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Best Practices in Planning and Performance Management: Radically Rethinking Management for a Volatile World, Third Edition

Book Description

A practical framework for effectively managing performance in today's complex, competitive and risky global markets

The Third Edition provides a complete framework for building best practice management processes for today's complex and uncertain world. Fully updated to reflect the events of the global economic crisis, this book provides further practical examples of companies that are successfully using the practices identified.

  • Updated for the implications of the global economic crisis on management practices

  • Completely rewritten section on "What it Takes To Be An Effective Manager In An Uncertain World

  • Added examples and mini case studies throughout the book from companies such as Qualcomm, IBM, Dominos, Target, Toshiba and Facebook

  • Establishes new benchmarks for performance management process and practice

  • Fully updated to include recent events, new learnings, technologies and emerging best practices

This book includes serious rethinking of the way companies plan and manage performance-from the role of accounting to the skills needed to be an effective manager-including new technologies, techniques and real time management processes.

Table of Contents

  1. Copyright
  2. Preface to the First Edition
  3. Preface to the Third Edition
  4. Acknowledgments
  5. Introduction
  6. I. Why Performance Management Matters
    1. 1. Traditional Management Process Are Obsolete
      1. 1.1. BETTER-INFORMED CUSTOMERS
      2. 1.2. CHANGING MARKET AND BUSINESS MODELS
      3. 1.3. STRUCTURAL CHANGE IN THE ECONOMICS OF BUSINESS
      4. 1.4. GLOBALIZATION
      5. 1.5. REGULATORY REVOLUTION
      6. 1.6. GROWTH THROUGH ACQUISITION AS THE NORMAL COURSE OF BUSINESS
      7. 1.7. REDEFINING ASSET VALUES
      8. 1.8. CHANGING DELIVERY CHANNELS
      9. 1.9. COMPRESSED CYCLE TIMES
      10. 1.10. VAST NEW INFORMATION SOURCES
      11. 1.11. TECHNOLOGY AND SYSTEMS
      12. 1.12. NEED FOR A BURNING PLATFORM
      13. 1.13. NOTES
    2. 2. What Is Performance Management?
      1. 2.1. DEFINING PERFORMANCE MANAGEMENT
        1. 2.1.1. STRATEGIC PLANNING
        2. 2.1.2. TACTICAL PLANNING
        3. 2.1.3. FINANCIAL PLANNING
        4. 2.1.4. MANAGEMENT REPORTING
        5. 2.1.5. FORECASTING
        6. 2.1.6. RISK MANAGEMENT
      2. 2.2. BEST PRACTICES DEFINED
        1. 2.2.1. EFFECT A MEASURABLE CHANGE IN PERFORMANCE
        2. 2.2.2. APPLY TO A BROAD SPECTRUM OF ORGANIZATIONS
        3. 2.2.3. BE PROVEN IN PRACTICE
        4. 2.2.4. EXPLOIT PROVEN TECHNOLOGIES
        5. 2.2.5. ENSURE AN ACCEPTABLE LEVEL OF CONTROL AND RISK MANAGEMENT
        6. 2.2.6. MATCH THE SKILLS AND CAPABILITIES OF THE ORGANIZATION
        7. 2.2.7. BE CAPABLE OF OPERATING EFFECTIVELY IN AN UNCERTAIN AND TURBULENT WORLD
      3. 2.3. TYPES OF BEST PRACTICE
      4. 2.4. APPLYING BEST PRACTICES
