The PERFORMANCE Manager

152 Pages·2009·4.2 MB·English

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R PPEERRFFOORRMMAANNCCEE
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Proven Strategies for
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Turning Information
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into Higher
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E Business Performance
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I FOR LIFE SCIENCES
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byRolandMosimann,PatrickMosimann,MegDussault
S
andPaulHake

The PERFORMANCE Manager
Proven Strategies for Turning Information into
Higher Business Performance
FOR LIFE SCIENCES
Edited by
John Blackmore and Catherine Marenghi
Production and Launch Team:
Steve Hebbs
Kathryn Hughes
Randi Stocker
©CopyrightIBMCorporation2009
IBMCanada3755RiversideDriveOttawa,ON,CanadaK1G4K9
ProducedinCanada
July2009
AllRightsReserved.
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TABLE OF CONTENTS
Introduction......................................................................................................................................5
Promise:EnablingDecisionAreasthatDrivePerformance...............................................................9
Finance:TrustedAdvisororComplianceEnforcer?........................................................................17
Marketing:InvestmentAdvisortotheBusiness..............................................................................29
Sales:YourBusinessAccelerator.....................................................................................................41
CustomerService:TheRisk/RewardBarometeroftheCompany’sValueProposition....................53
ProductResearch&Development:
DevelopingtheRightProduct,theRightWay,attheRightTime...................................................65
Regulatory&LegalAffairs:TheGateOpenerfortheBusiness......................................................77
Manufacturing:WinningattheMargins........................................................................................85
HumanResources:ManagementorAdministrationofHumanCapital?.........................................97
InformationTechnology:APathfindertoBetterPerformance......................................................107
ExecutiveManagement:ChiefBalancingOfficers.........................................................................125
Summary.......................................................................................................................................151
AbouttheAuthors.........................................................................................................................153
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INTRODUCTION
ThePerformanceManagercontinuesanexplorationthatbeganmorethantenyearsagowiththe
publicationofTheMultidimensionalManager.Bothbooksexaminethepartnershipbetween
decision-makersincompaniesworldwideandthepeoplewhoprovidethemwithbetterinformation
todrivebetterdecisions.
Morethanadecadeago,thefocuswasonunderstandinganexcitingnewtransformationaltrend—
companieswerebecomingmorecustomer-andprofit-centric.Whatdrovethattrend?Companies
wererelyingmoreandmoreoninformationassetssuchasbusinessintelligence.
Today,thatfocushasbecomeevensharperandmoreimportant.Globalcompetitionand
interconnectedglobalsupplychainshavefurtherintensifieddownwardpressuresoncost.
TechnologyandtheInternethavetransformedtheknowledgeeconomyfromtheequivalentofa
specialtystoreintoa24/7/365big-boxretailer.Vastamountsofcontentareaccessibleanytime,
anywhere.
Today,companiesareexpectedtohaveadepthofinsightintotheircustomers’needsunheardoften
yearsago.Andyetmarketuncertaintyisgreaterthanever.Thepaceofrapidchangedoesnotallow
formanysecondchances.Inotherwords,ifbeingcustomer-andprofit-centricwasimportantthen,
itiscriticalnow.
Tobettersupportthedecision-maker/technologyprofessionalpartnership,TheMultidimensional
Managerintroduced24Ways,asetofbusinessintelligencesolutionsusedbyinnovativecompanies
todrivegreaterprofitability.Thesesolutionswereorganizedbybusinessfunctionandreflectedthe
insightthatthemostvaluableinformationincorporatedecision-makingisconcentratedina
relativelysmallnumberofinformation“sweetspots,”nodesinacorporation’sinformationflow.
Thebookalsointroducedtwofurtherinsights.First,theemergenceofanewbreedofmanager—the
multidimensionalmanager,whocouldeffectivelynavigateandprocesstheseinformationsweetspots
andthusmakebetter,fasterdecisions.Second,thematurityoftheenablingtechnology—business
intelligence.
Thebooklaunchedafascinatingdialogue.Demandledtotheprintingofmorethan400,000copies.
