although its not anywhere near the Childrens' Party story yet! I hadn't realised that there is other material up there, Three n...

Polymaths see the bigger picture
One of my big themes these days is to look at the huge opportunities available to businesses that transform their operations, cost base or market reach through their use of the cloud. So I’m looking forward to meeting up this week with my Enterprise I...

Value Networks Monitor Hidden Value

Standards and XBRL for Intangible Asset Management Value network modeling and analytics are in the forefront of non-financial business reporting. The Value Networks data model is fully XBRL enabled and it is the only scalable business modeling methodo...

Mindmap Retail Intelligence Presentation
This is the mindmap that I used for the Retail Intelligence presentation that I gave at the microstrategy event. It mentions the trends in BI and Retail and how they come together. If you are interested in receiving the slides drop me an e-mail. ...

From Data Warehousing to Performance Management
Next year marks the 15th anniversary of The Data Warehousing Institute (TDWI), an association of data warehousing and business intelligence (BI) professionals that has grown nearly as fast as the industry it serves, which now tops $9 billion according...

Have we really understood what Business Intelligence means?
Everyone wants ‘business intelligence’ (BI) but have we failed to grasp the gap between what the business managers want and what conventional BI reporting delivers? I was ‘socialising’ this point with a former colleague whose views are always interest...

Sent from my iPad

Nine Questions to Ask a Rep Before You Buy a Business Intelligence System

Focus.com asked me to write this Business intelligence briefing:

Nine Questions to Ask a Rep Before You Buy a Business Intelligence System

Please have a look and let me know what you would add or change, I'm interested in all perspectives: Vendors, buyers, procurement people, business managers, and consultants.

 

The Intelligent Company (Book Review)

Book Review

The Intelligent Company: Five Steps to Success with Evidence-Based Management by Bernard Marr (2010, WIley).

I was first introduced to Bernard Marr's work in 2004 when he wrote "Business Performance Management: Current State of the Art" for Hyperion while I worked there, and then later in this excellent book:

Strategic Performance Management: Leveraging and Measuring Your Intangible Value Drivers

Marr has taken his extensive experience in Enterprise Performance Management, Balanced Scorecards, Strategy Maps (and the list goes on), combined it with the latest research and case studies on analytics, business intelligence, and other areas, and boiled it down to a holistic framework for Evidence-Based Management (EbM).

While the framework is simple & straight-forward, the components (people, processes, data, technology, culture) that make it up can be far-reaching and complex - hence the need for this book to bring it all together.

Some of the highlights of this very accessible book, for me, include:

- the intersection of EbM and Enterprise Performance Management;
- 21 pages of Balanced Scorecard and Strategy Maps examples and better-practices;
- treating Key Performance Indicators (KPIs) as performance conversations;
- good introduction to developing and using Key Performance Questions (KPQ's);
- the importance of experimentation and testing (and the removal of bias) in business performance;
- excellent summary and recommendations on various data collection methodologies;
- tips on visual business intelligence and creating performance dashboards;
- the importance of addressing culture as the foundation of success in EbM.

The book is loaded with quite a few real-world examples from organizations including:
Tesco, BMW, Enterprise Rent-a-car, Thomas Cook, UK NHS, Scotiabank, Purolator, Saatchi + Saatchi, Royal Dutch Shell, Unilever, Yahoo, CapitalOne, Harrah's, Coca Cola, and eBay.

I would like to have heard more on Marr's take on how EbM enables the debate in business, perhaps within experimentation & testing or scenario development, or in choosing options to make decisions and commitments, but that is a small nit to pick in this sweeping handbook for the design and implementation of an evidence-based management system and organization.

Highly recommended.

CFO as Strategic Partner

This month's CFO magazine has a good article on what it takes for the CFO to become a "true partner in setting company strategy." By Russ Banham.