      5. 2.5. BEST PRACTICE ADOPTION IS NOW A NECESSITY
      6. 2.6. NOTE
    3. 3. Sizing the Opportunities
      1. 3.1. BEYOND BENCHMARKING
      2. 3.2. DEFINING THE RIGHT METRICS
        1. 3.2.1. STEP ONE: HOW BROKEN IS YOUR PERFORMANCE MANAGEMENT PROCESS?
        2. 3.2.2. STEP TWO: UNDERSTANDING THE CAUSES OF DISSATISFACTION
          1. 3.2.2.1. Mismatch between Performance Management Processes and Business Needs
          2. 3.2.2.2. Planning and Reporting the Wrong Stuff
          3. 3.2.2.3. Poor Ownership and Accountability
          4. 3.2.2.4. Tying Plan Achievement to Compensation
          5. 3.2.2.5. Incomplete Strategy Definition
          6. 3.2.2.6. Inadequate Risk Recognition
          7. 3.2.2.7. Poor Communication
          8. 3.2.2.8. Weak Integration
          9. 3.2.2.9. Information Overload
          10. 3.2.2.10. Mistaking Detail for Accuracy
          11. 3.2.2.11. Overtly Financially Focused
          12. 3.2.2.12. Lack of Process and Project Orientation
          13. 3.2.2.13. Calendar Driven
          14. 3.2.2.14. Extended Cycle Times
          15. 3.2.2.15. Poor Staff Leverage
          16. 3.2.2.16. Automating Inefficiency
          17. 3.2.2.17. Management by Spreadsheet
        3. 3.2.3. STEP THREE: BEST PRACTICE METRICS
      3. 3.3. CONCLUSION
      4. 3.4. NOTES
  7. II. Best Practices
    1. 4. Using Best Practices to Drive Change
      1. 4.1. A BRIEF HISTORY
      2. 4.2. FROM BATTLEFIELD TO BOARDROOM
      3. 4.3. COMPONENTS OF A BEST PRACTICE FRAMEWORK
      4. 4.4. BEST PRACTICE RECIPE
      5. 4.5. SELECTING THE RIGHT BEST PRACTICES
      6. 4.6. GOLDEN RULE OF BEST PRACTICE APPLICATION
      7. 4.7. TIME TO SACRIFICE A FEW SACRED COWS
        1. 4.7.1. SLAVISH ADHERENCE TO THE CALENDAR
        2. 4.7.2. PREEMINENCE OF THE ANNUAL BUDGET
        3. 4.7.3. INTERNAL TRANSFER PRICING
        4. 4.7.4. SINGULAR FOCUS ON FINANCIALS
        5. 4.7.5. LEVERAGING PROFESSIONAL STAFFS
      8. 4.8. NO SILVER BULLETS
      9. 4.9. NOTES
    2. 5. Strategic Planning: Ideas That Drive Results
      1. 5.1. DEFINING STRATEGY
      2. 5.2. TYPICAL PROCESS
      3. 5.3. STRATEGIC PLANNING BEST PRACTICES
        1. 5.3.1. SOFT SIDE OF STRATEGY
        2. 5.3.2. NURTURE THE CULTURE
        3. 5.3.3. DEFINE A PURPOSE
          1. 5.3.3.1. Visions Should Inspire
        4. 5.3.4. WALK THE TALK
          1. 5.3.4.1. Missions Change
          2. 5.3.4.2. Recognize the Value of Values
      4. 5.4. COMMUNICATE, COMMUNICATE, COMMUNICATE
      5. 5.5. STRATEGIC PLANNING IS A COLLABORATIVE PROCESS
      6. 5.6. CEO AS CHIEF STRATEGIST
      7. 5.7. HARD SIDE OF STRATEGY
        1. 5.7.1. CLEARLY DEFINE THE BUSINESS
        2. 5.7.2. DEFINE WHAT YOU ARE NOT GOING TO DO
        3. 5.7.3. STRATEGIES SET TARGETS
        4. 5.7.4. TARGETS ARE NOT A SUBSTITUTE FOR STRATEGY
        5. 5.7.5. DECISIONS ARE MORE IMPORTANT THAN PLANS
        6. 5.7.6. BALANCE CREATIVITY AND RIGOR
        7. 5.7.7. EMBRACE INNOVATION
