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The Performance Manager
The Changing Value of Information

by Meg Dussault, CognosTuesday, August 7, 2007

Republished with permission from Cognos, with special thanks to Business Intelligence. Please visit Cognos for more information on performance management software.

INTRODUCTION

The new business book, The Performance Manager, can help you turn the growing information-intensity of your job from a challenge to a competitive advantage.

The Performance Manager, Proven Strategies for Turning Information into Higher Business Performance examines the partnership between decision makers and the people who provide them with information to drive better decisions. It offers suggestions for 42 decisions areas, or information sweet spots, taking into account the need to not only understand your data, but also plan and monitor your performance.

These 42 decision areas are organized by the eight major functions of a company. These eight functions provide the core structure of the book: Finance, Marketing, Sales, Customer Service, Product Development, Operations, Human Resources, Information Technology, plus an overarching section for Executive Management.

Each chapter introduces key challenges and opportunities companies face in the specific function. The Performance Manager then dives into each decision area, illustrating the core content of the corresponding information sweet spot. These are organized into two types of measures (goals and metrics); the hierarchical set of dimensions that allow you to look at the information from a variety of vantage points; and the plans that would be associated with functional goals.

Each decision area then offers advice on who beyond the specific function would benefit from seeing the information (e.g., Marketing should see Sales pipeline targets) to make better performance a truly cross-organizational exercise. We hope you see the value in this white paper and choose to take our offer for the whole book, The Performance Manager.

WHY THE PERFORMANCE MANAGER?

The Changing Value of Information

Research by McKinsey confirms what most of us have known intuitively for some time. Our jobs have become more and more information-intensive— less linear and more interactive, less rule-based and more collaborative—and at the same time we are expected to do more in less time. While technology has helped in part, it hasn’t achieved its full potential.

McKinsey1 has followed a trend that directly relates to the better performance dialogue we started a decade ago. Based on the research, McKinsey distinguishes among three primary forms of work and business activity:

  1. Transformational work – Extracting raw materials and/or converting them into finished goods. (Taking wood and making a chair)
  2. Transactional work – Interactions that unfold in a rule-based manner and can be scripted or automated (Taking precut wood and building chairs on an assembly line)
  3. Tacit work – More complex interactions requiring a higher level of judgment involving ambiguity and drawing on tacit or experiential knowledge. (Managing the sales of wooden chairs for the eastern US)

Looking at the U.S. labor market, McKinsey drew several conclusions.

First, tacit work has increased the most since 1998. It now accounts for 70 percent of all new jobs, and represents more than 40 percent of total employment. The percentage in service industries is even higher. For example, it’s nearly 60 percent in the securities industry.

Second, over the same period investment in technology has not kept pace with this shift in work. Technology spending on transactional work was more than six times greater than spending on tacit work. This reflects the past decade’s efforts in re-engineering, process automation, and outsourcing. It makes sense: linear, rule-based transactional processing is the easiest to improve.

But McKinsey’s third finding is the most important: competitive advantage is harder to sustain when it is based on gains in productivity and cost efficiency in transaction work. McKinsey’s research found that industries with high proportions of tacit work also have 50 percent greater variability in company performance than those industries in which work is more transaction-based.

In other words, the gap between the leaders and laggards was greatest in industries where tacit work was a larger proportion of total work.

Every decision-making cycle depends on finding the answers to three core questions: How are we doing? Why? What should we be doing? Scorecards and dashboards monitor the business with metrics to find answers to How are we doing? Reporting and analysis provides the ability to look at historic data and understand trends, to look at anomalies and understand Why? Planning and forecasting help you establish a reliable view of the future and answer What should we be doing? Integrating these capabilities allows you to respond to changes happening in your business. This is the underlying philosophy of the decision areas and The Performance Manager.

The Performance Manager offers insights and lessons learned on leveraging your information assets better in support of your most valuable human capital assets: the growing number of high-value decision-makers. Given the right information-enabling technology and leadership, these decision-makers can become performance managers. Such managers deliver sustainable competitive advantage by growing revenue faster, reducing operational expenses further, and leveraging long-term assets better.

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