Here are the key points from the article:

Skills needed
- management/leadership ability
- ability to think strategically
- insight & vision
- intellectual curiosity
- solves complex problems
- experience in finance and operations ("finance and business talent")
- understand the business "end-to-end"
- knowledge of the whole thought process around strategic objectives
- confidence

Responsibilities
- manage costs AND help drive growth
- continued relentless focus on cost containment
- provide facts & analytical truths
- execute (turn ideas into reality)
- "quantify and contextualize a path to myth-bust and to disrupt the status quo"
- understand the needs of business units and business functions, especially their growth initiatives
- resource allocation

Tools to use
- financial and operational analytics
- analysis of customer data
- predictive analytics (insights)
- healthy debate (over strategic direction)
- spend time on the front lines

Relationship with the CEO
- partner with the CEO to help chart strategic growth
- ability to voice independent, fact-based opinions
- "depersonalize the debate"
- hold collaborative dialogues
- be the "critical bridge in the value-creation process" between CEO and Business Units

Also see
Top Concerns of CFOs

More Concerns of CFOs

CFO: Be Clear About the Cloud

David McCann at CFO.com wrote about Cloud strategy from Finance's perspective.

Here's his advice:

1. Stay Alert - opportunities to move to the cloud will present themselves piecemeal.  In the meantime, avoid investing in too much server capacity.

2. Spread the Wealth - re-consider consolidating all your IT with one vendor while balancing interoperability issues.

3. Do a Test Run - prototype in the cloud

4. Get Ready for a Change - realign your IT skill sets with the needs of how the business is changing

5. Take Care with Contracts - who owns, uses & controls your data?  Beware costly up-charges.  Factor in costs to move applications to the cloud and don't underestimate configuration changes.  Don't ignore service level agreements.

6. Know Where your Data Is - especially understand various legal requirements for potential different jurisdictions.


Here's the full article.

Also see: Your Cloud or Mine

Determine your Key Performance Indicators

I was reminded of Neal Williams' Balanced Nine Step Process the other day:

1. Define your strategic objectives
    - eg: 5% profitable revenue growth
2. Create questions aligned with objectives
    - eg: what % of sales are from new products/services?
    - eg: what % of sales include cross-selling initiatives?
3. Write English descriptions of KPIs
    - eg: Sales Productivity by Product
4. Assign targets, goals, and benchmarks
    - benchmarks can be internal (ie: vs. last year) and external (vs. industry)
5. Diagram the navigation paths
6. Determine if KPIs are drivers or outcome metrics
7. Check the availability and condition of data
8. Check for compliance and balance
    - compliance with company standards and definitions
    - balance of leading/lagging and financial/operational/non-financial
9. Assign owners and users

For more, see Wayne Eckerson's article, "How to Create and Deploy Effective Metrics"

Business Intelligence vs. Enterprise Performance Management

Here's my response in "The Culture of Performance" LinkedIn Group on the question of Business Intelligence being confused with (Corporate) Performance Management:

I would agree with Tricia that BI tools are used for managing data (as are MDM tools, data warehouse tools, and so on), but I would respectfully argue that Business Intelligence (not just the tools) is also part of managing performance and some consider BI to be part of CPM (and EPM as Oracle, SAP, E&Y, PwC, etc. call it). Howard Dresner (the guy who coined the term 'business intelligence') has called CPM "BI with a purpose."

One way to look at it is to consider CPM (and EPM and the unfortunately named Business Performance Management - the other BPM) as the management processes and technology (ie: not OLTP) that help you execute on strategy. I look at it in 4 distinct major processes:

DEBATE
* given your strategy, what's the best way to make your numbers (and operational targets)? Organic growth? M&A? divestiture? product extension? price/mix adjustments?

* this includes financial & operational modeling, scenario planning, target setting and so on

DECIDE
* once the best scenario is identified, how will you deploy your resources (cash, people, equipment, time) to make your targets - by business unit, product line, geography, etc.

* this includes budgeting, planning, & forecasting - essentially documenting commitments in the organization

GATHER
* as you are busy making widgets, delivering services, and acquiring customers, how are you doing?

* this includes financial, operational, management, and statutory consolidation and reporting

ANALYZE
* why did you get the results you got?

* this includes financial & operational analytics, data mining, variance analysis, benchmarking, and so on.