        8. 5.7.8. SCENARIO PLANNING: EXPLICITLY ADDRESS UNCERTAINTY
        9. 5.7.9. STRATEGIC PLANNING IS A CONTINUOUS PROCESS
        10. 5.7.10. MINIMIZE THE LEVEL OF DETAIL
        11. 5.7.11. WHY BOTHER WITH STRATEGY?
      8. 5.8. ACID TEST
      9. 5.9. LESSONS FOR A VOLATILE WORLD
      10. 5.10. BEST PRACTICE SUMMARY
      11. 5.11. NOTES
    3. 6. Tactical and Financial Planning: Translating Strategy into Action
      1. 6.1. DEFINING TACTICAL AND FINANCIAL PLANNING
      2. 6.2. TYPICAL PROCESS
      3. 6.3. TACTICAL PLANNING BEST PRACTICES
        1. 6.3.1. COMPONENTS OF THE TACTICAL PLAN
        2. 6.3.2. SET CLEAR TARGETS AND OBJECTIVES
        3. 6.3.3. INTEGRATION IS KEY
        4. 6.3.4. ESTABLISH CLEAR ACCOUNTABILITY
        5. 6.3.5. DEFINE THE RIGHT TIME HORIZON
        6. 6.3.6. USE A COMMON LANGUAGE
        7. 6.3.7. TACTICS DRIVE BUDGETS
        8. 6.3.8. RISK WEIGHTED
        9. 6.3.9. INTEGRATE PROJECTS AND INITIATIVES
        10. 6.3.10. Conception
        11. 6.3.11. Prioritization
        12. 6.3.12. Mobilization
        13. 6.3.13. Execution
        14. 6.3.14. Completion
        15. 6.3.15. Realization
      4. 6.4. FINANCIAL PLANNING BEST PRACTICES
        1. 6.4.1. BUDGETS ARE A FINANCIAL REPRESENTATION OF TACTICS
        2. 6.4.2. Start with Business Drivers
        3. 6.4.3. Decimate Detail
        4. 6.4.4. Automatically Generate the Baseline
        5. 6.4.5. Focus on Materiality and Volatility
        6. 6.4.6. Align Detail with Responsibility
        7. 6.4.7. Eliminate Politics
        8. 6.4.8. Explicitly Address Alternative Scenarios
        9. 6.4.9. Prize Flexibility
        10. 6.4.10. It Doesn't Have to Be Annual
      5. 6.5. LESSONS FOR A VOLATILE WORLD
      6. 6.6. BEST PRACTICE SUMMARY
      7. 6.7. NOTES
    4. 7. Management Reporting: From Information to Insight
      1. 7.1. TYPICAL PROCESS
      2. 7.2. MANAGEMENT REPORTING BEST PRACTICES
        1. 7.2.1. DECISIONS DRIVE INFORMATION REQUIREMENTS
        2. 7.2.2. FOCUS ON RELATIONSHIPS, NOT ORGANIZATIONAL STRUCTURES
        3. 7.2.3. IT'S ALL ABOUT CONTENT
        4. 7.2.4. DEFINE THE RIGHT INFORMATION REQUIREMENTS
        5. 7.2.5. USE MEASURES TO DEFINE THE CRITERIA FOR SUCCESS
        6. 7.2.6. USE INSIGHTFUL ANALYSIS TO COMPETE
        7. 7.2.7. MAKE REPORTING RELEVANT
        8. 7.2.8. VALUE ACCURACY OVER PRECISION
        9. 7.2.9. NOT ACTIONABLE = NOT USEFUL
        10. 7.2.10. MANAGE DATA AS AN ASSET
        11. 7.2.11. LEVERAGE THE BALANCED SCORECARD
        12. 7.2.12. GUARD AGAINST MEASURING THE WRONG THINGS
        13. 7.2.13. MORE THAN JUST NUMBERS
        14. 7.2.14. START WITH USERS, NOT DATA
        15. 7.2.15. MAKE ONLINE REAL TIME A REALITY, NOT A SLOGAN
        16. 7.2.16. INFORMATION DELIVERY BEST PRACTICES
        17. 7.2.17. INVEST IN EDUCATION
        18. 7.2.18. DIALOGUE, DEBATE, AND DISCOVERY
        19. 7.2.19. SEPARATE THE FREQUENCY OF MEASUREMENT FROM THE FREQUENCY OF REPORTING
        20. 7.2.20. FLEXIBLE DELIVERY
        21. 7.2.21. DESIGN MATTERS
