Information is power. We’ve all heard that expression, but it has a special meaning for those who run businesses. For them, information is empowering. Accurate, timely, easy-to-understand information enables leaders to make optimal decisions in how they deploy capital, where they will focus their businesses and what areas need to be improved.
In 2019, however, we’ve noticed many business leaders continue to struggle to get the information they need. Nearly all have adopted some form of information reporting system, whether they call it a scorecard or dashboard, or perhaps they just include various metrics in a monthly reporting package (for purposes of this article, we will refer to all of them as a “dashboard”). At the same time, nearly all these same business leaders place limited confidence in the information they are given.
If accurate information is so important, why is it many leaders have difficulty getting what they need when they need it? The answer is multi-faceted, but in my experience, most often it’s because there is no one tasked with the responsibility, with the concurrent and necessary authority, to be in charge of information flow in the business. Often, a variety of people with differing skill sets are expected to contribute to the dashboard. They will use multiple tools (ERP systems, billing or project management systems, and lots of Excel) to track, compute and present the metrics for their areas. These are commonly fed into the dashboard, but each metric may be derived from different sources, or even the same sources but using different rulesets. The person compiling the dashboard typically accepts the inputs at face value, and no one performs a comprehensive check to see if all the reporting makes sense at a macro level.
What happens next is typically the executive reconciliation process, where senior leaders set in a room each month trying to figure out why their own reported metrics don’t align with those of their colleagues. Rather than focusing on how to lead the business based on the information, they instead spend their time negotiating the truth.
Whether you are a data-driven leader, or someone more comfortable with people, you need to know the information you use to run your business is valid. In most organizations, the finance and accounting team are most commonly responsible for information gathering and reporting. Make sure they have the tools and leadership they need, then expect them to give you the truth, and nothing but the truth, accurately, timely and in a form you can understand.
Most business owners get financial reports monthly: Profit and Loss, Balance Sheet, Statement of Cash Flows. Some look at them
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