home Investment Iii. what information the management needs to work. What information do we need

Iii. what information the management needs to work. What information do we need

Comments (71)

Which owner do you mean? Creator or buyer?
A business creator a priori will and must own the entire completeness of information.
Customer ready business may not own the entirety of information - he determines for himself why he bought it (profit, destruction of a competitor, splitting up for sale, merging to increase the share of the market, know-how, etc.) and, based on the goals, determines control points by which he will receive information.

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I register the first divergence of views. :)
The business creator does not have to have all the information about the subject of the business. What for?
It is enough for him to understand business processes and be able to manage a company and people in it.

Otherwise, it is very much not like a business, but like a handicraft.

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At the time of creating a business, it is extremely rare that everything is based on business processes and people management. More often than not, this is done on the multitasking and enthusiasm of the founding fathers and in austerity. Therefore, the owner-creator strives to possess all the information as much as possible in order to understand what you have to pay for and what you can do yourself. :-)))
Most businesses at the stage of creation are pure handicrafts. :-)))

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Michael, good afternoon!

It looks like you and I have different experiences and backgrounds in this matter. :)
Not a single business that I started was based on knowledge of the subject.
Billiard tables - I dreamed that this would be an interesting topic. And so it happened.
Consumer clubs (in this case, just billiard tables) - I thought it would go off. Shot.
Industrial ventilation and air conditioning. There I was not the owner, but neither I (the sales manager), nor he - General manager and the owner was not a pro in ventilation.
Design of engineering systems of buildings and structures. Again the same thing.
ZUBRA BUSINESS community: I still don't know what the Internet is and how it works. :)

Say - this is a special case (clinical;)), I will answer - "no". Almost all of the businessmen around me are of the same order.
And if you look at it - Chichvarkin, Tinkov, Polonsky, Branson ... the list goes on.

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Naturally I tried and got it. The question was raised about knowledge of technology, not about control.
Even now I cannot use AutoCAD and evaluate the quality of completed projects, play billiards, create websites. :)

And everything related to the market, marketing, sales, you need to know.

Although here Goldratt has his own opinion and I agree with him. :)

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I think that you are "slightly" cunning about technology as well.
After all, you made decisions with whom to cooperate on equipment - with "MoVen" or with Ashot from the garage on the next street? And, making decisions, you received and analyzed information about the technologies used in production. I do not argue - you studied this technology, as they say, with large strokes. And the depth of immersion in the technology depended on the degree of trust in the specialist whom you entrusted with the primary collection of information.

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If we talk about industrial ventilation, then with whom the owner "drank vodka", so he began to work as a distributor.

By the way, "Moven" is not much different from Ashot from the garage :)

I am not being a little cunning about technology, but I am saying it as it is: I am not a pro in technology. At all. Although in the process of work I begin to understand to one degree or another, but not at the professional level, but at the level of systemic knowledge.
(Returning to the design of engineering systems, after a while I knew what kind of work was being carried out for what - the sequence, and after 1.5-2 years at meetings I could make competent technical decisions, but this does not mean that I began to understand the subject matter.

Although now is the time. Everyone knows everything. :)
And the person who writes that he knows professionally English language, wanting to inform him that he is not interested this work, writes "not enterested"

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Moven is very different from Ashot. At a price. :-)))))
As a matter of fact, we have come to a common denominator.
What you called "system knowledge" I called "large strokes".
I have the same approach. Including vodka. :-))))

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Duc consensus around the zero point of the scales.
I agree that I don't have to be a techie.
You agree that the owner-creator should receive and analyze the system knowledge of the technology. Until the moment of complete delegation of management authority, at least.

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As a specialist who has created quite a lot, I confirm the correctness of Mikhail's position. He is 100% right. Of the hundreds of structures created from scratch before our eyes in the last 20 years and not only within the country - not a single successful case according to Dmitry's "standard".
But all the cases, conventionally called by me "appropriated", as a rule, develop according to Dmitry's "standard".

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The owner's desire to "know something" must be properly managed, i.e. it is necessary to control and regulate and shape these desires.

The methods and forms are different depending on the type of owners and the size of the business.

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Mikhail, this is not advice, but a point of view that is different from the opinions of other conference participants.
Moreover, businesses are of different sizes and the number of owners can be more than 1.
All owners "guess" what I have written.
Therefore, there are auditors, boards of directors, etc.

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"He is the owner, and he himself determines the amount of information he needs ..." - quite right, therefore he (or his representative of the State Duma) determines the form, frequency, structure, etc. components of the system management accounting and reporting ...
The discussion was initially set incorrectly. First you need to state your personal point of view, what is the cost, and then discuss it, and it looks like a lot like collecting information :-)

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My personal point of view is that the owner, ideally, should not know at all how the business works. He must look ahead and decide where to go, and about business only know that it works. For example, when you are driving, imagine that information about the operation of each of the thousands of parts is printed on your dashboard! The petrol sensor in this information will be lost. And what difference does it make if there is still gasoline if there is a hole ahead?
But the question is how to achieve such manageability when the owner only needs to look ahead.

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"... the owner, ideally, shouldn't know how the business works ...
He must look ahead and decide where to move, and ... ", but from this place in more detail, how to decide where to move the business, not knowing how it works ...: - (((((((((( ((((((((

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Elementary. I may not know how production works. I may not know how, for example, information about an order is sent to the warehouse. I may not know in what sequence the nuts are placed on the conveyor. But I can find out if I need it, because I know which of the employees is responsible for this.
Again, an example with a car: I have no idea how it works, or even how the hood opens. But in order to drive, I need to know, first of all, where to go. And how to go, you need to know the way. Then I look at the gauges on the dashboard.
In my opinion, in order to increase the scale of a business, this is precisely what is important: to stop knowing in time something about your business that you do not need to know about. But where to get wisdom to separate one from the other?

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If you do not know how your business is organized, how your main directions function, how to check the correctness of their functioning according to top indicators, etc. how you will choose which directions to develop in a given time period, which ones to slow down, and which ones to close altogether, DON'T STOP knowing how does YOUR business function, even if you become a venture investor otherwise you will not be able to accept and, most importantly, understand what risks you are taking upon yourself, otherwise it’s just a roulette wheel.
Your concepts are based on the erroneous opinion that at the top level one should not engage in tactics, but only strategy. experience best companies refutes this, for example, take J. Welch GE.
Another thing is that a systematic approach at the level of the owner, as well as top management, is not formed on the instrumental basis of complex special tools and not on the basis of a process model, it is formed on the basis of a vision of the entire business as a whole, an understanding of its essence, role and place of the organization (in which you work at the moment) in the industry and on the market and ways of its development in the short and long term ...
... On the other hand, seeing the business as a whole, understanding its directions and understanding it professionally, they, if necessary, should “be able to get into” any special issue “to sort it out” and organize its solution. This is another distinctive feature the owner and the system top manager, which allows him to move from company to company in various industries and successfully solve the assigned tasks.

