It isn’t a trick. This was one of the most difficult and useful exercises I had to complete whilst doing my M.B.A. It was a project set by the lecturer in our Finance module and, of course, there was no right answer. It was designed to do was to get us to think about what information was really vital to managing our businesses.
When you are managing in big companies, you are often drowning in reports. People request them (usually from finance as it is often the proxy home for management information systems). You read the report with interest the first month and often learn something. You glance at them the second month and after the third month, you just pile them up and don’t get look as you are too busy. Incidentally, no one EVER cancels the production of reports!
In small companies the reverse is true. Everyone is so busy selling or collecting money, that no one has time to produce reports let alone analyse them. Data has a cost and that cost is time. Management time is the scarcest resource in an S.M.E., so until something goes wrong the business is managed on the back of an envelope rather than a piece of paper.
You have all heard of Pareto’s Law also known as the 80:20 rule. So for example, 80% of your profit probably comes from 20% of your customers or products, more or less. (Often, if you have a real winning product or get a large customer it is even more concentrated that that!. However, concentration of risk is not directly the topic here). The point is that whatever your business is, there are a small number of measures out of hundreds or thousand of possibilities that will determine your success or failure.
Deciding what those Key Success Factors are and how to measure them is not easy. There are lots of things that seem important but understanding what they are and the drivers behind them will play a vital role in your success. It will also ensure that the time you spend producing information is productively spent and results in an accurate measurement of the health and prospects for your business.
So, at your next Board meeting, invite each Director to compile an A4 Sheet that they would use to manage the company. Invite them to each bring along their own suggestions to the next meeting so that you can collaboratively discuss suggestions and decide on a single sheet of A4 that you are all happy with. This will not only help you develop a vital signs Management Information System but it will also help each Director or department head develop a better understanding of how all the parts of the business fit together.
If you would like more information on how you can use this and other exercises todevelop your management team and sharpen your business for growth, contact me at Adman Management Partners for a no obligation chat.