Monday, December 29, 2008
Thursday, December 25, 2008
Management Matrix have an operating model (not just a collection of people), which allows you to scale better, ie economies of scales in production, sales, and in optimization.
Management Matrix understand the key drivers of output in your operating model in production ,sales, materials management.
Management Matrix are consistently managing the unit to your operating model.
Management Matrix have a set of early warning signs (your key drivers) that you can focus more attention on when they get below certain thresholds (i.e., it helps you to know where to spend your time).
Management Matrix have a set of measures that you can benchmark against other companies to understand where you have opportunities to move to best practices, and
Management Matrix know when you need to add staff or other resources well before you get caught short.
It is an approach in measuring the effectiveness of the business operation.
Metric driven management can and should be applied in every functional unit in an expansion stage company, from product development activities (e.g., project management, bug fix reports, usability testing) to marketing (lead generation ROI, website path analysis, shopping cart abandonment, number of daily quality leads) to sales (e.g., movement through the sales funnel, salesperson activity analysis) to customer service (response time, close rates, close times, etc.) to overall customer satisfaction measured both qualitatively (surveys, interviews, etc.) and quantitatively (usage reports, retention rates, etc.).
The key to getting the right metrics program in place is to eventually understand the minimum number of measure that give you an accurate understanding of the state of your company.
In different situations and in the transformation time Matrix Management helps an organization.
Many (most of the organizations) very early stage companies can get by without metrics-based management, as there are very few people in the organization, the processes you have are quite simple, and you can manage staff a lot easier. But as soon as you start getting any measurable number of users/customers, metrics-based management starts becoming useful, and as you grow more metrics become difficult to live without.
There is no sense building systematic operating models and a set of metrics if you are not going to manage to them. I have met many intuitive managers who don’t get (or don’t want to get) this approach. If you don’t believe in the approach, shoot me a note or comment to this post. If you don’t completely get the approach, hire someone to work for you who does (I have done this multiple times at my portfolio companies).IT comes in to operation it enhances the efficiency of an organization.
Once you lock into a set of metrics (it will take some time to determine the best most simple metrics), you should try to use the same metrics over time. I am amazed when I go into certain board meetings and see a different set of metrics each quarter…sometimes managers feel the need to present the metrics that show off the accomplishments of the company…I would rather see the metrics that show the improvement opportunities for the company…this is where the real upside is!
Many consulting companies are there who are operating in the matrix plans and operate accordingly.
Here is an example of Wipro Infotech
Sunday, December 21, 2008
Thursday, December 18, 2008
Bench Marking and its Importance in Corporate Strategy.
It is necessary to look at internal, as well as external, standards. The ultimate goal of benchmarking is to utilize actual peer operating results to improve the performance of all business processes, including production, purchasing and customer service.
Research demonstrates that performance in these areas can be improved by 18 percent through benchmarking, according to the Trendsetter Barometer, a quarterly survey of CEOs sponsored by Pricewaterhouse Coopers. These are not just speculative questions--the answers form the foundation upon which you can build a benchmarking strategy for your enterprise.
An executive team that reduced the cost per full-time equivalent employee from $37,000 to $34,750 might be pleased, but not as happy as it might be. If it had compared the company's costs to industry standards, it might have discovered that the average cost per full-time equivalent employee in its field was $32,000.
Finding the relevant data--for the purpose of comparison and contrast--is the first step in benchmarking. Potential resources include trade groups, federal or state governments and even benchmarking Web sites. For example, AMMBIT (Advanced Middle-Market Business Intelligence Tool) is a benchmarking tool developed by PricewaterhouseCoopers. This interactive tool provides private companies access to aggregated high-quality and hard-to-find operational and financial performance evaluation data on more than 3,500
Once you have the data source, you must determine which metrics are most important for your business. These might include activity ratios like receivable turnover, days sales outstanding (DSO), gross margins, income from operations as a percent of sales or net income as a percent of sales.
You should use a number of small metrics--from three to five--at any given time. Using too many metrics might make the process overwhelming. When first starting the process, in fact, you may want to use just one metric.
For example, a retailer named, XYZ Corp. decides to examine its metric of DSO to assist XYZ's finance team in determining the efficiency of its overall credit policy. This is calculated by dividing sales by average and sales per day by dividing that result into 365 days. If XYZ's DSO is 62 days in the current year and is down from 65 the previous year, it might think the company is doing well. However, if XYZ's CFO discovered through benchmarking that the leading companies in her industry had DSOs of 45, she would know that some improvement was needed.
This difference is commonly called the "performance gap." There will be reasons why your company is performing well below the standards set by the leaders in your field. To narrow this gap for DSO, you should look at the key areas of receivable and collection, credit approval and invoicing:
* Receivables Management. Make sure the executive in charge of accounts receivable is utilizing industry best practices, like linking sales compensation to cash collected, not sales invoiced. He should also review payment terms when negotiating with new customers, and set goals to improve billing accuracy and timeliness.