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Thank you, Eugene! How do you draw a reasonable line between strategy and tactics? I mean your words "from the erroneous opinion that at the top level it is not necessary to engage in tactics, but only strategy." This is not an idle question. This is the question that arises when automation systems are created. Who needs what reports? What should be displayed in the interface of the general manager, and what should be displayed in the interface of the head of the sales department?
Still it is necessary to separate two questions: 1) whether the manager CAN get involved in any special issue; 2) Should a manager GET INTO any special issue?
First, there are as many managers as you like who have not tried to understand the production technology or the specifics of the product, and are doing an excellent job of managing. Secondly, my case is just when I have to do the most difficult and complex production tasks myself. And I think this is wrong. Third, when I completely delegate production, how will I know that everything is going well? At the same time, I CAN get into any question, but I DO NOT WANT to get into. Otherwise, I'm not a manager, but a freelancer.

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"Firstly, as many managers as you like, who did not try to understand the production technology or the specifics of the product, and do an excellent job with management ..." than personally and specifically this success (effectiveness) is expressed: i.e. passwords, attendance, addresses ???
"Secondly, my case is just when I have to do the most difficult and complex production tasks myself. And I think that this is wrong ..." - certainly not right, it should not be a system, but here it depends the scale of the company and business. In small and some medium-sized ones, the top does both, I say based on practice, theoretically this may not be correct.

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1) The director of a network of pharmacies with whom I worked is a technician by education, did not understand medicine and did not want to understand.-You again confuse business organization with the essence of products: he did not understand medicine, but he understood which ones sold better and which brought more and / or stable income ...
2) The director of the hotel and restaurant holding, where I had a project, was not interested in either the maids or the cooks ... the same thing, but, as a rule, the chef is hired by the owner ... On the other hand, he could not help but be interested the profitability and profitability of the business, and since I was interested, I understood WHAT he specifically earns ... examples can be continued ... The owner should know how his business functions and what brings him and / or can bring income, even if he has to / will have to use internal and / or external consultants ...
I’m just now invited to organize a new business for me (I won’t name the industry) in the field of high technologies, for me the product is also CHA, but when setting the problem, I designate the input parameters and, most importantly, the weekend "Wishlist" ...
I do not want to be neither like the first, nor like the second, I remain myself :-))))

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So after all I am about the same. The owner must understand what he earns. But he needs to stay away from the actual production, this is not his question. This is what I learned (with surprise, I confess) from my own experience. That is why I ask the question: what kind of information about the business will answer the owner's question, how does he make money? Moreover, he will answer online, i.e. earned - found out on what - concentrated efforts - earned 100 times more on the same, until competitors hit the bonanza. This is the question: what information should go to the owner? There is still no answer. They did not even agree on what information should NOT go out to the owner.

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"This is the question: what information should go out to the owner? There is still no answer." - the answer was glitching. I will repeat. As V. Vysotsky wrote, the answer is and the only answer (in the sense in which you are asking). The information that the owner needs is determined only by himself and no one else, the parameters and the totality of this information depend on his qualifications and preferences, moreover, this information may change over time ... You and / or top management can recommend him the types, order , frequency, etc. of this information. The owner can accept it in whole and / or in part or reject it altogether. Therefore, here the answer is unambiguous, you do not define the information for the owner, once again he decides it CAM. Another thing is corporate governance there are rules and standards when, what, in what form this or that information is received at various levels, incl. and the owner, but it does not make sense to discuss it - you just need to know how to execute it.

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Well, I understood about "CAM determines". Then please tell for yourself: what information do you need about your business? Or the owner with whom you work?

Or maybe the homely truth is that the owner does not need information about the business at all ?! That any reporting is just a farce, and everyone only pretends that it is being used ?!

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"Then, please, tell for yourself: what information do you need about your business?"
Employment.
I am an advisor to the director of a telecom company, I work with corporate clients:
- I receive corporate information on my business;
- I receive information and participate in meetings of the Moscow Oblast Government;
- I track information about the work of the administrations of the Moscow region;
- I regularly maintain personal contacts.
Independent director in two companies with 100% state capital, IDA member:
- I regularly participate in meetings of the ND club and receive information about the activities of the association and colleagues;
- I receive corporate and accounting and reporting information on the profile of the companies in which I am an independent director and information on one-time requests.
Private business.
Senior partner of the Specialized Personnel Bureau (SKB) "New Recruiting and Organizational Technologies" (NORT):
- I track and receive information on the top management market from partners;
- I process information about the top management training market (the picture is sad).
New project:
- the name of the project and information are still closed.
"Or maybe the homespun truth is that ..." - not that, but that those who prepare information for the owner think that THEY know better what information he needs, instead of spending a couple of days to work WITH A SPECIFIC OWNER, to understand, accept and agree that HIS THIS OWNER needs, namely the DATA, and not the owner AT ALL!

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Soon you will not be able to work without knowing how the information about the order gets to the warehouse, because those who know will eat you :))
If you never open the hood of a car, then you can drive, but it will break.
You have the opportunity to travel by car because you use the services of external specialists, who will largely determine the schedule of their visits, the funds required to continue cooperation with them, etc.
That is, in many ways it is not yours, but their car.
If, in the case of a car, you can get somewhere by bus, then in the case of running a business in order to raise funds necessary for the implementation of some opportunities, you, unfortunately, will not be able to do this anymore: ((
Now imagine that something inside the car, for example a chair, begins to dictate to you where to go. This happens when an "irreplaceable employee" appears who completely and completely determines the functioning of any part of your business due to your unwillingness to delve into the intricacies :)

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Each System has KPI and KPR - "sensors" ...
The owners choose for themselves "sensors" and their number to the extent of their desire "to go safely ... and how else he wants there."
So that the owner can choose "sensors" without delving into the theory of KPI, KPR, etc. - managers should make these sensors simple and understandable, like sensors on a car ... or on an airplane ...
If the owner does not bother to ask what "sensors" are and which of them he needs to own, then he may soon cease to be the owner :)

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you know how the stomach works ;-) or why the sun rises in the east and goes down in the west. it all depends on the owner and the size of the company. if a company is a monster, with billions of turnover and a network around the world, I think that the owner will only know in general terms about what is happening in the branches. yes, I think he will be aware of loans, profits, cost, etc. but the top managers of the company, heads of accountants, and executive directors will also know this. Surely you can isolate the owner by looking at the charter, all other information can be available to at least two or three people.

