Does Cutting Down Days of Duration Improve Performance? Hint: Maybe Yes! Maybe No!

Does Cutting Down Days of Duration Improve Performance? Hint: Maybe Yes! Maybe No!

Many people believe that driving down durations of business processes is an improvement in itself. I.e. if it takes only three (3) days it is better than it takes five (5) days. How come? It is alluring because it looks so intuitive and simple. It is possible to measure it. It is impossible to measure process durations in free cash of profitability. Or? In such situations people tend to take the path of least resistance. Repeatedly throughout the history of performance management. Though everybody knows as well: “1. Performance indicators that measure activity rather than performance will provide less useful data and information overload” (https://smartkpis.kpiinstitute.org/kpi-101/pitfalls-and-how-to-avoid-them) Actually there is common sense about what it takes to make an effective performance indicator: We have figured how to measure operational activities in free cash or profitability. Hence Trufa performance indicators:  can be linked to objectives (enterprise efficiency or effectiveness)  are actionable (because drivers are clearly identified)  are simple (it’s either cash or profit)  are credible (it can be looked up in the P&L or in the balance sheet)  are integrated (financial outcome can be translated into operational measures)  are measurable (that’s what Trufa is all about). Do you want to take us up on...
The Profile of a Digital Controller

The Profile of a Digital Controller

New technology such as Digital Performance Management gives birth to a new type of controller (financial analyst). Proven tools and routines will be complemented with new tools and routines. Trusted habits and approaches will be recharged with new ways of doing things. How long this takes depends on our openness and willingness to learn from each other and to adjust to this change. We at Trufa are observing following changes of behavior in our customer base: 1. Leaving the ivory tower Digital Performance Management enables the automatic detection and in time management of operational input factors (operational performance drivers). Digital Controllers are closely collaborating with the operational managers. Digital Controllers are genuine Business Controllers. They are sitting in the business and no more in a central location. The input factors get managed early enough to influence the output factors (focusing on leading rather than lagging performance indicators). 2. Substituting reporting Digital Performance Management enables unbiased ad-hoc big data queries. Digital Controllers resort to experimentation to verify hunches and for special aspects. Experimentation saves time and money. 3. Ignoring outliers Digital Performance Management enables the management of whole distributions. Digital Controllers focus on bulk instead of single improvements. Managing outliers could be very hard and results are questionable regarding time and money. 4. Overcoming silos Digital Performance Management enables the analysis of end-to-end processes. Digital Controllers think in processes rather than departments. Competing and conflicting sub-optimizations are avoided. 5. Applying statistical thinking Digital Performance Management enables the application of robust statistics and machine learning. Digital Controllers accept statistical errors instead of insisting on deterministic results all the time. Statistics make...
Ignorance Is a Blessing – If Done Consciously

Ignorance Is a Blessing – If Done Consciously

Today’s business challenge is to decide what not to do rather than what to do! To take these decisions we are continuing to add data, tooling, technology, people and time. We are making everything even more complicated as our inherent complexity already demands. More often than not we are ending up in “doing nothing”. Either because we are stuck in “analysis paralysis” (see below). Or because we are continuing to do it like always: struggling in crunch times. Our customers are telling us that they have overcome this stalemate situation. Because they can test their hunches in seconds instead of spending three men-months use freed up cash or profitability as uniform decision criteria instead of incomparable KPIs be sure that nothing has been overlooked instead of relying on biased reports For our customers “conscious ignorance” has arrived. P.S. Analysis paralysis or paralysis by analysis is the state of over-analyzing (or over-thinking) a situation so that a decision or action is never taken, in effect paralyzing the outcome. A decision can be treated as over-complicated, with too many detailed options, so that a choice is never made, rather than try something and change if a major problem arises. A person might be seeking the optimal or “perfect” solution upfront, and fear making any decision which could lead to erroneous results, while on the way to a better solution.[1] The phrase describes a situation in which the opportunity cost of decision analysis exceeds the benefits that could be gained by enacting some decision, or an informal or non-deterministic situation where the sheer quantity of analysis overwhelms the decision-making process itself, thus...