Business Management
Under this caption I group all activities that translate the company's strategic intent
into quantified business goals, allocate such goals to individual reporting periods and
management layers, forecast performance given the most actual assessment of the
prevailing conditions, analyse and report on actual results, and initiate all necessary
steps to reestablish the congruence between planning and execution.
Business management is an essential leadership element at the crossroads between
long term strategy, finance and control, operational management and sales. Its quality
is of the utmost importance to ensure enterprise continuity and maintain mutual trust
between executive management and the stakeholders, thus optimising company value
and ensuring a trouble free access to (additional) owner's equity or third party
financing should the need arise. It also provides a systematic contracting and
measurement framework for all concerned.
On the other hand, it requires detailed and time consuming documentation and
communication, conceivably leading to conflicts in priority. For this reason, part
delegation becomes an attractive option. Without boasting, I feel justified in
recommending my long term expertise in this field for such tasks.
As a matter of interest, recent experience on both sides of the Atlantic tends to
highlight a level of risk due to the micro-management of achievement compliance in
environments with a strong focus on corporate governance ("quarterly thinking", stock
price influencing up to misuse of insider knowledge). However, avoiding this trap should
not lead to a rejection of the topic as such.
The following components are essential elements of the business management chain:
Business Planning
The business plan constitutes the top planning layer for operational management, set
to optimally further the company strategy. As such it is a key component of the
"fulfillment contract" between the company and its top executives, and contains the key
goals and objectives. With a time horizon between 3 and 10 years it is deemed to cover
the longest period relevant for implementation. It sets out the intended business
performance in quantitative and qualitative terms, and lists all material underlying
assumptions, conditions and enablers. Thus it provides the backdrop for all tactical
decisions. Furthermore it usually is a prerequisite for stock emission proposals and
external financing deals.
Budgeting
focuses on the next 1 - 3 years and covers all major financial and performance
parameters. The budget details the agreed short to mid term plan and sets out the
agreement on goals and measurements between the various layers of general
management (e.g. business units, geographies). Once accepted it usually becomes a
formal commitment with deviations only conceivable in the face of unforeseeable and
insurmountable external impacts.
The plan of record
normally is restricted to one financial accounting period (12 months) and focuses on
order intake and revenue. As such it constitutes the fulfillment contract between
general and sales management for each level of aggregations, and hence the summary
framework for all goal sheets.
Forecasting
provides best estimates of short term performance (typically for the current and next
reporting period (month, quarter) and for the accounting period as a whole (year). The
forecast should be realistic in order for the recipient to dependably manage
expectations, but it does not affect the submitter's budget or PoR commitment.
Actual reporting provides a summary of actual performance (usually over the most
recent reporting period as well as year-to-date) and an analysis of significant
deviations. The latter, again, is explanatory, but does not change the measurement
agreement.
The corrective action plan then lists the agreed actions to re-attain or exceed
performance commitments.
My involvement, at the client's request, can be in any or all of the above stages, and
typically includes a transfer of responsibility for quality and dependability. Unless
certain positions are or have become untenanted, it normally excludes delegation of
goal achievement.
1. About