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The author asks two different questions.
Thorough knowledge of all aspects of your business is a moot point.
But the hired manager is obliged to keep the owner 100% informed, decisions taken etc. This is my point of view, if someone prefers to shove his business off to a hired manager and only learn about profits, this is his own business. I've seen examples where it didn't end well.

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Colleagues, let me give you an example in simple words: my wife has a sewing workshop, 40-50 people. Knows the names of family members, birthdays of children and grandchildren and all that. Toyota and Ford are also created by entrepreneurs. Do you understand what I mean? The determining factor in the context of the topic is the scale of the business.

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How do you scale up without losing control? For example, what can be done to turn a sewing workshop into an international corporation with an annual turnover of a billion dollars? Also know all employees by name?

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Diana, I was not talking about business development, but about the amount of information that the owner is able to "digest" and that he needs. In this and only in this sense, I compare the scale of the sewing workshop with private corporations corporations. And the development of a workshop into a giant company is a separate topic. By the way, not uninteresting.

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Here I am about the amount of information. The owner is not able to know everything about everyone. But I must know something most important. What is this? And the larger the scale of the business, the more carefully it is necessary to select what it should know and what it should spend time on and what it should not. I would like someone to share experience of this kind, for example: a year ago I knew by sight all the managers of the sales department and who has how old the children are. Today the commercial director knows this, but I no longer do.

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Diana, hello!
"Does the owner need to know thoroughly how his business works?"
Thoroughly perhaps and shouldn't.
"Yes? And, for example, when you fly on an airplane, do you know how it works? When you eat an apple, do you know how your stomach works? No, and you don't want to know!"
1. The CREATOR knows how all of the above works for you. 2. Owner - the creator knows exactly how, why and why his business SHOULD work. It really is somewhat similar to the work of the body. And any person who cares about his health KNOWS how his stomach works ... and at school everyone went through this topic :)))
3. The owner - the purchaser of an already operating business (and it looks like a flight in a ready-made plane) wants a "flight" SAFETY GUARANTEE. This means that he will want to carry out a complete check of all systems when buying (he will hire, for example, specialists). And then, when the business is already his ...
4. "No and do not want to know" - any normal person may not "want to know", but wants to feel safe, and for this he will do see paragraphs 2, 3.

"And in the case of a business: what information should go to the owner?"
That and according to those parameters, which will be determined by the owner. Usually the owner is interested in Mrs. PROFIT and the reduction of costs to zero.

I completely agree with Mr. Kornev: "Initially, the discussion was set incorrectly. First, you need to state your personal point of view, what is the cost, and then discuss it, and it looks like a lot of information gathering :-)".
Or not your personal point of view, but unresolved examples and questions arising from them.

Sincerely

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Thank you for bringing up the subject of the Creator. "God created a universe that functions according to certain principles. He does not make all decisions. He has put in place principles and processes that operate independently." (Alan Kors)
It's the same in business. I want to understand how to create operating system from people, equipment, money and other resources so that the problems that arise do not fall on the manager, but at the address: where there is information for decision-making. I want my business to be built this way. If we imagine that such a system has been built, then only strategic questions should be left to the manager: where to move next? And after choosing the target, the car should be "on autopilot". Of course, in reality, nothing like this, managers sometimes make decisions about the color of toilet paper. And they endlessly babysit now with the chief accountant, who has no money for taxes, or with the suppliers who did not buy the goods on time. And most importantly, all these people believe that the leader should babysit them. In my opinion, the manager should receive no more information than on the dashboard and navigator: direction, location relative to the target, speed, remaining resources, indicators of the normal operation of systems (supply, finance, sales, personnel, etc.).

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Diana, hello!
"God created a universe that functions according to certain principles. He does not make all decisions. He has put in place principles and processes that operate independently." This is how a normal organization functions.
Diana, if I understand correctly, then you want to receive information on how to create the system you want. If so, then briefly about it below.
In order for emerging problems to reach the address, it is necessary to create these addresses and empower employees to make decisions.
Your opinion on business efficiency is absolutely correct. In order not to make decisions regarding the "color of toilet paper", you need to create a functional organization, look for descriptions, articles on the TRIZ-CHANCE website (Rostov).
Define specific tasks for each department and set benchmarks / end result of solving problems; determine the effectiveness of each position, provided for by the staffing table and define the tasks; empower each position; prescribe regulations for the submission of information, information flows, decision-making; instructions for work (what you do not want to be distracted by, as an owner); create Work Standards; company, (up to the Standard for the order in the office), which will describe the behavior patterns of employees, etc. In general, for what you want, you need to create a "solid" documentary base that will describe how and according to what laws your "world" functions. Then, you will need to implement / "give life to the world" in order for it to become independent and after that track the values on the "dashboard".
About "babysitting" is not out of business, it is out of kindergarten:). Therefore, create a company in which people will work safely, and not "play" or "be friends."
Define your role in the business process: who are you, owner, manager? If the leader, then what? Divide financial flows, etc.
In general, what you want to create has already been created many times and works effectively.

Sincerely

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I just want to shout, like Stanislavsky at the rehearsal: I DO NOT BELIEVE !!! If it works so well, then why aren't you the richest person in the world?
"Prescribing" pieces of paper does not work, because pieces of paper are not read.
Regular recruitment does not provide people who are able to be perfectly organized and do not need nannies and snot wipers. Such people somehow need to be made from what you manage to recruit.
The market is changing so quickly that while you come up with and write pieces of paper, there will be no money, because competitors do not waste time on such a boon.
The point is something else. Indeed, clearly organized companies exist, but there are NO prescribed regulations. There are working laws themselves, unwritten rules. How do you make it work today, this minute?

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Diana, hello!
1. You needed answers, you got them. And how you use them is your business.
Note: Stanislavsky had the right to the famous remark because he was the author of the proven system that he used to teach, which works to this day. You are more like Thomas the Unbeliever ...
2. "Papers", "selection of" ideal "personnel," unwritten rules ", etc. DO NOT work SEPARATELY.
3. "this very minute" there is NOTHING, except perhaps hysteria :). If you want a WORKING business, you have to work very hard.

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Good afternoon, Vasilina, thank you very much for your detailed answer! I also own and run my business. And I agree that this is perfect different functions... There are no "pure" managers in my business, i.e. doing nothing, but only controlling the work of others. And, apparently, it will not: as I imagine my business, it will always be innovative. It will have commanders, but no functionaries. The program makes the reports for me, people only enter data for them. Therefore, the question arose: what reports should the program do so that I receive exactly as much information as I need, no more and no less. And about any other business: what reports are needed by the head of the trade, construction, real estate, restaurant, etc. business so that they receive exactly the information they need?

