Effective management is about continuous improvement and that’s why performance drivers really matter.
It is very easy to get bogged down in the numbers. Actual v Budget, trends, forecasts, feed forward, feed back etc. etc. But effectively control the drivers and you effectively control the performance.
This all began with Activity Based Costing (ABC) and has moved on many times since then. If you can manage and control the activity then you can manage and control the performance.
I have used the Kindle example before but it is worth repeating. To manage the cost of a book we can look for cheaper paper, print smaller, use cheaper ink and use a cheaper carrier. Alternatively we can control the performance drivers (quantity of paper, ink, carrier etc.) and reducing their use. Kindle delivers the same book to the customer but eliminates all of those costs. A win, win situation as it also moves us toward net zero which should be the target of all businesses.
If you are looking to improve performance and move to net zero as well then stop looking at income and costs in isolation and start looking at drivers. An effective way of constantly moving forward is to consider which drivers do we need to control to move us toward our ultimate goal? Effectively control those and we are well on the way.
Start making a list.
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