Management reporting problems – conversation in the cockpit

Current situation with business management reporting is similar to situation in the airplane cockpit. Each pilot (Board member or Chief of Business unit) looks into panel with instruments and sees only static data with two or several options prepared by their stuff.

Change plane flight attitude for +5%. Equivalent example in Decision Support System might be change Economic Value Add in next two years – raise for 5% but there are several options how to achieve raise of EVA:  

• Option number one – Cut Capex for 25%, stabilize costs at current level
• Option number two – Cut capex for 10%, cut operative costs for 5%
• Option number three – Raise revenue for 4%, Operative costs raise for 2%

 What is in-between named steps….

 Nobody knows.

 Let’s compare pilots cockpit instruments and managements instruments. Here is a look over managers shoulder into all available value based management methods.

This is just example of different concepts…. Not KPIs. Behind each concept are hundreds of KPIs.

 Let’s listen to short conversation of pilots.

 Do you understand how instruments function?

„Well I know for my area of competence, I understand how major instruments work…. For each sub area I have expert to ask….“

If I correctly understood, you know how one set of instruments function?

“Yes”

Does anybody know how all instruments and commands affect plains actions?

“No, just certain groups of commands and instruments. That’s why we have to work as a team.”

Well,… experts do know better how commands and instruments run…. In their respective area!

But expert (somewhere in plane cargo)  does not have global view like his manager….

 …

Something is not OK in this conversation.

…

Nobody knows how everything runs and how instruments and commands are interconnected and affect each other.

…

And with each day more and more instruments are suggested and placed into cockpit…

This is total flood with very beneficial data. It is information clutter like never seen before.

How to handle all very valuable data?

Very hard with current business intelligence solutions.

Related posts, articles and documents:

• Problem types and management decision levels
• Scope of Management Functions
• Controlling in Management Functions
• Knowledge Management and Business Intelligence