To write technologies on paper, they have to be worked out in life, but they have not been worked out. I can't imagine a consulting business in which you can prescribe something for three years, since over the past three years the market has changed dramatically. Even the sales technology, which worked perfectly for us in the spring, no longer works in the fall, we are looking for new methods and ways of sales and production every day. We change our main product every day, enter new markets and niches. Business is reduced to constant innovation, all employees, without exception, must be creative in their area of responsibility, I do not accept "gray" performers right away on the basis of a self-developed test. That is why I still don’t believe that you have done it the way you write.

Is the prescribed technology of daily innovation possible? Can this be formalized and introduced into job descriptions?

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Diana, hello!
Technology only becomes technology when it becomes workable in the face of change.
Please read the description of the "Any-Trade" package, I am not saying that it is "ideal", but the approach can be used.
Answering your question: you can. Moreover, if this is not done, the economy of the company begins to suffer and especially "innovative" employees can quickly begin to suffer from "star fever".
To believe or not to believe is not the issue that we are discussing. In business, questions of faith are usually resolved through verification and evaluation.

I wish you success!

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Vasilina, success to you too! In my opinion, we have similar businesses, and it is all the more interesting that the points of view differ so much. For example, I think that the creator's faith in his business is the most important thing that can keep this business afloat. "A miracle should come from faith, and not faith - from a miracle" (Berdyaev). And yet, I cannot find a single "innovative" employee, I need to come up with all the changes myself. Hired workers look at me: oh, I can't do it, but what should I do? Do something differently? It's like, I was not taught this at school (institute, graduate school, doctoral studies)! Tell me how, write step-by-step instructions, answer a hundred questions, then maybe I will, if the working day does not end! But the instruction will be out of date by tomorrow. Tomorrow there will be another order with completely different problems, but today's sales technology will give zero results, and we need to come up with something again. How to delegate the invention so that it does not turn into empty daydreaming in the performance of an employee?

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Diana, I welcome you.
I apologize for the delay in answering.
"Innovative" employees are usually "evil" for any company, because in the end they tend to become "stars", about "fighting" with which they write and talk so much.
There are no instructions on "innovations", you are right. But there is a system of typical orders, actions for order processing, customer support, etc. There are Standards of behavior, communication, etc. Read the materials on "TRIZ-CHANCE".
If you dream of a mercenary who will "invent" new sales technologies, you dream that someday you will transfer your business to someone else. As far as I understand, you are running a consulting business, and apparently have been running it for less than 5 years, if so, then read the materials on the Treco portal. Just the last conference was devoted to this topic. As for the questions of employees like "tell me how" - this is a legitimate question of an employee, to whom the Company SHOULD provide methods and methods of work, indicate how he should and how he should not act. We pay employees money to work according to our rules and achieve our goals. Employees work for us because they need salary, experience and some comfort. But to pull out our business, develop it on their own, "put their soul into it" they forgive, they did not hire. And from our side it is simply not fair to demand this from them.
If you believe in "innovative" / ideal employees, you are wrong.

Sincerely,

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You still have to think over and prescribe - prescribe rules and processes ... assign quickly and quickly implement - make you work according to the rules (written and unwritten) ... and beat just as quickly and mercilessly, and it is also indicative of all those who do not follow the rules ... And those who do - quickly and revealingly praise ... three months - and everyone reads ... pieces of paper - no, but the Rules - Yes! (the task of the Head is to create rules, not pieces of paper :))

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It is harmful for the owner to know everything thoroughly. He gets bogged down in small details and performs his proprietary functions - to set the vector of motion. Great things are seen at a distance. This is an axiom, but a rule from which there may be exceptions.
The owner, who also runs his own business, often falls into the trap of routine work. I went through this myself personally and I see it very often in others. And either a person comes to understand the need to separate ownership and control, or not. Explaining and dragging by the hand is useless. Sooner or later he will understand himself. Better early, but ...
Even though I am a coach, in the minds of the majority - the one who "cheats" on supposedly help, but even from medical practice I have clearly defined for myself - does not hurt - do not touch! So what if I see an impending disease in a person? The most that I can do for him to begin with is to say about what I see and what the consequences might be. And only the person himself will make the decision to be treated or leave everything for the time being. If I insist, but the person does not realize the need for himself, then he will take the pills a couple of times or fulfill my some easy recommendations and abandon everything.
It's the same with sales. The same goes for consulting. The same is true in the issue under discussion now - either the owner understands that the details prevent him from seeing the big whole picture, or not. Hence, there are 2 views on the problem, which we see in the discussion.

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That is the question: after all, what does the owner need to borrow and what does not? To know everything thoroughly is harmful, to know nothing is also harmful. Where is the golden mean? Does it depend on the type of activity, does it depend on the owner as a person? Does it depend on the age of the business, on its size?

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You need to know the key information. She often envy both the business and the owner's personality. It is determined only by him, and not by the hired director, that's for sure. It is possible and necessary to determine. From time to time, an audit is carried out and adjustments are made to these very key parameters, more precisely, to their list.

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Just about, key information! And what kind of information should it be? On every project I have to answer this question, and there is no technology for finding an answer. Only trial and error. Whenever I need to make a map of targets and benchmarks, and then forms for drawing up plans and management reports, I go in circles: done - wrong, done again, again not everything, not complete, too detailed, too long, too short, contradictory etc. I would like to find a technology to answer the question: how to understand the composition of the key information about the business that the owner needs? Why is it just speed, gasoline, engine speed for a car? But for business - what is this? It is important to detail the items of budget costs (budget report) and% of each in their total volume.
The profitability of working capital can also be detailed.
The crisis is usually associated with an acute shortage of working capital. So the question arises of assessing the effectiveness of their use: assessing the "profitability of working capital" in detailed sections: by product groups, areas of activity, retail outlets, and even groups of clients. In each "cut" - the turnover is "frozen" (in the form of the average daily indicator for the period). For example: the average daily cost of inventory in a warehouse. So the question arises: what kind of return (income) does each ruble bring? this "frozen" turnover.
What we are talking about: it is very important to pay attention to the economic model and the SYSTEM of business performance indicators. If not, then you need to create this "dashboard". It is this "panel", in confirmation of the intuition of the Owner and General Director, that will show the necessary "points of application" of additional management efforts.
And the Owner should just be well versed in this "indicator control panel" Economic model business (including the system of indicators) cannot be built without consideration, in isolation from all other elements organizational system management and specifics of the directions of business activities of the enterprise.
about this on the site www.ed-kosheev.ru "About the Problem and its solution (systematic approach)"
In fact, in the end, the Owner is only interested in two linearly independent indicators: (management) Profit - an indicator of the performance of the business (capital), as it were, the gross indicator and Profitability equity capital- Profit / Average daily own assets of the enterprise - an indicator of the efficiency of the business (the capital that is driven into it). Just two ...
Moreover, the current indicators are simply not indicative, they become interesting only in comparison with the indicators for previous periods. Those. their dynamics is important. It is the dynamics of these two indicators that demonstrates the trend of business development. Namely, this is what the Owner is interested in.
Moreover, in order to exclude fluctuations, it is interesting to consider the dynamics of these indicators averaged (for example, over the last three months). Consider for seasonal business fluctuations, etc.
Well, then: "moving forward, development is not a protrusion of the pluses, but the elimination of minuses." And the Owner is interested in finding these "cons". Those. it is interesting to see these two "indicators" in detail. To answer the question: why, for example, this month the Profit has become less. In this case, the indicators of the lower level are considered (Revenue, Budget costs, etc.). Further: and why the Income has become less, the Income is considered in the context of: for example, product directions or indicators of a lower level are estimated: sales volumes (in cost prices) and the average markup

