STRATEGY EXECUTION MODULE: 3

Using Information for Performance Measurement and Control

-ROBERT SIMONS

Group 3
Ashutosh Chhibber
Bala Bharathy U
Banoth Ravi Kumar
 TOPICS TO BE COVERED

• Use of information in achieving profit goals and strategies

• Information use for monitoring business
• Input, process, and output effective strategy execution
• Information use for different purposes:
• Decision making
• Control
• Signaling
• Education
• And external communication

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 INTRODUCTION

• Information: Communication and reception of intelligence or

knowledge
• Uses:
• Communicate goals effectively
• To make decision
• Plan for future
• Communicate directions effectively
• Problem solving and utilizing opportunities effectively
• Cybernetics: Information + Feedback
• Uses:
• To control animate and inanimate systems, including biological, mechanical, electrical,
and organizational systems

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 INFORMATION FLOW FOR EFFECTIVE MANAGEMENT

Board of Directors And Share Holders

Information about
strategies and
economic pay-offs

Top Management

Information Information
Information
about progress about emerging
Information about
in achieving threats and
about intended
intended opportunities
strategic strategies
strategies
domain and plans

Lower Organizational Level

Fig. Information Needs of Top Managers In Achieving Profit Goals and Strategies

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 THREE CHOICES FOR PERFORMANCE MEASUREMENT AND CONTROL

1. Trade offs inherent in choosing to measure either organizational

inputs, processes, or output as defined by the organizational
process model
2. Implications in choosing to use management information for either
decision making, control, or learning
3. Conflicts in the use of this management information for achieving
profit goals and strategies

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 ORGANIZATION PROCESS MODEL

Input Process Output

Fig. Input - Process - Output Model

• Inputs: Information, material, energy, labor, and supporting staff

• Process: Consumes inputs to create or sustain something of value
• Outputs: Intermediate or final product or services
• Examples :
• A Clerk At Boston Retail
• An Automobile Assembly Line
• A Division Manager

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 ORGANIZATION PROCESS

• Manager responsibilities:
1. Inputs are appropriate to task at hand and adequate quality and quantity
2. Efficient transformation process
3. Output meets specification
• Cybernetic feedback model
standard

Inputs Process Outputs

Feedback
Fig. Cybernetic Feedback Model
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 THE CHOICE OF WHAT TO CONTROL

Inputs and Process or Output

4 criteria to make the above choice:

Technical feasibility of Monitoring and Measurement

Understanding of Cause and Effect

Cost

Desired Level of Innovation

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 TECHNICAL FEASIBILITY OF MONITORING AND MEASUREMENT
A manager can choose to monitor process directly only if it is possible to observe production or
service processes in action

Assembly Line Workers Mid-Level Managers

McDonald’s Service Standards Accountant
Sales Clerk in a fashion retail store

A manager can choose to monitor outcomes only if it is possible to measure production or

service outputs accurately

Sales People Research Scientists

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 UNDERSTANDING OF CAUSE AND EFFECT

If the cause and effect relationship between the transformation process and desired outcomes
cannot be understood, monitoring processes is not feasible as the primary means of control

Illustrated examples:

Sales People
Parts-assembly Operation

Other Examples: Research Scientist, Software

Programmer, Architect or Orchestra Leader

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 COST
Cost has two components:
• The Cost of Generating and Processing Information
• Lost opportunities or damages resulting from not generating information

All things being equal, managers will choose to monitor outputs to conserve their time and attention

Illustrated Example: Sales Manager monitoring his Sales Representatives

Whenever safety or quality is an important criterion of effectiveness, managers will choose to

gather information about, and monitor the transformation process directly

Illustrated Example: Space X

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 DESIRED LEVEL OF INNOVATION

If managers desire to limit innovation, they will choose to control processes carefully by
standardizing work procedures

Managers would want to limit innovation because of reasons related to quality, efficiency, safety

Quality:
Employees may introduce poor quality inputs or services may not be of desired level
Example: Burger King

Efficiency:
Example: A large semi-automated manufacturing plant
It is not optimal to have assembly line employees tinkering with parts of production
line as it decreases efficiency and pace of production

Safety:
When safety is critical to success and costs of failure are high
Example: SpaceX, Nuclear Reactor

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 DESIRED LEVEL OF INNOVATION

For maximum innovation, managers focus on monitoring outputs

• A fast moving and competitive market

• Employees are needed to create values
• Tailored services for specific customers

Rare Case When All Else Fails

• Ill-defined outputs or at remote locations
• Poorly understood and unobservable processes

Illustrated Example: Forest rangers, Expatriate managers of large MNCs

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 BIG DATA
Information has become easier and cheaper to collect
More sophisticated computer programs to analyse the data
Different from traditional analytics because of high volume, velocity and variety of information

5 Uses of Information
Decision Processes

Control

Signalling

Education and Learning

External Communication

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 THANK YOU

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