Spiders go through a planning cycle on a daily basis – building differently, stretching differently, making decisions, all to ensure the continuity and efficiency of the operation of their ‘business’ (in his case, the continuity of the species).
The similarity between the workings of a spider and controlling – apart from the aforementioned eight legs – is therefore very great.
The spider, sitting in the middle of the web, keeps an eye on everything that goes on in the ‘business’. The controller similarly – needs to feel what is going on. No matter how big the company is – whether it is a small family business or a multinational corporation – his job is to have knowledge of what is happening everywhere in the company, whether it is a single problem, with a single product, in a single department, or whether it is a general problem concerning the structure of the organisation or the continuity of the company.
A simple rule of thumb – we always operate in a network building cycle
Just as a spider has its own cycle regarding its webs, we in controlling should follow similar principles. We have our plan, then its execution, followed by evaluation and analysis, learning lessons and planning the process anew.
This is the cycle we always operate in. Whether it is weekly sales review cycles, monthly financial reviews, quarterly reforecasts, annual budgets or large strategic plan cycles of several years, we should always operate in a loop – plan, execute, analyse and finally decide whether we change something or not. We should know why things are the way they are and not the way they are, and based on that we should make decisions and keep going.
No matter what we are talking about – whether analysing, planning or looking at the data – we should always think of it as part of that cycle, not a one-off action. The practice of planning and budgeting projects is that if we cannot verify how something has been done, there is no point in wasting time on it. That’s what we plan and budget for, to be able to assess whether it has been done well, to learn lessons, to do it better in the next cycle, to provide decision-makers with the best available information to make the right decisions.
Where is the best place to spread the nets?
Nature has worked it out best – if a spider spins its web in the wrong place, natural selection will very quickly verify its plans, and with them its plans. Human life is a little less brutal and there is room for error and experimentation (at least in some companies). Moreover, if we are able to learn from our failures and become better, more efficient, this is a very good path to success.
But how is this for our controlling? Generally speaking, it is best to untangle the nets where we will get the most benefit (for the sake of the project, it is also worth untangling where you will get the quickest benefit).
While all threads are relevant, when we imagine our controller sitting in the middle of the ‘web’ trying to get a sense of what is happening in the organisation, the sales and customer tastes part is the most relevant. This is where optimisation is insanely important, it is where we are able to advise, tell, diagnose that ‘something’ that gives us a competitive advantage. This is where we are able to increase sales, grow the business, move in the right direction to become more efficient. The second part of the bill, costs, is also very important, unfortunately it usually involves some sacrifices and renunciations.
Of course costs need to be planned, controlled, reduced, etc., but it’s much nicer to talk about how to increase sales, much less how to reduce costs. In the context of how we function in the company, how easy it is to encourage discussion or generate a more interesting analysis, diagnosis, it is sales that is much more important and easier to deal with.
Incidentally – the higher up we are in the hierarchy, the more the interest in sales data grows.
A set of rules for an effective ‘spider’
Study changes over time. Observing trends sometimes adds more than observing specific absolute numbers. A number can give us a measurement that is distorted by the market or changes in the law. A proper measurement of trends, on the other hand, will give us knowledge as to whether we are moving in the right direction.
Observation of data slices and comparison of comparable things
Don’t always use a traditional ‘linear’ calendar. Create a calendar that is based on significant or recurring events rather than dates. Holidays do not always fall on the same day, let alone when it comes to comparing data from countries where holidays vary dramatically?
Make a distinction between measurement and evaluation. Measure as accurately and in as much detail as you can. Measure in quantifiable values that can be compared over time (quantities, currencies, etc.), but do not evaluate the measure itself! The measure should only tell you what happened. Evaluation, on the other hand, should already be part of the control. Ensure a ‘common grid’ – discussions about which data is better will do little. Adopt common and clearly understood measures and evaluations.
Tailor your network to relevant audiences. Management will need ‘coarse’ information, and the lower it goes, the greater the granularity.
We are therefore influenced by two opposing forces – on the one hand, we want the information to be repeatable and well aggregated so that we know exactly what is going on, and on the other hand, we would like to be able to analyse everything very accurately. Fortunately, we now have the possibility to build IT solutions that reconcile these two opposing forces (on the one hand, to handle participants in controlling processes operating on very large aggregates, concepts, deadlines counted in human measures – weeks, months, regions, product groups, etc., and on the other hand, to be able to refer to a single cell, a single sale).
Better one small efficient network than a lot of networks with holes in them
Let’s remember that quantity does not always go hand in hand with quality. Let’s not do everything at once, one dashboard and a smaller analysis that we can prove is better than a huge system with all the data.
Have you thought about how many reports are actually used in your company and how many you do just out of habit? Why is this happening? How many people are going to raise the lariat that they didn’t get their report?
Sometimes it’s worth giving up the old ‘networks’ and building them from scratch, with a clear head and uncontaminated ideas. If we only focus on improving the old solution (process, report), we may miss out on new opportunities.
If you would like to find out how Cogit can help with controlling, please contact us by email at email@example.com or call +48 22 496 60 00.