Second. Does the owner perform only the function of ownership or does it combine it with the function of management? If it is combined with the management function, then what kind of management - strategic or operational? If the answer to all questions is "yes", he should receive three information packages: as an owner, as a strategic manager and as an operational manager.

Third. How much and what information he should have. There are, as you know, two ways of possessing business information. The first is when she is introduced to you; second, when you yourself have easy access to information, that is, information is easily accessible to you. As you can imagine, this is a different amount of information. We, as owners, determine the types, forms, volumes and terms of regular and emergency reporting, as well as information that should be easily accessible to the owner.

Fourth. Should the owner know everything? Of course not, but it is beyond human capabilities. But he must (if at least a little bit involved in the management processes) precisely know the indicators of the inputs-outputs of the main business process and the indicators of the inputs-outputs of the stages of the main business process. When the slightest forecasts for their deviation in any direction appear, the owner begins to be interested in the following levels of indicators.

Of course, the owner or the owner-manager has the right not to know the production, but then he must know that sooner or later he will incur unreasonably high costs in this area of work, and will buy the wrong equipment. This is more Russian specifics than Western ones. Do you know how many new expensive machines are gathering dust in the corners of warehouses and workshops, which were purchased at the request of seasoned production workers who received a decent kickback for this purchase? This also applies to other activities, be it logistics, finance, personnel, capital construction and so on down the list. When owning an enterprise, one must constantly remember that we do not have Great Britain or even Germany. At a minimum, the owner must have "knowledge of ignorance", that is, he must know exactly what he does not know and involve, if necessary, qualified independent experts, whose knowledge compensates for the blank spots of the owner's knowledge.

In addition, the owner must know the indicators of those areas of work where the risks of fraud and embezzlement most often arise, since in our country there is a special attraction to these "business processes".

Fifth. The indicators presented to the owner should not depend on those who are responsible for these indicators, and moreover, receive remuneration for their achievement.
So, if the owner does not participate in management, then the information for him is provided by the owner's department, which works at the enterprise, has access to any information, but is not subordinate to anyone at the enterprise. If the owner is included in the management system, then the information is presented to him, as you know from the experience of the best enterprises, the IT director and his service, but not the executive (managing) director who is personally responsible for these indicators.

Sixth. An important aspect of obtaining information is the quality of this information. It is impossible to talk about management information and not indicate the quality of this information. The receipt of low-quality information to the owner will easily remove the very problem of owning this enterprise, soon there will be nothing to own. Information, as you know, must be objective, reliable, complete, accurate, relevant and useful (valuable) for one's own

Diana, we live in Russia. Unfortunately Russia is not Germany. As a person who "ate the dog" in the management of enterprises, I will say that in order to preserve their property, there are two options:

First: deeply know the current financial and economic situation in business, the strategic situation and trends in the industry, have a clear objective KPI system and BSC, monitor the dynamics and trends of the business, put controls on indicators of pre-crisis states, limit the amount of managerial decision-making to mercenaries, use independent auditors for regular inspections, etc. etc. Do whatever is called owner's work and do it well. But this does not remove all the risks, so the owners avoid hiring very smart managers, and the business will be snatched away. It is also necessary to distinguish between small, medium and large businesses - their toys are everywhere.

Second option. The manager must know that for dishonesty, theft or decisions leading to losses, harsh organizational conclusions will definitely follow, associated with the most difficult, irreparable consequences for the manager and his family. This is how it is built in businesses owned by reputable businessmen during the period when they are in places not so remote. There are plenty of such examples in St. Petersburg. The famous phrase of Al Capone says: a kind word and a pistol can do much more than just a kind word. So, of all the well-known reputable businessmen, there is not a single one who would lose a business at the time of his absence.

And I wrote the article for only one purpose, in order to emphasize that if you engage in a conversation about something, then it is advisable to know the problem not at an everyday, but at a professional level, at the same level and discuss it. I would not like to offend anyone, but very often, judging by the content of some posts, people begin to press the computer keyboard on any issue, without having the slightest idea about the problem. Moreover, there are whole topics in which the most common words are not professional terms, but interjections: wow, ah, oh, phew, hmm, ha, eh, hey, ehma or ugh ... As you understand for a portal called "professionals" this is great.

