Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics (Wiley and SAS Business Series)

275 Pages·2009·2.13 MB·English

by  Gary Cokins

E1FTOC_1 02/11/2009 13
PERFORMANCE
MANAGEMENT
Integrating Strategy
Execution, Methodologies,
Risk, and Analytics
GARY COKINS
John Wiley & Sons, Inc.
E1ENDORSMENT_1 01/30/2009 10
E1ENDORSMENT_1 01/30/2009 1
AdditionalpraiseforPerformanceManagement:IntegratingStrategy,
Execution,Methodologies,Risk,andAnalytics
Inhismostrecentbook,GaryCokinsshowshehassuccessfullybeenabletoexpandhisbasethinking
intoacontemporaryandusefulread.Inrecognizingtheimportanceofenterpriseriskmanagementto
today’sorganizations–andintegratingitintothebroadercontentmessage–thisbooksmakesaleapfor-
wardfor21stcenturybusinesspractices.
—EllenM.Heffes,editor-in-chief,
FinancialExecutive;FinancialExecutivesInstitute
GaryCokinshascrackedthecodetoimprovingperformancebyproducingacomprehensivebodyofknowl-
edgewhichfocusesontheimplementationofthestrategy.AuniquefeatureofGary’sworkisthathepro-
videsanintegratedframeworkthatincorporatesGovernance,Risk,andCompliance,aswellasCustomer
ValueManagement.Thisisamustreadforeveryexecutivewhointendstoshowperformancegrowth.
—V.Kumar,Ph.D.,RichardandSusanLenny
DistinguishedChairProfessorofMarketing,andExecutiveDirector,
CenterforExcellenceinBrand&CustomerManagement,
J.MackRobinsonCollegeofBusiness,GeorgiaStateUniversity
AuthorofManagingCustomersforProfit
GaryCokinsisoneofthoseguruswhonotonlyisarecognizedexpertbuttrulygetsit.Heisthefirst
experttotrulylinkperformancemanagementtocustomervaluemanagementinawaythatmakessense
forthe21stcentury.Becauseofthat,markmywordshere,thisbookwillmakeaseriousdifferenceto
theconductofbusinessintheworkplace.
—PaulGreenberg,
President,The56Group,LLC;andManagingPartner/CCO:BPTPartners
AuthorofCRMattheSpeedofLight,4thedition.
Cokins’writingsonPerformanceManagementrepresentvaluablecontributionstobetterunderstandwhy
andhowperformancemanagementisessentialinmanaginginadynamicbusinessenvironment.The
bookenablestoday’smanagersandexecutivestotakeanothercriticalstepforwardinrealizingthepo-
tentialoperatingandstrategicimprovementsthatcanbederivedfromawellstructuredandimplemented
PerformanceManagementsystem.
—LawrenceMaisel,
ManagingPartner,DecisionVuLP
Gary’slatestworkonPerformanceManagementcontinueshisthoughtleadershiponthetopic.Hecrys-
tallizesthebroadarrayofperformancemeasurementtoolsintoaholisticapproachtobetterandhigher
level performance management. His emphasis on learning from others, behavioral change, making
choices,focusing,andusingreliablefact-baseddataareallsoundpiecesofadvicethatshouldhelp
organizationsdealwithtoughtimesandkeeponthewinningtrack.
—ChristopherT.McKittrick,CPA,
DirectorofMembersinBusiness,Industry&Government,
AmericanInstituteofCertifiedPublicAccountants(AICPA)
GaryCokinshasbeenaproventhought-leadereversincehewastheleadauthorofthepopularAnABC
Managers’Primerpublishedintheearly1990s.Witheachofhissuccessivebooks,Garyhasraisedthe
bartohelppractitionerswithconceptsandimplementationissuesrelatedtomanagerialaccountingand
performancemanagement.Thisbookiswritteninalightheartedwaythatanyonecanunderstandand
describestheintegrationthemanypossiblesolutionsthatanorganizationcanusetoimprovetheirper-
formanceandalsoavoidimplementationpitfalls.