      3. 7.3. PUTTING IT ALL TOGETHER
      4. 7.4. LESSONS FOR A VOLATILE WORLD
      5. 7.5. BEST PRACTICE SUMMARY
      6. 7.6. NOTES
    5. 8. Forecasting: Pass the Crystal Ball
      1. 8.1. TYPICAL PROCESS
      2. 8.2. FORECASTING BEST PRACTICES
        1. 8.2.1. LET THE REAL-TIME FLOW OF BUSINESS DRIVE THE FORECAST
        2. 8.2.2. MAKE FORECASTS RELEVANT
        3. 8.2.3. START WITH THE RIGHT INFORMATION
        4. 8.2.4. DECISIONS ARE WHAT COUNT
        5. 8.2.5. SALES IS THE MOST IMPORTANT ITEM TO FORECAST, AND IT'S THE HARDEST
        6. 8.2.6. USE ROLLING, NEAR-TERM FORECASTS AND UPDATE THEM FREQUENTLY
        7. 8.2.7. IS A ROLLING FORECAST RIGHT FOR YOU?
        8. 8.2.8. DRIVER-BASED APPROACH
        9. 8.2.9. FORECAST FEWER THINGS MORE OFTEN
        10. 8.2.10. EVENTS, NOT CALENDARS
        11. 8.2.11. DEFINE THE APPROPRIATE TIME HORIZON
        12. 8.2.12. USE FORECASTING AS A RISK MANAGEMENT TOOL
        13. 8.2.13. PLAY THE WHAT-IF GAME
        14. 8.2.14. THE PROCESS IS AS IMPORTANT AS THE RESULT
        15. 8.2.15. ENSURE CONSISTENCY
        16. 8.2.16. BALANCE STATISTICAL ANALYSIS WITH GUT FEEL
      3. 8.3. UNDERSTAND VARIABILITY
      4. 8.4. LESSONS FOR A VOLATILE WORLD
      5. 8.5. BEST PRACTICE SUMMARY
      6. 8.6. NOTES
    6. 9. Risk Management: Place Your Bets
      1. 9.1. NO EXCUSES
      2. 9.2. GLOBAL INTERDEPENDENCE
        1. 9.2.1. REGULATORY PRESSURE
        2. 9.2.2. DIFFERENT CUSTOMERS, DIFFERENT CONNECTIONS
        3. 9.2.3. SOURCES OF RELEVANCE
          1. 9.2.3.1. Convenience
          2. 9.2.3.2. Speed
          3. 9.2.3.3. Price
          4. 9.2.3.4. Trust
          5. 9.2.3.5. Choice
          6. 9.2.3.6. Reliability/Quality
          7. 9.2.3.7. Technology Leadership
          8. 9.2.3.8. Compliance
          9. 9.2.3.9. Compatibility
          10. 9.2.3.10. Aura/Hipness
      3. 9.3. DEVELOPING AN EFFECTIVE BUSINESS RISK MANAGEMENT CAPABILITY
        1. 9.3.1. FRAMEWORK FOR MEASUREMENT AND MANAGEMENT
        2. 9.3.2. EXTERNAL RISK PROFILE
        3. 9.3.3. BUSINESS MODEL AND STRUCTURE
        4. 9.3.4. EXECUTION CAPABILITY
        5. 9.3.5. MEASUREMENT DEMANDS ACTION
      4. 9.4. RISK MITIGATION TECHNIQUES
      5. 9.5. LESSONS FOR A VOLATILE WORLD
      6. 9.6. NOTES
    7. 10. Technology: Panacea or Pain?
      1. 10.1. EVOLUTION OF INFORMATION TECHNOLOGY IN BUSINESS
      2. 10.2. WHY THE TIME FOR CONVERGENCE IS RIGHT
      3. 10.3. APPLYING TECHNOLOGY TO PERFORMANCE MANAGEMENT—DAWN OF THE DIGITAL MANAGER
        1. 10.3.1. BEYOND THE HYPE
          1. 10.3.1.1. Examples of "the Basics"
          2. 10.3.1.2. Examples of "Value-Adding" Performance Management System Capabilities
      4. 10.4. BEST PRACTICES FOR LEVERAGING TECHNOLOGY
        1. 10.4.1. INTEGRATE TECHNOLOGY AND BUSINESS PLANNING
        2. 10.4.2. BREAK DOWN THE FUNCTIONAL WALLS
        3. 10.4.3. SET THE RIGHT PRIORITIES
        4. 10.4.4. DON'T IMPLEMENT NEW SYSTEMS JUST FOR THE SAKE OF IT
        5. 10.4.5. AVOID AUTOMATING INEFFICIENCY
