Taking the first step toward implementing decision support excellence involves selecting the most effective measurement framework for your organization. Ever since Peter Drucker wrote that "what is measured gets done," managers have considered performance measurement an essential part of their job. Unfortunately, a proliferation of measure frameworks and the surrounding hype often leave managers confused about which business performance management strategy would be most relevant for their business: EVA, MVA, TSR, balanced scorecard? Determine the potential effectiveness of a measurement framework for your organization by considering the following criteria:
- Is it, or can it be, connected to your company's strategy?
- Will the behavior throughout the company stay consistent with the strategy?
- Is a balance of financial and non-financial measures included?
- Are key measures anchored to a model which expresses the causal relationship between them so the focus is on key performance levers?
- Can it be linked to your key management processes (e.g., planning, management reviews, budgeting, etc.)?
Underperforming companies are more often the result of hundreds or thousands of decisions made by individuals throughout the company than any grand strategic mistakes. Decision results at all levels impact the strategic capacity of the company, from those who deal with supplier relations to those who develop new products to those who market the products. Too frequently, people must rely on a variety of generic inputs which aren't targeted to their specific needs. An effective decision support capability must offer the collective data, history, insights and applicable analyses of the enterprise to managers making decisions at ground zero of the company's operation. Design your decision support capability keeping the following guideposts in mind:
- It provides a template for cascading decision support capabilities to increasingly lower levels of the organization in order to ensure that the shop floor is linked to the boardroom.
- It aligns the organization horizontally across each decision process to support the natural workflow of the company.
- The decision support enablers and technology are explicitly incorporated into the decision-making processes.
- Compensation, incentive and reward systems have been aligned with the measurements delivered through the decision support system.
- Job role descriptions and competency requirements have been redefined to ensure that the users of the decision support system can effectively apply it to actually improve decision making.
- Input from internal and external sources received, measured and analyzed, thus yielding insights into best practices.
Another critical step, and possibly the most difficult, is continuously recording the analyses, the decisions made and the results of those decisions so future decision-makers can learn from the past. This feedback loop is essential not only to populate the knowledge assets of the organization, but also to enable the DSS to monitor and make intermediate adjustments to key underlying business rules and assumptions. Managers must be signaled when the organization is where it should be, and when it's off track. When companies succeed, they need to know why. Incorporate these vital characteristics into your decision support system to drive and sustain positive change in your company's decision-making behavior.
Developing a decision support system that will generate such complete information requires management to understand that the best DSS is a unique DSS. Only when the DSS connects with the resolution of your organization's specific business issues will it work optimally. Such resolution starts with a thorough analysis and understanding of the enterprise's decision making network and the requirements of each organizational level. It then builds a structural framework to ensure that decision making throughout the enterprise is bonded by common business rules, definitions and economics. Finally, an inherent feedback mechanism must be in place to support a continuous response loop which allows the decision support system to re-calibrate based upon changing business and competitive conditions.
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