* Collection. Ensure that your sales representatives are involved in the collection process. They should stay on top of past-due accounts.
* Credit Approval. Conduct credit review on existing customers, as well as new customers. The credit department should not only ask for references, but check them.
* Invoicing. Mail invoices promptly. The invoices should clearly show payment terms and specify penalties for late payment. Problems should be addressed quickly, ensuring that the same errors are not repeated.
A $50 million distributor with a DSO of 62 would have about $8.5 million in receivables in accounts. Each one-day reduction in the DSO generates an additional $137,000 in cash flow. What's more, improving the DSO by 10 days will produce an added $1.4 million in cash flow, which creates an additional revenue stream to pay outstanding debts or purchase newer productivity-enhancing equipment or software.
Benchmarking is not a one-time project. Once you have succeeded with one metric and improved your company's performance, you can benchmark other metrics. Because this is a perpetual process to gauge strengths and weaknesses, benchmarking will cultivate the implementation of industry best practices. This will reduce any other performance gaps your company may have and help you lead the field.
It is not only in case of financial analyses but Bench marking can also be used in there functional areas like Human Resource , Production, Materials Management, Sales and Marketing.
If you talk about HR , it is the quality of human capital working with particular firm, the capacity of he firm t retain the human capital, what value addition in can do to the human capital in turn what value addition the employee can do the the organisation.
Production out put can be compared between the firms in the same industry , to what extent the out out can be increased , what technology/operation practice can be introduced to enhance the production capacity to remain competitive in the industry.
In the technology front what latest technology can be applied and what amount to R&D expenditure must be incurred to remain updated with the current competition.
In the age of globalisation when a firm have to compete in the global marketplace the benchmarking has become a very handy strategic tool in the hand of the management professionals.
Benchmarking is always used to make the restructuring and re engineering in the industry.
Best Practice and Bench Marking is the all time and a continuous process in the strategy mapping process.Proactive professional management always use this these tools to over come any shortfall in the short fall in the outcome and use this as a trouble shooting tool.
Corporate social respsbility is coming up in all the frontiers of modern corpoarte world.
Bill Gates and Melinda Gates Foundation is doing a phenomenal job in eradicating the poverty and certain disease from he face of this world.
NACO is getting a sizable amount of funding from the Gates foundation.This is a foundation with specific mission and very focused approach for solving some major problems with HIV/AIDs, malaria specially o he sub Saharan Africa and the 3rd wold countries,mainly to the poorest region of the world affected by extreme poverty. India
The assistance is given to this foundation by thousand of NGO’s who are working
actively , the uniqueness of this foundation it s the world’s most diversified fund
doing philanthropic job.
In the last world economic forum Gates illustrated how global leaders are creating new markets and providing expanded access to existing ones -- tapping into a new kind of "Creative Capitalism" -- to improve lives.
As we are in the cross road of capitalism all the profit making organizations must return a certain amount of profits back to the society from where it’s making the profit.
It’s the moral responsibility of all the corporate citizen to repay the dividend back from where it’s making money
Thursday, December 11, 2008
It is a continuous process and must continue to go on provided it has to get going smoothly in the hyper competitive today's global business environment.
On the contrary the resistance to change is an inevitable part during the change management process sometimes and quite often a very very painful process.
Resistance to change is very common disease and a phenomenon organisation have.It is the duty of the top management to carefully introspect and analyze the business environment and surroundings and then come to a conclusion what type of change an organisation requires .
In an global economic situation when the world has become increasingly small the change management is very much required.
In early 1990s Late Dr Micheal Hammer wrote " Business Process Reengineering" in short we call BPR.
To talk very carefully we mean all business activities are nothing but systematic process to achieve business goals, the emphasis of process has been taken from Late Adam Smith the great Scottish Economist and philosopher on his doctrine of " Division Of Labour".Process leads to enhancement of skill sets and a bunch of skill sets that requires upgrading.
Process management with effectiveness is an important part in managing successfully today's complex business.
The main question which lies in the resistance to change which is an obstacle to the effective change management and the capacity of the adaptability an organisation has.
Employees shy away from the change process because the consultants or Top management are not in a process to make the internal customers to understand about the benefits they will reap if change management in is used.
In today's knowledge bases economy every employer must create an organisation which will create value to its internal customers, and it can only be possible if it is a learning organisation.It's an expensive proposition to make a thriving learning organisation as involves money training and patients.
Whether the change is large or small, the ability to manage it is a critical component of high performance. Organizations must prepare for coming both external and internal changes, manage the complex organizational and workforce transition to the desired end state.
Top management must help them operate successfully once a business and transformation process to realize the greatest leverage from their business improvement efforts.
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