—SteveVieweg,
PresidentandCEO,CMA-Canada
E1ENDORSMENT_1 01/30/2009 2
GaryCokinshassucceededincreatingamusthaveresourceforanybodyeitherinthemidstoforeven
justconsideringaperformancemanagementproject.Thisbookcontainsvaluablecontentfromthebasics
toadvancedperformancemanagement2.0capabilities.Gary’sbookwillbehelpfulforfirsttimeanalysts
tryingtojumpstarttheirinitiativetoseasonedprojectmanagement expertslookingtoadvancetheir
knowledge-basetoahigherlevel.
—JohnColbert,VicePresident,
ResearchandAnalysis,
BPMPartners
Gary’sperformancemanagementexpertisecomestolightwithincreasingclarityinhisnewestbook,
PerformanceManagement:IntegratingStrategyExecution,Methodologies,Risk,andAnalytics.
Hiswritingstyleisdirect.Hisexamplesandpredictionsarecolorfulandoftenuncomfortablytrue.
Onapersonalnote,readerswillappreciateGary’saccessibilityandhiswillingnesstohelpwhen
needed.
—RonPowell,EditorialDirector,
BusinessIntelligenceNetwork
DespiteknowingGaryforsome20years,Icontinuetobeamazedatthedepthandclarityofhisthoughts
andarguments.Thisbookpresentsavisionforperformancemanagementandhowthatdisciplineinte-
grateswithotherkeymanagementprocesses.Butmostimportantlyforreaders,Garytellsushowto
achievethis,notjustwhatandwhy,andthatmakesthisbookthatmuchbetter.
—RobertTorok,ExecutiveConsultant,
IBMGlobalBusinessServices
Manyorganizationsattacktheparts.InthisbookGary,aconsensusthoughtleaderintheperformance
managementcommunity,showshowtoalignorganizationalgearsformaximumeffectiveness.
—StevePlayer,ManagingDirector,
ThePlayerGroup
ProgramDirector,theBeyondBudgetingRoundtable
Co-authorofCornerstonesofDecisionMaking:
ProfilesofEnterpriseActivity-BasedManagement
GaryCokinsofferspowerfulinsightsandpracticalcounselforallwhoareseekingtomanageeffectively
intheseturbulenttimes.
—DavidA.J.Axson;Founder,SonaxGroupInc.
AuthorofBestPracticesinPlanningand
ManagementReporting
PerformanceManagementprovidesabridgebetweenhigh-levelstrategiesandpracticalimplementation.
Gary’sbookisrequiredreadingforallexecutivesseriousaboutbuildingshareholdervalue.Thinkofitas
asurvivalguideformanaginginthesetoughtimes.
—Dr.StephenG.Timme,President,FinListicsSolutions
AdjunctProfessor,GeorgiaInstituteofTechnology
GaryCokinshasbeenpioneeringperformancemanagementendeavors.Hisnewbookshowsthathe’sstill
notonlyfollowingbutleadingthoughtprocesseswhenitcomestofurtherdevelopingperformanceman-
agementstrategies.It’samust-readforeveryonewhowantstolearnabouthowtoimproveorganizational
performance.’’
—ChristophSporleder,ManagingPartner,
EchoˆAdvisorsGmbH,Germany
E1ENDORSMENT_1 01/30/2009 3
Asalways,GaryshedslightonavastarrayofcomplexissueswithaneasethatIalwaysfoundamazing.
Inparticular,hiseffectiveuseofanalogiesdrawgreatparallelswiththemanypointsheisbringing
across.Justasanexample,hisuseofthebraintoillustratethedistinctcontributionsoftransactional
systemsversusBIandperformancemanagementinformationissimplybrilliant.
—DanielDube´,M.Sc.,FCMA,
FounderandformerCEOofSynermaInc.
ProfessionalPracticeManager,
RaymondChabotGrantThornton,
MontrealCanada
Improvingandorganizingperformancerequirestherightbalanceofquantitativeandqualitativedecision
making.GaryCokins’pastwritingshaveexplainedineasilyunderstoodlanguagehowtoachievethe
rightbalanceofthequantitativeandqualitative.Inthisbook,Garyeducates,entertains,andinspires
readerswhoareinterestedinimprovingtheirorganizationaldecisionmaking.