Answer

New technologies are data processing devices intended mainly for the individual user. But when we talk about information, we are mainly talking about information for the enterprise - at least that was the case in the previous part of this chapter. However, an equally important role is played by the information necessary for the work of management - moreover, for all knowledge workers. Indeed, for intellectual workers, for management in particular, information is a key resource. Information connects employees with each other and with the organization as a whole. In other words, it is information that enables knowledge workers to do their jobs.
But it is already clear today that no one but themselves can provide knowledge workers and management with the information they need. Unfortunately, few managers think about what kind of information they need, and there can be no question of how to develop principles for its organization. Management prefers to shift this work to those who provide them with information - to specialists in information technology and accountants. But data providers do not always know what data the user needs, what data will become not just information for him, but information. Only the knowledge worker himself and only the manager himself are able to turn disparate data into information. And only the knowledge worker himself, and especially the manager, can decide how to organize this information in such a way that it becomes the key to effective action.
To get the information he needs, the manager must first find answers to two sets of questions. What information should I provide to the people I work with and depend on? In what form? And what time?
What information do I personally need? From whom? In what form? And what time?
These two groups of questions are closely related. But at the same time they are quite different. The question "What should I?" comes first, because it forms the paradigm of information exchange. And as long as it is not installed, there will be no backflow of information from employees to the manager.
We have known this since the time when Chester Barnard (1886-1961) published his (still relevant today) book The Functions of the Executive in 1938. Despite the fact that management unanimously admired (and admires) this work, Barnard's ideas are almost never applied in practice. True, Barnard paid little attention to information exchange, referring it to the sphere of human relations and personal life. However, information exchange can be effective in the workplace as well if it concerns subjects that are not related to personal life. Communication should focus on common tasks and common problems, in other words, at work.
Question: "To which employee should I provide information so that he can do his job?" - determines the focus of information exchange on general tasks and general work... This makes the exchange more efficient. Therefore, here (as in any case, when we want to make the relationship effective) we cannot start with the question: "What do I need and what do I want?" The first questions should be phrased as follows: "What should I do for others?" and "Who are these others?" Only after receiving answers to them, you can ask the following: "What information do I need? From whom? In what form? At what time?"
As a manager ponders these questions, he will quickly find that his company's information system does not provide much information. Some information comes from the accounting department, but in most cases, in order for a manager to use it in his work, it must be rethought, presented in a different form and expressed in other indicators. Most of the information that a manager needs to work comes, as already mentioned, from the external environment. This information should be organized separately and supplied independently of the internal information system.
To the question: "What information should I provide? To whom? In what form?" - only the person who will receive this information can give an answer. Therefore, if a manager wants to have the information necessary to fulfill the tasks facing him, he must first of all turn to the employees with whom he works, on whom he depends, in general to everyone who, by the nature of their work, needs to have the most full information... But before you ask, you need to prepare yourself for the fact that you will have to answer the questions of the opposite side. For the one to whom the leader addresses his questions can - and should - in turn ask: "What information do you need from me?" Therefore, the manager should first think over the answers to both questions, and then ask the employees with the question: "What information should I provide you?"
Both questions: "What should I?" and "What do I need?" - are deceptively simple. But anyone who has ever asked them knows that answering them takes a lot of thought, experimentation and hard work. Plus, the answers change frequently. Therefore, these questions should be asked regularly, approximately every one and a half years. In addition, they should be asked at every significant change, for example, when the company’s business theory changes, the nature of the questioner or his position, as well as in the case of a change in the work or positions of those to whom the question is addressed.
If the leader seriously thinks about these questions, then he will soon understand what information he must provide and what information he needs. And then he will be able to start organizing both types of information.
ORGANIZATION OF INFORMATION
Unsystematic information is just information. Only information organized in a certain way makes sense. However, depending on the form of organization, the same information may have different meanings. The same information needs to be organized differently for different employees and for different purposes.
Here's just one example. Since Jack Welch took over the leadership of General Electric in 1981, the company has created more wealth than any other company in the world. One of the main factors in this success was that General Electric organized the same performance information differently for each of its divisions for different purposes. The company has retained its traditional annual financial and marketing reports as a way to measure the performance of its divisions. But in order to develop a strategy for the long term, the data from these reports were systematized differently: so that unexpected successes and failures, as well as events that did not fit into the framework of previously drawn up plans, were visible. A third way to organize the same data was to focus on efficiency. innovation activities companies - after all, it is this indicator that turns into the main factor in determining the size of incentive payments and remuneration to the general manager and representatives of the management of each separate division. Finally, the same data was organized in a different way for the needs of department management and staff development. It was on this last type of report that management subsequently relied on when making decisions about the promotion of managers, especially when it came to top positions in the division.
As far as I can tell from my own experience, there are no two leaders who organize the same information in the same way. And this is correct: the information should be systematized in a way that is convenient for the work of this manager. However, there are a number of fundamental methods for organizing information.
One of them is to highlight a key event and is determined by the question: "What events (because usually we are talking not about one, but about several events) most influenced the overall result of my work?" A key event may be technology related (e.g. success research project). It can be related to people and their professional growth; with the offer of a new product or service to target consumers; attracting new consumers. What event is considered a key one is usually determined personally by the leader. However, he must first discuss this issue with the employees on whom his work depends. This is perhaps the most important principle that must be communicated to all employees and management.
The second technique is developed on the basis of the modern theory of probability; by the way, is based on it overall governance quality. Within the usual probability distribution, there is a distinction between normal deviation and exceptional events. As long as the deviations do not go beyond the usual probability distribution for a given type of event (for example, for a quality level in production process), no action is required. Data on such deviations are classified as information, not information. But exceptions that do not fit into the probability distribution are already information and require immediate action.
Another method of organizing information is based on the theory of the threshold phenomenon (effect) - the theory that underlies the philosophy of perception. The German physicist Gustav Fechner (1801-1887) was the first to understand that we begin to feel, for example, a pinprick, only after the sensation reaches a certain intensity, in other words, when it passes a certain threshold of perception (the so-called Weber-Fechner law. . ed.). Very many phenomena fall under this law - in our situation, we are talking, of course, not about phenomena, but about data, the volume of which must reach a certain value to overcome the threshold effect.
This theory applies to work and personal life; it allows you to organize information - about a wide variety of events - into information. When we talk about a downturn in the economy, we are talking about a threshold effect: a decline in sales and profit levels becomes a downturn, in particular, when it lasts longer than a certain period of time. Similarly, a disease takes on the character of an epidemic after a certain percentage of cases from a certain population is reached, i.e. after a certain threshold has been passed.
This concept is especially useful for organizing information about personal events. Events such as accidents, injuries, minor incidents, etc., become significant after their number exceeds a certain threshold. All this also applies to the effectiveness of the company's innovative activities, with the only difference: here we are talking about the threshold below which the drop in the effectiveness of innovative activities becomes dangerous and requires urgent action. The concept of a threshold effect is also very useful for determining the moment after which a sequence of events turns into a trend, begins to require increased attention and, possibly, action; or vice versa, to define a situation in which events, even if they look quite alarming at first glance, do not entail serious consequences.
Finally, many leaders have found in practice that a very effective way of organizing information, in which information is collected about all the unusual.
One example would be a letter to a manager. The employees of the department write monthly letters (informal reports) to one of the managers, telling about everything unusual and unforeseen that happened in their field of activity during the reporting period. Most of the above facts can be completely forgotten. But there are "exceptional" events that fall outside the normal scope of the probability distribution. Sequences of events are invariably looming, insignificant in the context of one line of activity, but gaining great importance when combined with others. Each time the emails to managers reveal new events that should be paid attention to. Each time they bring new information.
NO SURPRISES
None of the systems created by knowledge workers, and especially managers, to provide the information they need can be (and never will) be perfect. Still, these systems are constantly being improved. An indicator of the quality of the information system is the absence of surprises in the work of the company. In other words, management has time to learn about upcoming events, analyze them, understand and take appropriate measures even before these events occur or become large-scale.
Here's one example: for only three or four - in general, for a very few - financial institutions The US was not surprised by the economic crisis that erupted in the late 90s in Asian countries. These institutions timely analyzed the "information" coming to them about the economic situation and currencies of Asian countries. Gradually, they abandoned all the information that their own divisions and branches in these countries provided, because they realized that this was not information, but just information. Instead, they stepped up the collection of information on subjects such as the ratio between fixed and portfolio investments in these countries, the ratio between portfolio investments (for example, short-term loans) and a country's balance of payments, and the amount of money a country has at its disposal to service foreign short-term investments. debts. Long before these ratios became dangerous and pointed to the inevitability of worrying events on the Asian exchanges, the heads of these financial institutions knew where it was going. They realized "that they have a difficult decision to make: leave these countries and guarantee short-term growth, or stay to implement long-term - and very risky - strategies. In other words, they identified really important economic data in time, were able to organize it, analyze it and correctly interpret it. They turned intelligence into information and devised priority actions long before they were really needed, and the vast majority of American, European and Asian companies doing business in the Asian mainland and / or investing in their ventures relied only on that information. reported by their representatives in these countries. It turned out that this information can not be called information at all - in any case, in fact, it turned out to be a form of disinformation. Only those leaders who have spent several years looking for answers to the question: "What information can be considered to be correct and adequate when it comes to our business in Thailand or Indonesia? "
Too often, information is simply confused with a large amount of data. The difference between a lot of data and information is about the same as between the phone book, which has millions of names, and the last name, place of work and address of the person you need. Management must learn two lessons: First, it is necessary to eliminate data that is not relevant to the right topic; second, the data must be organized, analyzed, interpreted, and only then used to make decisions about actions. For we collect information not in order to accumulate knowledge, but in order to take the right action.
GO TO THE WORLD
The example of companies from developed countries, for which the Asian crisis came as a complete surprise, underlines the importance of obtaining significant information from the external environment.
The leader, ultimately, has only one way to do this: to go out into this external environment himself. Even the most remarkable reports and the brilliant economic or financial theories underlying them cannot replace personal, direct observation, and in such a form when it is really external observation.
The chain of British supermarkets has tried again and again to gain a foothold in neighboring Ireland - with little success. Super-Quinn is a leading supermarket chain in Ireland, founded and run by Fergal Queen. The secret of his success is not in a wider range or low prices, but in the fact that he forces all the heads of the company to spend two days a week not in their offices, but in the points of sale. The executives spend the first day in one of the Super-Quinn supermarkets, doing some kind of work, such as checking receipts or monitoring the unloading of perishable goods, the second day in competitors' stores: watching, listening, talking with employees and customers.
One of the founders of the largest US medical device company spent his vacation (four weeks a year, two times two weeks) at the counter as a salesman. He demanded the same from the entire top management of the company. After these two weeks, an ordinary seller returned to the counter and listened to customer complaints about his "colleague" for a long time. For example, a castellan from a Catholic hospital, buying medicines, was indignant: "What kind of stupid thing worked here for you? All the time he asked why I buy goods from other companies, and not this one. I could not even really accept an order." Working with clients allows top management to get simply unique information about their products.
By the way, it has long been noticed that nothing has such a positive effect on a doctor's work as turning him into a patient for a couple of weeks.
Marketing research, focused group interviews and so on - all of this is very valuable and has a right to exist. But all of these types of research are focused on the company's product. They never aim to find out what else the consumer buys and what other goods he is interested in. There is only one way to obtain genuine information about the external environment: to become a consumer, seller, patient, etc. But even such information is largely limited by the experience of consumers and non-consumers of one particular company. What is other information about the external environment that management needs in its work? And how can he get it?
Incidentally, this is one of the reasons why volunteering in non-profit organization- we will talk about this later in Chapter 6 - is very important not only in the sense that it allows you to better prepare for the second half of your life and career. It is no less important in the sense of obtaining new information about the external environment - information about people, their work, lifestyle, their knowledge and value systems, views on certain problems, ways of making decisions and actions. For the same reason, additional education for employees who already have one education. For in the course of receiving such an education, a knowledge worker at the age of about 40-45 years old - be it a company manager, a lawyer, a university rector, a clergyman - communicates with new people who have a completely different way of life and a different system of values. This is a great way not only to increase your level of knowledge, but also to get what the bosses who are cut off from life are always lacking - information about the lives of other people.
Summarizing, we can say that information about the external environment is the very important information that management needs to work. At the same time, this is information that always requires systematization. This information is not only the foundation for making the right decisions. It is also the foundation for the two challenges that the next two chapters focus on: improving the productivity of the knowledge worker and managing one's own career. Both tasks are within the power of only specialists who know what information they need in their work and what information they must provide to others, and who are constantly improving methods that transform the chaos of disordered information about the world into organized information necessary for work.