Peopleusedittohelpunderstandandcommunicatethepromiseofbusinessintelligence.Thepages
oftendog-earedandannotated,itbecameafieldmanualforbusinessandITteamstaskedwith
developingsolutionsfortheircompanies.Cognos®(whichcommissionedthebookandisnowpart
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INTRODUCTION
ofIBM),BIInternational(whichco-authoreditanddevelopedthe24Ways)andthecompanyPMSI
(whichpartneredcloselywithboth)maintainedadialoguewithhundredsofcompaniesoverthe
years,collectingandsynthesizingthemanycommonexperiencesandrefiningthemintoabodyof
bestpracticesandsolutionmaps.
Tenyearson,ThePerformanceManagerrevisitsthisdialogueandtheunderlyingassumptionsand
observationsmadeinthefirstbook.Weshareourconclusionsaboutwhathaschangedandwhat
hasbeenlearnedbysuccessfulcompaniesandmanagersintheirattemptstodriveprofitabilitywith
betterinformation.Whilethecoreprinciplesoriginallypresentedhaveevolved,theyarestilllargely
true.Afterall,businessesexisttoservecustomers,andnotwithstandingthetechboom’sfocuson
marketshare,profitistheultimatemeasureofsuccess.ThePerformanceManagerisnotasequel;
thoughrelated,itstandsonitsown.Wehopeitwilllaunchanewdialogueamongthoseambitious
andforward-lookingmanagerswhoviewinformationnotasacrutchbutasawaytobothdrill
downintodetailandsearchoutwardintoopportunity.
TheChangingValueofInformation
McKinseyQuarterlyresearchsince19971hasfollowedaninterestingtrendthatrelatesdirectlytothe
dialoguewestartedadecadeago.Basedonthisresearch,McKinseydistinguishesbetweenthree
primaryformsofworkandbusinessactivity:
1.Transformationalwork–Extractingrawmaterialsand/orconvertingthemintofinishedgoods
2.Transactionalwork–Interactionsthatunfoldinarule-basedmannerandcanbescriptedor
automated
3.Tacitwork–Morecomplexinteractionsrequiringahigherlevelofjudgmentinvolvingambiguity
anddrawingontacitorexperientialknowledge
InrelationtotheU.S.labormarket,McKinseydrewseveralconclusions.First,tacitworkhas
increasedthemostsince1998.Itnowaccountsfor70percentofallnewjobs,andrepresentsmore
than40percentoftotalemployment.Thepercentageinserviceindustriesisevenhigher—for
example,it’snearly60percentinthesecuritiesindustry.
Second,overthesameperiodinvestmentintechnologyhasnotkeptpacewiththisshiftinwork.
Technologyspendingontransactionalworkwasmorethansixtimesgreaterthanspendingontacit
work.Thisreflectsthepastdecade’seffortsinre-engineering,processautomationandoutsourcing.It
makessense:linear,rule-basedtransactionalprocessingistheeasiesttoimprove.
1BradfordC.Johnson,JamesM.ManyikaandLareinaA.Yee:“Thenextrevolutionininteractions,”McKinseyQuarterly(2005,Number4),and
“Competitiveadvantagefrombetterinteractions,”McKinseyQuarterly(2006,Number2).
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INTRODUCTION
ButMcKinsey’sthirdfindingisthemostimportant:competitiveadvantageishardertosustainwhen
itisbasedongainsinproductivityandcostefficiencyintransactionwork.McKinsey’sresearch
foundthatindustrieswithhighproportionsoftacitworkalsohave50percentgreatervariabilityin
companyperformancethanthoseindustriesinwhichworkismoretransaction-based.Inother
words,thegapbetweentheleadersandlaggardswasgreatestinindustrieswheretacitworkwasa
largerproportionoftotalwork.
Thisfascinatingresearchconfirmswhatmostofushaveknownintuitivelyforsometime.Ourjobs
havebecomemoreandmoreinformation-intensive—lesslinearandmoreinteractive,lessrules-based
andmorecollaborative—andatthesametimeweareexpectedtodomoreinlesstime.While
technologyhashelpedinpart,ithasn’tachieveditsfullpotential.
ThePerformanceManagercanhelpthishappen.Itoffersinsightsandlessonslearnedonleveraging
yourinformationassetsbetterinsupportofyourmostvaluablehumancapitalassets:thegrowing
numberofhigh-valuedecision-makers.Giventherightinformation-enablingtechnologyand
leadership,thesedecision-makerscanbecomeperformancemanagers.Suchmanagersdeliver
sustainablecompetitiveadvantagebygrowingrevenuefaster,reducingoperationalexpensesfurther
andleveraginglong-termassetsbetter.Thecompanieswhoseexperiencesweshareinthisbookhave
validatedthispromisewithhard-earnedvictoriesinthetrenches.
