The performance ideas blog

Tag: kpi management

  • Dashboarding – Insights from Mike Duncan, Bizzeness -Part 1

    Your dashboard should provide the least amount of the most critical data

    In a previous post I discussed the art of dashboarding at a very fundamental level. That post sparked enough interest that I wanted to follow with more discussion about the practical aspects of dashboarding.

    Here are three of the most compelling practical questions on the subject:

    1. How should my company be using a dashboard(s)?
    2. What is the basic process for choosing my KPI’s?
    3. What are some common mistakes I should avoid in my dashboarding?

    Dashboarding in Your Organization

    You have probably seen a view of mission control during a space shuttle mission. There is a large screen on the wall tracking the most basic information about the shuttle – where it is, its projected path on the current trajectory, speed, and other basics. That is Houston’s dashboard.

    Dozens of mission specialists are seated around the large screen viewing their own small screens – their own dashboards. Each specialist has an area of responsibility, so each has his/her own dashboard, providing real time data indicating the performance of the key systems for their area of responsibility. For example, the APU specialist probably has a screen showing the amount of power from and condition of each APU – auxiliary power unit.

    Mission Control in Houston provides a comprehensive example for your own dashboarding program. The contents and use of each dashboard is determined by the goals and objectives of the user’s area of responsibility – from the big screen on the wall (responsible for mission success) to the screens on each person’s desk (e.g., responsible for APU’s).

    Each business has a unique dashboard specific to its objectives and industry, and each critical function of the business has its own dashboard specific to its area of responsibility. The CEO watches the entire business entity, the CFO watches the financial systems, the COO watches operations, and so on. For small and medium size businesses (SMB), the business owner usually gets the privilege of watching all of these areas, making their dashboarding program even more important and more challenging.

    Breaking down your organization by functions will help in the layout of your dashboarding program. Each dashboard should be designed to provide glance and go information – the least amount of the most critical data for the function. If there are multiple levels of managed responsibility, a cascading dashboard program should be used – multiple dashboards providing KPI’s for each area of responsibility.

    Next Time . . .

    Check in on my next post as I conclude with Questions 2 and 3, providing some insight into the process of selecting your KPI’s and address some of the most common and damaging mistakes people make in dashboarding.

    Mike DuncanAbout the author of this post:

    Mike Duncan is Partner and co-founder of Bizzeness, LLC. Mike began his career with KPMG and Deloitte. He has been a business owner and advisor for over 30 years serving over 300 businesses in various capacities. Mike focuses on SMB’s with concept development, business modeling, start-up, market adaption, strategy and succession. Mike lives in the Kansas City area. You can contact Mike at mike@bizzeness.com.

  • A conversation with the King of KPIs – David Parmenter

    DAVID PARMENTER

    Two winters ago, I traveled to Prague to speak at a large conference about Performance Management. As the taxi approached the hotel which was set beneath the breath-taking castle, I felt a sense of excitement: I was just minutes away from meeting a king for dinner. Not any king. Not a member of the scandal-ridden European royalty houses. No, I was about the meet a true thought-leader in the performance management community. His nickname is ‘The King of KPIs’. I am of course talking about the management guru and author, David Parmenter. David was one of the other speakers at the conference and we had the opportunity to exchange some thoughts ahead of the conference.

    For those of you who do not know David Parmenter, you are really missing out. David has authored a number of bestselling books like ‘Key Performance Indicators – developing, implementing and using winning KPIs’ and the ‘Pareto’s 80/20 Rule for Corporate Accountants’. He is also a great speaker who truly knows how to inspire his audience.

    Earlier this week, I had the great opportunity to re-connect with David Parmenter. He is about to publish a new book called ‘Winning CFOs: Implementing and Applying Better Practices’.

    Christoph Papenfuss: David, your new book focuses on providing CFOs with hands-on advice for increasing the performance of their companies. What prompted you to write this book?

    David Parmenter: I have been increasingly aware that many CFOs are not finding enough time to keep abreast of best practice.  They are spending a disproportionate amount of their time putting out fires. The “winning CFOs” book is an update of the Pareto book including additional material that a CFO would need to know in order to be a leader and business partner.

    Christoph Papenfuss: In the past, CFOs spent a lot of time on developing a detailed annual budgets. But the increasing volatility has shifted the focus away from fixed budgets towards flexible plans and forecasts. Why should CFOs consider moving towards a more flexible forecasting approach?

    David Parmenter: As I say in the book, “The standard annual planning process takes too long, is not focused on performance drivers, is not linked to strategic outcomes or critical success factors, leads to dysfunctional behavior, builds silos, and is a major barrier to success. By 2020 there will be few progressive organizations using the annual planning process to allocate resources. Quarterly rolling planning will be embedded and we will; all look back and wonder why we ever did annual planning.  As a CFO you need to be abreast of this change and ensure you are not one of the doubters who claim the “world is flat”.

    Christoph Papenfuss: Many business managers are literally afraid to submit a realistic forecast as they fear repercussions in the form of higher targets or poor performance reviews. As a result, we find that many organizations submit forecasts that mirror the plan. What can CFOs do to encourage objective and honest forecasts?

    David Parmenter: There has to be a major shift in the way we set up performance based remuneration, away from rewarding progress against a future target to measuring performance retrospectively based on relative measures. Secondly there needs to be a paradigm shift in the way we forecast.  There needs to be a separation of targets from forecasts and a rule that a forecast should tell the truth and not what we want to hear.  Both of these issues are discussed, at length, in the book.

    Christoph Papenfuss: Even today many finance organizations are highly dependent on spreadsheets for compiling their monthly forecasts and reports. What is your opinion on that and how do you see this changing in the future.

    David Parmenter: Being an expert in Excel is career limiting and should be removed from your CV.  It is like applying for a job as a test driver at Ferrari and having on your CV a gold medal for driving a horse and carriage.  All accountants, including CFOs, need to have on their CV, a statement to the effect that they have a working knowledge of a forecasting software.

    Christoph Papenfuss: Many thanks for taking the time, David. We are all looking forward to reading your new book.

    You can learn more about David Parmenter and his work on his home page. His new book is scheduled for release on April 5th, 2011.