Weasel Words - designing a Business Performance Management system
posted 13.10.09 by Damon Hurst
"Weasel words" is a term attributed to US President Theodore Roosevelt in 1916 to describe words and phrases that create an illusion of clear, direct communication. Global internet information giant Wikipedia says "if a statement can't stand without weasel words, it lacks a Neutral Point Of View", the latter being one of their core content policies.
In Australia, Don Watson, a former speech writer for prime minister Paul Keating, penned Death Sentence: The Decay of Public Language (2003), a book which is both cutting and hilarious. The follow-up best seller, Dictionary of Weasel Words: Contemporary Cliches, Cant and Management Jargon (2004) lead to the creation of weaselwords.com.au and the birth of a modern word-watch phenomenon. His just-released book Bendable Learnings: The Wisdom Of Modern Management (2009) no doubt has management practitioners across the spectrum grimacing.
In this context, I want to explain the common ground and differences between the oft-used terms Business Performance Management, Business Performance Measurement and Business Intelligence systems. Why do I consider these terms important? And why bother explaining them? Because the primary goal when defining strategy is to ensure it's alive within the business, not trapped in a document and weighed down by management speak, and understanding the interdependence of these terms is, I think, crucial.
"Performance Management" can best be described as a system that measures both behavior and results. It's a simple definition, the success of which is dependent on the "measurement" system that underpins it and how reliable the "intelligence" is that comes from it.
Developing such a system requires four distinct phases, each with unique characteristics. From the bottom up, these are as follows:
- Financial budgeting
Characteristics:
- Budgeting one year ahead, based on the same business model, bench-marked to prior year.
- Financial budgeting only, often only focused on profit or rudimentary cashflow.
- Forecast planning
Characteristics:
- Financial budgeting greater than one year.
- Integrated Balance Sheet, Cashflow and Profit & Loss analysis.
- Competing capital expenditure (CAPEX) requirements across the business.
- Real world won't behave as forecast, leading to:
- trend analysis,
- regression modeling, and
- simulation modeling.
- Realisation that charting the future isn't possible, and that highlighting key issues for management is key, thereby maximising opportunities and minimising risks.
- Process leads to a portfolio analysis of business unit performance and gateway analysis of CAPEX based on concepts such as Economic Value Added (EVA), underpinned by Weighted Average Cost of Capital (WACC).
- Externally orientated planning
Characteristics:
- Starting to define the business in terms of sustainable value proposition in relation to:
- customers,
- suppliers,
- competitors, and
- substitute products & services.
- Shifting the business capabilities to be:
- more attractive to customers,
- better than competitors, and
- focused on continuous improvement, not static ideals.
- Surprise strategies - even the competition hasn't thought it through.
- Top-level managers freed up to make top-level decisions.
- Management accountability is measured across both performance and behavior.
- Starting to define the business in terms of sustainable value proposition in relation to:
- Strategic management
Characterised by the seamless melding of strategic ideas into measureable goals and everyday management practices - a Business Performance Management system.
The modern world is increasingly complex, yet we demand ever simpler solutions. The answer is flexibility achieved via deeper connections in your supply chain - digital solutions that will generate more unambiguous, real-time data. In turn, creating time for management to focus on trends, emerging opportunities and finding ways to bring meaning to the workplace - without the weasel words.