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PROMISE
Enabling Decision Areas that Drive
Performance
Thisbooksynthesizescountless,variedcompanyexperiencestoconstructaframeworkand
approachthatotherscanuse.TheinformationsweetspotwasthecornerstoneconceptofThe
MultidimensionalManager.Sweetspots,businessintelligenceandmultidimensionalmanagerswere
thekeystothebook’sprofitabilitypromise.
ThesethreeinsightsarestillfundamentaltothepromiseofThePerformanceManagerandtheneed
toleverageinformationassetstomakehigh-valuedecisionsthat:
•Enablefasterrevenuegrowth
•Furtherreduceoperationalexpenses
•Maximizelong-termassetreturns
(cid:2)andthereforedeliversustainablecompetitiveadvantage.
Ifanything,thesethreeinsightsareevenmorecriticaltosuccesstoday.
Insight1revisited:Theinformationsweetspot(cid:2)More“sweet”requiredtoday
In1996,wewrotethat“themostvaluableinformationforcorporatedecision-makingis
concentratedinarelativelysmallnumberofsweetspotsofinformationthatflowthrougha
corporation.”Thedrivinglogicwastherelativecostofacquisitionanddeliveryofinformation
versusthevalueandimportanceofthatinformation.Whilethiscost/benefitconsiderationisstill
valid,fourfactorsrequiretoday’sdecision-makinginformationtobedefined,refined,and
repackagedinevenmoredetailthantenyearsago:
1.More:Thereissimplymuchmoreinformationavailabletoday.Theterm“datawarehouse”isno
accident.Companiescollectmassiveamountsoftransactiondatafromtheirfinancial,supply
chainmanagement,humanresourcesandcustomerrelationshipmanagementsystems.Earlyon,
oftentheproblemwasfindingthedatatofeedbusinessintelligencereportsandanalytics.Today,
dataoverloadisthegreaterchallenge.
2.Faster:Informationflowhasbecomefasterandmorepervasive.TheInternet,wirelessvoiceand
data,globalmarketsandregulatoryreportingrequirementshaveallcontributedtoa24/7/365
workingenvironment.Today’scompanyisalwaysopenforbusiness.Managersarealways
connected.Timeforanalysis,actionandreactionisshort,especiallyinthefaceofcustomer
demandsandcompetitivepressures.
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PROMISE
3.Integrated:Workhasbecomemoreinteractiveandcollaborative,requiringmoresharingof
information.Thismeansintegratinginformationacrossbothstrategicandoperational
perspectivesaswellasacrossdifferentfunctionalandevenexternalsources.
4.Enrichment:Effectivedecision-makinginformationrequiresmorebusinesscontext,rulesand
judgmentstoenrichandrefinetherawtransactiondata.Categorizationsandassociationsofthis
datacreatevaluableinsightsfordecision-makers.
Insight2revisited:Managersthinkmultidimensionally(cid:2)Managersperformwithiniterativeand
collaborativedecision-makingcycles
Tenyearsago,manymultidimensionalmanagerstendedtobe“powerusers”whowerebothwilling
andabletonavigatethroughavarietyofinformationtofindtheanswerstheyneeded.Theseusers
wereadeptatslicinganddicingwhen,who,whatandwheretobetterunderstandresults.
Theeaseofadhocdiscoverywasincrediblypowerfultomanagerspreviouslystarvedforinformation
and,moreimportant,answers.Thispowerofdiscoveryisstillhighlyrelevanttoday,buttheneedfor
decision-makinginformationhasevolved:analysisbysomeisn’tenough—whatisrequiredis
interactionandcollaborationbyall.AstheresearchbyMcKinseyshows,moreandmoretacitwork
isrequiredtodriveinnovationandcompetitiveness.Today’sperformancemanagersincludemore
executives,professionals,administratorsandexternalusers,andarenolongermainlyanalysts.