—MichaelD.Shields,
SchabergEndowedChairinAccounting,
BroadCollegeofBusiness,
MichiganStateUniversity
Performance measurement and management are at the center of current corporate concerns. Gary
Cokins has been a global leader in this field for decades and this new contribution provides an
integrated approach that is a must read for corporate leaders interested in improving business
performance.
—MarcJ.Epstein,
DistinguishedResearchProfessorofManagement,
JonesGraduateSchoolofManagement,
RiceUniversity
Cokins’usesaholistic,action-orientedapproachtoexplainperformancemeasurement.Hisframework
callsformanagerstoconductmeasurementstosupportstrategyimplementation.Thusalignmentwith
strategydefinestheperformancemeasurementprocessanditsroleinthemanagerialdecision-making
process.
—F.As´ısMart´ınez-Jerez,
AssociateProfessor,HarvardBusinessSchool
Ittakesalotofexperienceandwisdomtodiscussacomprehensivebusinessconceptsuchasenterprise
performancemanagementinaconversationalway,whichGarydoesinhisnewbook.Hehasstrong
opinions,withwhichyoumayagreeordisagree,butreadingthisbookwillmakeyoureflectonyour
ownbeliefs.
—FrankBuytendijk,
authorofPerformanceLeadership
GaryCokinshasbeenattheforefrontofchampioningoneofthemostcomprehensivevisionsofper-
formancemanagementintheindustryformanyyears.PerformanceManagement:IntegratingStrategy
Execution,Methodologies,Risk,andAnalyticsistheculminationofthisvisionandwilljoinhislonglist
ofwritingsthataremandatoryreadingforanyoneinthefieldwhowishestounderstandstateoftheartin
currentthinkingonthistopic.Heartilyrecommended!
—NenshadD.Bardoliwalla,
VicePresident,Technology,
BusinessPerformanceOptimization,
OfficeoftheCTO,SAPAG
E1ENDORSMENT_1 01/30/2009 4
PerformanceManagementprovidesinvaluableinsightsintowhatittakestoachieveoutstandingorgani-
zationalperformancebytakingaverybroadviewofwhat‘‘performancemanagement’’reallymeans.
Goingwellbeyondtheestablishmentandmonitoringofmetrics,GaryCokinssuccessfullylinkstopics
suchasstrategicplanning,costmanagement,predictiveanalytics,businessintelligence,enterpriserisk
management,andorganizationalchangemanagement.Whetheryouarenewtothetopicofperformance
management,orawellseasonedpractitionerlookingfornewinsights,thisbookisa‘‘mustread.’’
—DouglasWebster,ChiefFinancialOfficer,
U.S.DepartmentofLabor
Co-authorofChasingChange:
BuildingOrganizationalCapacityinaTurbulentEnvironment
Garyhasmovedthedialsoftheevolvingarchitectureofperformancemanagement.Abrilliantlyland-
scapedmosaic.Thechipsoftheperformancemanagementfittingintoacircuitofavisionaryclass.
—A.N.Raman,CentralCouncilMember,
ICWAofIndia
Organizationshavebeenstrugglingfordecades,arguablyforcenturies,onhowtoimprovetheirper-
formance.GaryCokinsisaninternationallyrecognizedthoughtleaderonthistopicandactivecontribu-
tortoprofessionalsocietiessuchasmyorganization.Withthisbookanditsdeepandrichinsights,Gary
hassetahigh-levelmarkthatotherexpertswillbechallengedtoexceed.
—AshokG.Vadgama,President,
ConsortiumforAdvancedManagement-International(CAM-I)
Inaveryimportantchapteroncustomervaluemanagement,GaryCokinsrightlyviewsthecustomerasa
businessentitywithanassetlifevalueandadedicatedprofitandloss(measure).Garyaddressesthereal
costtoservethecustomerwithanactivity-basedmanagementapproachthatisessentialtomaximizethe
businessperformanceofcriticalcustomers.
—BernardQuancard,PresidentandCEO,
StrategicAccountManagementAssociation(SAMA)
GaryCokins’clearwritingisderivedofclearthinkingaboutperformancemanagement.Performance
management is about nothing less than how to run an enterprise. Gary cuts through the jargon and
explainswhatperformancemanagementis,whyitisimportantandhowtodoit.Thisbookisinvaluable
foranybusinessperson.