And all of your analyses (which are based on the information you gathered and the variances to commitments) go on to feed the DEBATE as you optimize your resources.

The last two: gather & analyze, are traditionally considered BI. All 4, when integrated and aligned with strategic objectives, are Corporate/Business/Enterprise Performance Management.

So, to Ken's points, these categories have already converged and it's now called EPM. Unfortunately, there is a lack of leadership in this space for propagating a consistent definition, and software vendors have their own product agendas to pursue.

You can find more on this in my blog post at
http://businessfoundation.typepad.com/bf_blog/2008/02/what-enterprise.html

Popular Management Techniques ROI

Every Saturday I spend 2 hours in a Recording for the Blind and Dyslexic studio narrating high-school and college text books and reference materials (if you live in a city with a studio, I highly recommend volunteering for this organization - it's extremely well-run and worth while).  Sometimes I come across interesting material related to my field of work.  This one was eye-opening.  Even though I've heard this from Tony Mayo, it didn't resonate like it did after reading this (underlines are mine):

"Staw & Epstein (2000) studied the adoption of popular management techniques (PMTs) and their implications for (among other things) CEO compensation....Additionally, Abrahamson (1996) described the emergence and adoption of PMTs as fashion cycles.  That is, at any given time, older practices tend to be viewed as deficient and newer practices tend to be viewed as better.  Institutionalization theory predicts that adoption of PMTs will be motivated more by a need for legitimacy than a desire for efficiency....Studying the 100 largest Fortune firms in 1995, they gauged PMT usage through news articles on the sample firms.  Their evidence showed that adoption of PMTs had no impact whatsoever on firm performance (regardless of the effectiveness of implementation).  Further, CEOs of firms that adopt PMTs tend to be paid more, regardless of whether or not the adoption was linked to firm performance.  Finally, the authors show that when press reports highlight PMT adoption, CEOs tend to be paid more, again regardless of the firm's performance or the effectiveness of the actual implementation of the PMTs.  They add that the effects show up in short-term compensation, and their analyses clearly link the compensation effects to the adoption of PMTs, not to reputation increases or effective implementation."

From Strategic Leadership: Theory and Research on Executives, Top Management Teams, and Boards (Strategic Management Series) Oxford University Press, 2009

Pages 314-315

Book Review: Dealing With Dilemmas

Dealing With Dilemmas: Where Business Analytics Fall Short
Frank Buytendijk, John Wiley & Sons, 2010

Once again, Frank has produced a work with a very high content-to-pages ratio: there is a lot of stuff in here!  And as he did in Performance Leadership: The Next Practices to Motivate Your People, Align Stakeholders, and Lead Your Industry, he manages to combine the philosophical and practical through theories and Real-world examples and case studies.
It's hard to classify "Dealing with Dilemmas," since it cover so many areas:
- strategy & decision making
- scenarios & resource allocation
- risk, ambiguity, constraints, assumptions
- morality & ethics
- alignment & culture
First of all, this is a really good overview of strategy - it's like a Strategy Safari: A Guided Tour Through The Wilds of Strategic Management crash-course.
And he does a solid job of identifying 6 dilemmas that exist in every business:
- value vs. profit
- long term vs. short term
- top down vs. bottom up
- listen vs. lead
- inside out vs. outside in
- optimize vs. innovate
Then he neatly classifies those into "you versus me" and "now versus later," which both require different approaches.
Given Frank's pedigree, he ties the message of the book neatly into Enterprise Performance Management/Business Intelligence concepts and practices - like the Balanced Scorecard, Resource Planning, Finance, and Analytics.
There are plenty of interesting subjects - I was going to say tangents - in this book (like synthesis, the art of creating options, all the way to time-space dimension swapping, and the bit about meta-synthesis in the end), but Frank brings it all together so none of it feels tangential.  And, being a big fan of closed-loop management systems, you'll enjoy Franks "donut vs. the pretzel" treatment.
At it's heart, I think this is a Change Management book: changing our own context & behaviors - dealing with our own dilemmas - to help improve organization change for the better.  And I'll bet you'll never read another business book that asks "do you want sex, or do you want a cookie?"