Iterativeandcollaborativedecision-makingcyclesresultfrommoretwo-wayinteractionincommon
decisionsteps:settinggoalsandtargets;measuringresultsandmonitoringoutcomes;analyzing
reasonsandcauses;andre-adjustingfuturegoalsandtargets.Thesetwo-wayinteractionscanbe
framedintermsofdifferentdecisionroleswithdifferentworkresponsibilitiesandaccountabilities
foragivensetofdecisions.Thesejobattributessituateperformancemanagersinadecision-making
cyclethatcutsacrossdepartmentalsilosandprocesses.Thiscycleclarifiestheirinvolvementinthe
informationworkflow,helpingdefinetheinformationtheyexchangewithothersindrivingcommon
performancegoals.Adecisionrolecanbederivedfromaperson’sworkfunction(suchas
Marketing,Sales,Purchasing,etc.)and/ortheirjobtype(suchasexecutive,manager,professional,
analyst,etc.).
Workresponsibilitiescanbedividedintothreebasiclevelsofinvolvement:
1.Primary:Decisionsatthislevelarerequiredtoperformparticulartransactionsoractivitiesand
aremadeoften.Typically,thisemployeeisdirectlyinvolved,ofteninthetransactionitself,and
his/heractivitydirectlyaffectsoutputand/orcost,includingforplanningandcontrolpurposes.
He/shehasaccesstoinformationbecauseitispartofthejobrequirement.
2.Contributory:Informationsupportsdecisionsmadewithindirectresponsibility.Decisionsare
moreadhocandmayaddvaluetoatransactionoractivity.Theemployeeatthislevelmayhave
toresolveaproblemor,forexample,adjustaproductionschedulebasedonsalesforecasts.
3.Status:Informationsupportsexecutiveoradvisorydecisions.Thesepeoplereceivestatusupdates
onwhatisgoingon.Sometimestheymanagebyexceptionandgetupdatesonlywheneventsfall
outsideacceptableranges.
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PROMISE
Thesedifferentlevelsmeanthatsecuringsweeterinformationsweetspotsisnotenough.Information
mustbetailoredtoaperson’sdecisionrole,workresponsibilityandaccountabilityforagivensetof
decisions.Inthepast,manybusinessintelligenceeffortsstumbledpreciselybecauseofaone-size-fits-
allapproachtouseradoption.Informationmustbepackagedaccordingtouseanduserrole.
Insight3revisited:Thereportingparadigmformanagershaschanged(cid:2)Performancemanagers
needintegrateddecision-makingfunctionalityinvariedusermodes
Businessintelligencewasanemergingtechnologyinthemid1990s.Today’sbusinessintelligencehas
maturedtofitthenotionofperformancemanagement.Tofullysupportsweeterinformationsweet
spotsandcollaborationwithindecision-makingcycles,youneedarangeofintegratedfunctionality.
Forperformancemanagerswithvariedrolesandresponsibilitiesandthosemakingdecisionsbased
onback-and-forthcollaboration,functionalitycan’tbenarrowedtojustonekind,suchasscorecards
forexecutives,businessintelligenceforbusinessanalystsorforecastingforfinancialanalysts.In
practice,performancemanagersneedarangeoffunctionalitytomatchtherangeofcollaboration
andinteractiontheirjobrequires.
Everydecision-makingcycledependsonfindingtheanswerstothreecorequestions:Howarewe
doing?Why?Whatshouldwebedoing?Scorecardsanddashboardsmonitorthebusinesswith
metricstofindanswerstoHowarewedoing?Reportingandanalysisprovidestheabilitytolookat
historicdataandunderstandtrends,tolookatanomaliesandunderstandWhy?Planningand
forecastinghelpyouestablisha
reliableviewofthefutureand
answerWhatshouldwebedoing?
Integratingthesecapabilitiesallows
youtorespondtochanges
happeninginyourbusiness.
Toensureconsistencyinanswering
thesefundamentalperformance
questions,youmustintegrate
functionalitynotjustwithineach
one,butacrossthemall.Knowing
whathappenedwithoutfindingout
whyisoflittleuse.Knowingwhy
somethinghappenedbutbeing
unabletoplanandmakethe
necessarychangesisalsooflimited
value.Furthermore,thisintegrated
functionalitymustbeseamlessacross
thefullnetworkofperformance
managers,whetherwithina
departmentoracrossseveral.Inthis
sense,thenewparadigmtodayisthe
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