This quiz will not be too hard. It is multiple choice, so you can guess and maybe you’ll luck out. The answers are at the end.
1. Which has higher value for managing an organization’s strategy?
a. A balanced scorecard.
b. A strategy map.
c. A club to whack underperforming managers.
2. What is a more effective and higher-ROI way to retain, grow, win back and acquire customers?
a. Spray-and-pray advertisements.
c. Work backward, understanding the unique preferences of customer microsegments (and ideally individual customers) and tailoring deals, offers, discounts, etc. to them.
3. True or false: The annual budgeting process is so broken and dysfunctional that it should be abandoned altogether.
4. Which is the correct relationship between performance management methodologies and business intelligence/data warehousing?
a. Performance management is a subset of BI/DW.
b. BI/DW is a subset of performance management.
c. They are unrelated.
5. Which will have more impact?
a. Implementing and integrating many performance management methodologies without any embedded analytics.
b. Implementing and integrating fewer performance management methodologies, but embedding analytics in each methodology.
c. Maintaining the status quo and not implementing anything.
1. B. The strategy map has all the intelligence in it. The balanced scorecard, although also important, is the feedback mechanism that should be derived from the executive team’s strategy map.
2. C. If you answered A or B, please see me after class.
3. C. “Tr-alse.” Trick question; the answer is kind of both. The annual budget is typically obsolete in a few months. Budgeted department costs are padded by veteran managers who sandbag their numbers. Department budgets cave in to the loudest voice or strongest muscle and, worse, are overinflated by needless “use-it-or-lose-it” fiscal year-end spending, as the next year’s spending for each expense is typically incremented by 3 percent for inflation. But if you abandon the annual budget, what do you replace it with to satisfy the purposes of a budget? Those who asked that question get extra credit.
4. B. BI/DW is a subset of performance management, but they are inextricably linked together. Performance management deploys the potential power in BI/DW. Performance management applies BI/DW in the context of a problem to be solved or system to be optimized.
5. C. Doing nothing will have a sufficient adverse impact that eventually an organization will fail or go bankrupt. The more interesting question is whether A or B will have more impact. The answer is that it depends, but I lean toward B, because embedding analytics (such as multivariate correlation analysis among key performance indicators and performance indicators in a strategy map) will turbo charge and add more torque to the integrated gears of performance management compared to having a few more gears spinning.
No one ever said that tests in school were easy or fair. It can be an even greater challenge working in the real world!
Gary Cokins is the founder of Analytics-Based Performance Management LLC, an advisory firm. He is an internationally recognized expert, speaker and author in advanced cost management and performance improvement systems previously a principal consultant with SAS. You can contact him at firstname.lastname@example.org. For more of Cokins' unique look at the world, visit his website at www.garycokins.com.