—NeilRaden,FounderofHiredBrainsInc.
Garyisalwaysfocusedonhowtechnologycanhelpmanageandimproveanorganization’sperform-
ance–notjustmeasureormonitorit.PerformancemanagementthewayGarydescribesitinthisnew
bookprovidestheessentiallinkagebetweencorporatestrategyandoperationaldecision-making.Gary’s
brandofperformancemanagementshouldbeoneveryexecutive’sto-dolist.
—JamesTaylor,AuthorofSmart(Enough)Systems:
HowtoDeliverCompetitiveAdvantage
byAutomatingtheDecisionsHiddeninYourBusiness
Usingcompanystrategyasapointofdeparture,Garyclearlyarticulatesthe‘‘strategyashypotheses’’
connectionsbetweenbusinessfunctioningandtheintelligence/analyticsmeasurement/feedbackloop.
This scientific approach to measuring and managing business performance, a logical but important
extensiontotheBalancedScorecard,providesaclear(thoughnotnecessarilysimple)prescriptionfor
businessesthatwishtobemanagednimblyfromevidenceandfacts.
—SteveMiller,
President,OpenBI,LLC
E1ENDORSMENT_1 01/30/2009 5
Garywriteswithaseldomencounteredclaritythatisconversationalandcollegial,butthatalsohasa
distincttoneofchallengeandurgencyforthereaderto‘‘getit’’.Withacomplexsubject,heconsistently
engagesyoutoworkoutthechallengeofPMinallitsimplicationsandpotentialrewards.Hiscentral
notionthatmanyorganizationsare‘‘over-managed,butunder-led’’isonethatshouldkeepmanyexecu-
tivesupatnight.Athoroughlystimulatingread.
—PeterTraynor,EditorinChief,
DashboardInsight
Anexcellentbookwhoseinsightsintocostcontrolandperformancemanagementaremorerelevantthan
everinlightofcurrenteconomicconditions.GaryCokinshasspentacareerfocusingonhowcompanies
canimproveperformanceandcostmanagementwithoutsimplyresortingtocostcutting.Thisbothfun
andseriousbookcontinueshisnumerouscontributionstothestudyofperformancemanagement.
—JackFingerhut,
President,SmartProsLtd.
OurworkingassociationwithGaryCokinsspansmorethantwodecades,includinghisinvaluableser-
vicesasAdvisoryBoardmemberforthejournal,CostManagement.Severaltimes,Garycouldhave
madethechoicetorestin‘‘emeritus’’status.Instead,hisuncannytalentfortargetingthenextdevelop-
ments in performance and cost management–subjects covered in this volume such as sustainability
effectsonCFOsandsocialandenvironmentalperformancemanagement–drivesforwardboththeprofes-
sionaldisciplineaswellasitsreceptivepractitioners.Gary’sinabilitytoremainsatisfiedwiththeim-
matureaspectsofcurrentpracticehasmadehimbothreviled(totheimmature)andrevered(bythose
readytoreceivehismessage).Inthesetimes,weoptformaturity.
—JoeandCatherineStenzel,
EditorsinChief,CostManagement
GaryhasdoneaterrificjobofpointingoutthatPerformanceManagementisaboutPerformanceImprove-
mentratherthanjustPerformanceMeasurement.HisemphasisthatPerformanceManagementconsistsof
avarietyofmethodsthatmustbeintegratedinordertosuccessfullyexecutestrategyiscritical.Hisfocus
onpredictabilityratherthanafter-the-factreportingisexactlywhateveryorganizationneedstodo.
—JohnAntosconsultant
Co-authorofABMforServices,Government,
NonprofitsandDrivingValueUsing
Activity-BasedBudgeting
Gary’syearsofexperience,expertise,knowledge,andcreativepersonalityflowinthisnewbooklikea
torrent!Gary’sinsightsanduseofhumorgetbetterallthetime,thisnewbookislikehavingachanceto
peekinsidethemindofYoda,really!Asmartlywrittenbookwithloadsofexamplesandexperiencesfor
leadersandmanagersatalllevels.
