management reporting and innovation - ipa conference 2015
TRANSCRIPT
Management Reporting Driving Innovation & Entrepreneurship
Chris Catto Putney Breeze Business Advisors
Fit For The Future Conference
19 March 2015
Sydney Harbour Marriot Hotel
Circular Quay
30 Pitt Street
UnknownKnown
What you Know you Know!
What you Know you don’t know!
What you Know and you don’t know how you
know it!
What you don’t know you don’t know!!
Denning & Kruger effect
Known
Unknown
What is innovation and how does innovation happen?
Innovation is the introduction of something new or different. The act of innovation is the introduction of new things and new methods. Macquarie Dictionary
1) Dissatisfaction with the status quo2) Inspiration from other sources 3) Invention4) Internal and External validation
http://sloanreview.mit.edu/article/how-management-innovation-happens/
What is Entrepreneurship?
Someone who organises and manages any enterprise, especially one that involves considerable risk; an employer of productive labour Macquarie Dictionary
• Desire• Belief• Life Experiences• Imagination• Planning for the purpose of action• Decision making mastery• Persistence• Influencing the subconscious mind (trust)
Problem solving and engaging others to action accordingly
Think and Grow Rich – Napoleon Hill
Entrepreneurial Mind Set
Great Innovative and Entrepreneurial Organisations create new needs through innovative products!
– Motor Car
– Walkman
– Cyclone Vacuum Cleaner
– iPad
Great Innovative and Entrepreneurial Organisations
Where is CPM and management reporting heading?
1) Office-of-finance CPM — largely involves the improvement of financial processes
2) Strategic CPM — supports organization wide transformation and growth
Strategic CPM — supports organization wide transformation and growth
How do you leverage Management Reporting to;
1) Highlight dissatisfaction with the status quo 2) Act as a catalyst to see inspiration from other sources3) Advance those who organise an enterprise that involves risk and employs productive labour
What is your Entrepreneurial Value; what is your product or service that facilitates organisation wide transformation and growth?
Communicate the Problem
Highlight the destination
Communicate the Solution
Provide the path to the
Solution
Implement and solve the
Problem
Where are we now? The Responsibility holders problems and challenges and
fears.
Where we need and can be. The benefits of alternative
scenario. Clarity in information, improved
communications, aligned goals, improved decision making , higher personal esteem amongst peers
Outline the benefits of a driver based budget and
forecasts for decision insights, forward planning and
managing communications with key stakeholders
Provide a budgeting and forecasting process that
enhances decision insights, forward planning and
communications with key stakeholders
Enhanced Budget &
Forecast Buy in and
collaboration
Budgets and business influencing a framework
It begins with Trust!
The framework provides a starting point from which the end goal can be achieve through a logical sequence of action.
However to engage your internal stake holders, your clientele, the establishment of both perceived and real goal congruence will be a critical factor.
• Do you understand the key motivators of your clientele (internal)• How are they rewarded?• What are their measures of success?• What are their short term goals?
Have you asked the question? Or have you made assumptions?
By asking the right questions you begin the process of establishing goal congruence
Is a framework enough?
• Enhance interdepartmental understanding through transparency
• Friend v Foe - moving from gate keeper to solution provider
• Alignment of Culture and common goals.• Underpinned by consistent delivery of
reporting, commentary and insights
Ultimately delivering actionable information in the appropriate context to facilitate the goal achievement of your clientele.
Every Month End, Business Case and Tender evaluation, Finance project provides and opportunity to build trust. The establishment of consistent service provides a platform from which to enhance engagement in the budget and forecasting process
Leveraging Goal Congruency
Enhanced Budget and Forecast engagement
underpinned by Singular objective
Facilitate Goal Congruence
Deliver Consistency in
ServiceBuild Trust
Enhance Budget and Forecast Engagement
facilitate organisation wide transformation and growth
Align Culture
Case - Kyocera Amoeba ManagementDrill Down
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0.0
50.0
100.0
150.0
200.0
250.0 Profit from operations
Profit from operati...
( Unit: Billions of yen )
Founded by Kazuo Inamori Kyocera has never recorded a loss in 54 years of
operations
► Amoeba Management Accounting Philosophy
► Business Units Fiscally independent, self contained and aligned with overall corporate goals
► A principle of Cash basis management
► Monthly Profit management focused on forward activity
► Key measures at Business Unit Level - Hourly Efficiency System
Case - Kyocera Amoeba ManagementDrill Down
Facilitate Goal Congruence
Deliver Consistency in
Service
Align Culture
All business units “Amoebas” focus on improving the “Effective Hourly Rate” measure as the all encompassing measure of progress. Transparent calculation and collective understanding of implications.
Philosophy - Segregates company into autonomous self managed “Amoebas” who operate on a share philosophy of continuous improvement challenging the status quo in competitive environment, underpinned by “Good citizen” culture
Forward focused reporting that facilitates action plans for the week/month ahead on requirements to return to goals or embed advantages . Reporting underlined by collective problem solving outcomes
Facilitate Goal Congruence
Budget - “The Fiscal Year Master Plan”- A summary of objectives for the entire company- Management objectives are represented as goals in clear
numbers for each Amoeba unit (Sales, net Production, and Hourly efficiency )
- Amoeba leaders are left to create their own master plan on how the objectives will be reached.
Monthly Reporting- Forward looking, focused on action planning for only the
immediate month ahead- Clear link between activity and financial numbers must be
made.- Monthly plan must make reference to annual plan goals.
Adapted from Kazuo Inamori – Amoeba Management: The Dynamic Management system for Rapid Market Response
Case - Kyocera Amoeba ManagementDeep Dive – Budgeting and Reporting
Principles