- Henry Haugland
Don't Manage Out of the Rear View Mirror
Most of our management processes are transactional. A corporate plan is assembled and plan elements appropriate for each operating component are cascaded deeply and broadly. Typically, at each level an executive or manager is assigned a set of goals. The assumption is that if they achieve their goals, they will achieve the portion of the organization’s “plan” that they are responsible for.
Management by Objectives (MBO) aka Management by Results (MBR) was popularized by Peter Drucker’s 1954 book The Practice of Management. Historically, goals/objectives were reported as a summary of individual transactions since the available tools did not facilitate anything else. Data always lagged events which led to the expression “managing out of the rear view mirror”. The primary issue with this approach has always been that early recognition of risk was difficult if not impossible. Similarly, early recognition of opportunity was often not supported.
Most managers have had at least some training in the concepts involved with Six Sigma. Simply stated, if results don’t meet requirements look at the processes involved. How can the process be improved?
A business is a complex organism with a lot of moving parts. The effectiveness and efficiency of all of these moving parts is based on the integration of many processes. Yet, senior execs rarely have visibility on the critical underlying processes.
Dynamic dashboards allow us to manage by watching all of the relevant processes in near real time. They provide early warning when risks surface as well as early alerts concerning opportunities.