—BobPaladino,CPA
ManagingPartner,BobPaladino
&Associates,LLC
AuthorofFiveKeyPrinciplesofCorporate
PerformanceManagement
Onceinawhilethereemergesfromacloudofconflictingthreeletteracronyms,poordefinitionsand
misconceptionsarayoflightthatmakeseverythingsomuchclearerandasaconsequencesomuch
moreuseful.Gary’sbookonPerformanceManagementburnsawaythemists.Hisemphasisonstrategy
executionoverstrategyformulation–inotherwordsactuallymovingthebusinessforward–issupported
byhisadvicethatPerformanceManagementhastochangefrommonitoringthedialstoactivelymoving
themandtherebyimprovingperformance.
—BrianPlowman,ManagingDirectorofDevelin
&Partners,CostManagementConsultancy
E1ENDORSMENT_1 01/30/2009 6
GaryCokinsistheconsultants’consultantforperformancemanagement.Hisdetailedknowledgeofthe
subjectanditsroleinthemanagementoftheenterprise,combinedwithcomprehensivecoverage,creates
aninvaluablereferenceguideforthoseinpursuitofperformanceimprovement.
—PeterB.B.Turney,Ph.D.;
PresidentandChiefExecutiveOfficer,CostTechnology
AuthorofCommonCents:HowtoSucceedwithActivity-BasedCosting
andActivity-BasedManagement
Conciseandbackedbyreallifeexpertise!Theideaofintegratinghindsight(BI)andforesight(predic-
tiveanalytics)isapowerfulapproachtoPerformanceManagementfororganizations.Wehavealways
foundCokins’inputs,valueaddingtooursolutionsandserviceofferingsonPerformanceManagement.
—PremSwarup,PracticeManager
PawanKumar,VicePresident,
BusinessIntelligence&InformationManagement,
WiproTechnologies,Bangalore,India
NoonecanexplainperformancemanagementconceptsbetterthanGaryCokinsandthathasneverbeen
truerthaninthiscompilationofhisrecentarticlesandblogs.Theformatandconversationalstyleofthe
booknotonlymakeitanenjoyableread,buttheyenableGarytopresenttheissuesinavarietyofways
andfrommanydifferentperspectives.Thisbookisamustforanyonewhoreallywantstounderstand
performancemanagement.
—DouglasT.Hicks,
President,D.T.Hicks&Co.
AuthorofActivity-BasedCosting:
MakingItWorkforSmallandMid-SizedCompanies
I’vehadthepleasureofknowingandworkingwithGaryforover20years.DuringthattimeIknowof
noonethathasbeeninbetterpositiontoobserve,document,andrefinebestpracticesinthearenasof
ABCandbusinessperformancemanagement.Inthisbookhedealswiththemuchmoresubtle,and
equallyimportant,waysinwhichweaccomplishthemanyfacetedchallengesofmanagementtosupport
thesepractices.
—JackHaedicke,
Founder,ArenaCG
GaryCokinsdoesinthisbookwhathedoessoeloquentlyeachtimeIseehim–makesitstartlingly
obviousjusthowextensivelyperformancemanagementweavesthroughthemostimportantsystems
andprocessesofmovinganorganizationfromwhereitistowhereit’splannedtogo.Heboldlyand
honestlyadmitsthatthefieldofperformancemanagementisbroadandrelativelyimmature,andtack-
lesthisdauntingfactheadonwithacollectionofpracticalandinsightfularticlesthatdowhatI’ve
seennootherworkinthisfielddo:giveperformancemanagementacomplete,clear,andcompelling
identity,aboveandbeyondtheindividualnotionsofscorecards,dashboards,budgeting,performance
appraisals,andtherest.Thisbookiseveryperformancemanagementfacilitator’sreferencemanual.
—StaceyBarr,-,
DirectorofStaceyBarrPtyLtd.