        6. 10.4.6. GET THE BASICS RIGHT
        7. 10.4.7. IMPLEMENTATION IS A TEAM EFFORT
        8. 10.4.8. FOCUS ON USE, NOT DEPLOYMENT
        9. 10.4.9. MANAGE COMPLEXITY
        10. 10.4.10. LINK RETURN ON INVESTMENT TO BUSINESS VALUE
      5. 10.5. LESSONS FOR A VOLATILE WORLD
      6. 10.6. BEST PRACTICE SUMMARY
      7. 10.7. NOTES
  8. III. Moving from Data to Decisions
    1. 11. Implementing Best Practices
      1. 11.1. GETTING STARTED
      2. 11.2. MOVING TO IMPLEMENTATION
      3. 11.3. UNDERSTAND THE OVERALL STRATEGIC GOALS AND OBJECTIVES
      4. 11.4. DEFINE THE CRITICAL SUCCESS FACTORS AND DRIVERS
      5. 11.5. DEFINE THE APPROPRIATE PERFORMANCE MEASURES
      6. 11.6. LINK MEASURES TO THE OVERALL STRATEGY
      7. 11.7. DEFINE THE REPORTING DIMENSIONS
      8. 11.8. DETAIL AND SOURCE THE PERFORMANCE MEASURES
      9. 11.9. DESIGN THE USER EXPERIENCE
      10. 11.10. DESIGN AND BUILD THE REPORTING PROCESS
      11. 11.11. INTEGRATE THE REPORTING AND PLANNING PROCESSES—ALIGN INCENTIVES
      12. 11.12. DEVELOP THE REQUIRED SKILLS
    2. 12. Implementation Secrets
      1. 12.1. LEARN FROM THE MISTAKES OF OTHERS
      2. 12.2. EFFECT CHANGE AND THEN SUSTAIN IT
        1. 12.2.1. #1. DON'T COUNT ON A "SILVER BULLET"
        2. 12.2.2. #2. APPROACH THE PROGRAM IN STAGES
        3. 12.2.3. #3. PLAN COMPREHENSIVELY
        4. 12.2.4. #4. DEDICATE THE RESOURCES
        5. 12.2.5. #5. BUILD COMMITMENT THROUGH INVOLVEMENT
        6. 12.2.6. #6. GAIN MOMENTUM QUICKLY
        7. 12.2.7. #7. MAKE THE INVESTMENTS OF TIME AND MONEY
        8. 12.2.8. #8. WORK ORGANIZATIONAL POLITICS CONSTANTLY
        9. 12.2.9. #9. BE FLEXIBLE BUT DON'T COMPROMISE
        10. 12.2.10. #10. DON'T LET THE TECHIES TAKE OVER
        11. 12.2.11. #11. KEEP SENIOR MANAGEMENT INFORMED AND FOCUSED ON THE GOALS
        12. 12.2.12. #12. DON'T LET THE NAYSAYERS GET YOU DOWN
      3. 12.3. IT'S ABOUT COMMITMENT AND EXECUTION
      4. 12.4. NOTES
    3. 13. Managing in an Uncertain World
      1. 13.1. LEADERSHIP QUALITIES
        1. 13.1.1. PASSION
        2. 13.1.2. FLEXIBILITY
        3. 13.1.3. HUMILITY
        4. 13.1.4. BUSINESS KNOWLEDGE
        5. 13.1.5. FINANCIAL ACUMEN
        6. 13.1.6. DECISIVENESS
        7. 13.1.7. COMMUNICATION AND ORGANIZATIONAL SKILLS
        8. 13.1.8. INTEGRITY
        9. 13.1.9. INSPIRATION
        10. 13.1.10. COACH
        11. 13.1.11. FOCUS
        12. 13.1.12. CHANGE AGENT
      2. 13.2. DON'T UNDERESTIMATE THE IMPACT OF LEADERS
      3. 13.3. NOTES
    4. 14. Looking to the Future
      1. 14.1. FAST, FLAWLESS EXECUTION WILL BE THE DISTINGUISHING CHARACTERISTIC OF WORLD-CLASS COMPANIES
      2. 14.2. GLOBAL ACCOUNTING AND REPORTING STANDARDS WILL BECOME A REALITY
      3. 14.3. THE FOCUS WILL SHIFT FROM BUYING TECHNOLOGY TO USING IT
      4. 14.4. THE ANNUAL BUDGET WILL DIE—AND FEW TEARS WILL BE SHED
      5. 14.5. FINANCE EXECUTIVES WILL REQUIRE NEW SKILLS OR NEW JOBS
      6. 14.6. FINAL THOUGHTS
      7. 14.7. NOTES
  9. About the Author