But it is already clear today that no one but themselves can provide knowledge workers and management with the information they need. Unfortunately, few managers think about what kind of information they need, and there can be no question of how to develop principles for its organization. Management prefers to shift this work to those who provide them with information - the information technology specialists and accountants. But data providers do not always know what data the user needs, what data will become not just information for him, but information. Only the knowledge worker himself and only the manager himself are able to turn disparate data into information. And only the knowledge worker himself, and especially the manager, can decide how to organize this information in such a way that it becomes the key to effective action.

To get the information he needs, the manager must first find answers to two sets of questions. What information should I provide to the people I work with and depend on? In what form? And what time?

What information do I personally need? From whom? In what form? And what time?

These two groups of questions are closely related. But at the same time they are quite different. The question "What should I?" comes first, because it forms the paradigm of information exchange. And as long as it is not installed, there will be no backflow of information from employees to the manager.

We have known this since the time when Chester Barnard (1886-1961) published his (still relevant today) book The Functions of the Executive in 1938. Despite the fact that management unanimously admired (and admires) this work, Barnard's ideas are almost never applied in practice. True, Barnard paid little attention to information exchange, referring it to the sphere of human relations and personal life. However, information exchange can be effective in the workplace as well if it concerns subjects that are not related to personal life. Communication should focus on common tasks and common problems, in other words, at work.

Question: "To which employee should I provide information so that he can do his job?" - determines the focus of information exchange on general tasks and general work. This makes the exchange more efficient. Therefore, here (as in any case, when we want to make the relationship effective) we cannot start with the question: "What do I need and what do I want?" The first questions should be phrased as follows: "What should I do for others?" and "Who are these others?" Only after receiving answers to them, you can ask the following: "What information do I need? From whom? In what form? At what time?"