HavingknownGarysincehisfirstbook,havingtravelledandseenhimpresentthroughoutEuropefor
years, I have grown to respect Gary’s endurance of spearheading and constantly re-inventing his
viewsonperformancemanagement.Untilthisbook,peopleunfamiliarwithGary,haveonlyreadhis
seriousside.Thoseofuswhohaveenjoyedhimpresentknow,however,thatGarysometimespro-
moteshisideasbypinchesofhumorinthemannerhislatestbooknowdoesit.Thefuturewilltellif
someofthosestoriesofthisbookwillbecomeindustryclassics?
—JuhaJolkkonen,SalesDirector,
CoxConsultingOy;Helsinki,Finland
E1ENDORSMENT_1 01/30/2009 7
Leadersshouldnotpromisechange.Changecaneitherbegoodorbad.Instead,organizationsneedim-
provement.GaryCokins’bookisloadedwithpractical principlesandmethodseverymanagercanuseto
improvetheirorganization.
—TomPryor;GrowthCoach,
TexasManufacturingAssistanceCenter
AuthorofUsingActivityBasedManagement
forContinuousImprovement
Garyisagiftedcommunicatorandinthisbookhebringstogetherdecadesofpracticalexperience
andscholarlyexpertise.Thebookisausefulstartingpointformanagersgrapplingwithmodernchal-
lengesofperformancemanagement.Itisalsoavaluableresourcefortheexperiencedmanager;inte-
gratingrecentadvancesindiversemanagementdisciplines(e.g.,strategy,marketing,operationsand
accountingsystems)topresentanintegratedviewofperformancemanagement.
—ShannonW.Anderson;AssociateProfessorofManagement,
JesseHJonesGraduateSchoolofManagement,RiceUniversity
Formanyyears,GaryCokinshasbeenaglobally-recognizedthought-leaderthattranslatescomplex
managementconceptsintounderstandableinsightsthathelpmanagersdrivebreakthroughresults.His
latestbookdistillstheprinciplesofperformancemanagementintopracticalnuggetsofwisdomthatwill
guidemanagersinfulfillingtheirmostimportantresponsibility—strategyexecution.
—Dr.PeterC.Brewer,ProfessorofAccounting,
MiamiUniversityofOhio
Co-authorofthemarket-leadingcollegetextbookManagerialAccounting.
GaryCokins,arenownedconsultingexpertise,hasjustaddedabrilliantpieceofworktohisalreadylonglist
ofaccomplishments.Hisnewbookprovidesconceptualframeworksandoperationalguidelinesforafully
integratedperformancemanagement,whicharemuchneededforacompanyto’intelligently’perform.
—JoonhoPark;AssociateProfessor,
SchoolofBusiness,HanyangUniversity
FormerChairpersonofAccounting&AuditCommittee,
KoreaCommunications Commission
Gatheringreamsofinformationhasnovalue.Informationonlyhasvaluewhenitisusedtosupportdecision-
makingaimedatincreasingshareholdervalue.Thisisthemajorlessontobelearnedfrom(mylong-standing
colleague)GaryCokins’newbookonperformancemanagement.Garyhasdrawnuponhismanyyearsof
experiencetoprovidethereaderwithpracticalframeworksfordecidingwhatinformationismeaningfulto
collectandhowitcanbeleveragedtodriveimprovedcustomervalueandbusinessperformance.
—LarryLapide,Ph.D.,Director,
DemandManagement,MITCenterforTransportation&Logistics
Gary’sbookisathoughtfulworkonperformancemeasurementandmanagement.Heisanauthorwith
deepexperienceintheaccountingarena.Writteninaveryaccessiblewritingstyle.
—DrEvaLabro;ReaderinManagementInformation,
LondonSchoolofEconomics
Thistextcombinesasoundandoriginalcritiqueonthecontemporaryperformancemanagementdiscus-
sionwithaconstructiveandpracticalsummaryofsomeessentialofitsconcepts.Theformatandcontent
ofthebookprovidesthereaderwithavarietyofperspectivesonperformancemanagement.Together
theseformarichandmuchneededadditionandevenalternativetosomeofthe’generallyaccepted
performancemanagementprinciples’foundelsewhere.
—Prof.Dr.FrankHartmann;ManagementAccounting&ManagementControl,
RotterdamSchoolofManagement,ErasmusUniversity