By Andy Burrows [originally published September 2016]
If you are going to be successful in managing your business, you need measurement. You need facts that tell you how well you are doing and where you need to improve.
And those measures of success are much broader than just financial measures, such as profit, cash, margins, etc, however important they are.
How do you make sure that your business is heading in the right direction? How do you make sure that your strategies are working? How can you even tell if your strategies are being implemented correctly?
Is profit the only measure of success? Does profit tell you anything about whether you are achieving your vision?
Let’s say my vision was to become number 1 in a particular market. How would I know how close I was to achieving that? Not by looking at my profit in isolation.
And just asking that question leads to other useful questions that clarify what I am aiming at. For instance, what does becoming number 1 mean? Number...
By Andy Burrows
Getting business strategy right is not easy.
The definition of strategy is simple enough: “a plan of action to achieve an aspiration or overcome a problem”. And the process of arriving at the plan sounds so easy: define the objective (vision, aspiration, problem), assess the current state and therefore the gaps, and decide how to get from where you are to where you want to go.
One of the things that makes it difficult is knowing where to start in assessing the current state. There are so many factors you could take into account. It’s sometimes difficult to see the wood for the trees.
And performance measurement has similar issues. I’ve written previously about the need to make sure you’re looking at the right performance measures – KPIs.
What we need in both cases is to be focused on the “performance drivers” or “value drivers”.
So, in this article I want to introduce you to a very simple tool called the...
This article is written by financial modelling specialist, Lance Rubin. You can find more of Lance's work at https://www.modelcitizn.com/
When I first came across the term driver based planning and forecasting I was confused.
As an ex-investment banker having joined a Finance team the concept of drivers when talking about a forecast or plan was simply assumptions.
Why was it not called just that? Assumptions! Investment bankers have been building models with assumptions ever since the first model was built and a corporate transaction was negotiated.
So what’s all the excitement about driver based planning. It’s simply a financial model with assumptions to drive decisions..no?
Why give assumptions a different name i.e. a driver, why not just call it assumption based planning?
Ultimately a plan or a forecast is a collection of assumptions both in the numbers that are input into the model but also assumptions around...
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