As a manager ponders these questions, he will quickly find that his company's information system does not provide much information. Some information comes from the accounting department, but in most cases, in order for a manager to use it in his work, it must be rethought, presented in a different form and expressed in other indicators. Most of the information that a manager needs to work comes, as already mentioned, from the external environment. This information should be organized separately and supplied independently of the internal information system.

To the question: "What information should I provide? To whom? In what form?" - only the person who will receive this information can give an answer. Therefore, if a manager wants to have the information necessary to fulfill the tasks facing him, he must first of all turn to the employees with whom he works, whom he depends on, in general to everyone who, by the nature of their work, needs to have the most complete information. But before you ask, you need to prepare yourself for the fact that you will have to answer the questions of the opposite side. For the one to whom the leader addresses his questions can - and should - in turn ask: "What information do you need from me?" Therefore, the manager should first think over the answers to both questions, and then ask the employees with the question: "What information should I provide you?"

Both questions: "What should I?" and "What do I need?" - are deceptively simple. But anyone who has ever asked them knows that answering them takes a lot of thought, experimentation and hard work. Plus, the answers change frequently. Therefore, these questions should be asked regularly, approximately every one and a half years. In addition, they should be asked at every significant change, for example, when the company’s business theory changes, the nature of the questioner or his position, as well as in the case of a change in the work or positions of those to whom the question is addressed.

If the leader seriously thinks about these questions, then he will soon understand what information he must provide and what information he needs. And then he will be able to start organizing both types of information.

In the classification of costs for management decisions, the key place is occupied by the sign of information materiality, according to which costs are divided into relevant and irrelevant. Relevant information is essential for making a decision, i.e. it contains the data that should be taken into account when preparing information for managers. Irrelevant information includes irrelevant, redundant data. Information for management should contain the necessary, perceived and conscious information necessary for the analysis of specific situations, making it possible integrated assessment the reasons for its occurrence and development, allowing to determine a number of alternative solutions, from which it is realistic (based on a specific situation) to find the optimal management solution.

In the classification of costs for management decisions, the key place is occupied by the attribute materiality of information, according to which the costs are divided by relevant and irrelevant.

Relevant information essential for decision making, i.e. it contains the data that should be taken into account when preparing information for managers. Irrelevant information includes irrelevant, redundant cost and income data. They can lead to two consequences:

making an erroneous decision due to the fact that the information picture describing problem situation on which a decision should be made;
decrease in efficiency and increase in labor intensity of the decision-making process, i.e. distortion of information does not occur, however, the manager receives unnecessary data, which makes it difficult to think about the situation and increase the time to solve it.

First rule of relevance

Information for the manager should provide the right decision ... This is main characteristic the quality of information for the leader.

Let's consider examples of options for preparing information that lead to erroneous decisions.

Example 1. The head of the enterprise decides to discontinue a type of product. What data should he get?

An enterprise for the production of bakery products sells products through an extensive network of trade stalls within the limits of demand for each item. After a sharp increase in the prices of some supplements, the director, based on intuition, suggests that some of the products have become unprofitable. He asks to analyze costs and revenues.

The accountant who was given this assignment provided data on revenue by product for the period and all costs, i.e. he attributed all production and sales costs to product costs in order to calculate the profit for each unit. The results of the calculations showed that the bagels with poppy seeds were sold at a loss, and the manager took them out of production.

However, after this action, the company's profit declined, since the decrease in revenue did not entail a proportional decrease in costs. Some fixed production and sales costs remain the same. In this case, information on the share of the cost of renting trade stalls, the cost of maintaining the truck and the wages of the directorate attributable to bagels appeared irrelevant... Her accountant should not have included in the calculations presented at the director's request.

General indicators are relevant in this situation: variable costs, sales volume (revenue), marginal income.

Unit costs and incomes may be relevant: unit price, unit variable costs per unit, marginal income per unit of output.

The relevance of costs is well traced in the analysis of "past costs" arising from earlier decisions.

Example 2. You dream of a TV with certain characteristics (diagonal, configuration, etc.) and have saved half of the amount for it. On the eve of the anniversary, friends and relatives, knowing about your desire, decided to add the missing amount. They certainly wanted to see TV on your birthday. Searches for the ordered model did not give any results and you gave the go-ahead to purchase an analogue for $ 300. After a short period of time (we abstract from consumer rights), you go into the store and see the TV of your dreams: exactly that diagonal, screen plane, setting! In addition, its cost is lower - 260 USD.

One of your colleagues, having learned about your regrets, offered to buy a TV from you, but the amount he had at his disposal did not exceed $ 240. What is the amount in conventional units is it relevant for making a decision to buy a TV: 40, 60 or 20, or another?

To make a decision about purchasing a new TV set, you should not worry about either 300 USD paid for the purchase, or 40 USD. price differences. They are lost to you. These are the costs of the past, and the past cannot be changed. When making a decision, you should only think about whether it is worth paying $ 20. for the desired characteristics of the TV.

Second rule of relevance

Information for the manager should be presented in an easy-to-read form and should not contain redundant data .

Example 1. The issue of opening a separate subdivision in Rostov is being resolved; it is obvious that additional costs will be incurred. Information will be relevant only about additional costs and income... Sales and cost data for existing subdivisions will be redundant or irrelevant.

Example 2. Increases the relevance of information for management decisions using alternative (contingent) costs... For example, an enterprise has unused steel reserves. At the beginning of the period, their remains amounted to 1,000 units. for 110 rubles. for 1 unit It turned out that there are many uses for steel. The company can sell them for 190 thousand rubles. or 90 rubles. for 1 unit, throw away or produce 2 types of products.

Alternative options are discussed on how to make the most profitable use of stocks of steel castings: to organize the production of products, sell them, throw them away.

Opportunity costs transform the report so that you can immediately see how much more profitable it is to produce a particular product than to sell at the best of the alternative options, or vice versa (Table 1).

Table 1 Data for Decision Making (Using Opportunity Costs)

Calculation algorithm:

the priority direction is discussed based on the development strategy of the enterprise;
the best of the selected options is selected;
taken as contingent costs and entered into the calculation of the profit for the best alternative;
it is calculated how much the discussed option is better (worse) than the alternative.

According to the table, it is more profitable for an enterprise to produce product A from steel than to sell it, for 70 thousand rubles; at the same time, it is more profitable to sell than to produce product B, by 50 thousand rubles.

Thus, the information for management should contain the necessary, perceived and conscious information necessary for the analysis of specific situations, which makes it possible to comprehensively assess the causes of its occurrence and development, allowing to determine a number of alternative solutions, from which it is realistic (based on a specific situation) to find the optimal management solution. ...