Management Reporting that Drives Innovation and Entrepreneurship. IPA NSW Conference Presentation on how Management Reporting can be a catalyst for innovation.

1. Management Reporting Driving
Innovation & Entrepreneurship
Chris Catto
Putney Breeze Business Advisors
Fit For The Future Conference
19 March 2015
Sydney Harbour Marriot Hotel
Circular Quay
30 Pitt Street

3. Does the Business know how you are
positioned enable innovation and
entrepreneurship?

4. Perceptions – The Face Value

5. UnknownKnown
What you Know you
Know!
What you Know you
don’t know!
What you Know and
you don’t know how
you know it!
What you don’t know
you don’t know!!
Denning & Kruger effect
Known
Unknown

6. What is innovation and how does innovation
happen?
Innovation is the introduction of something new or
different. The act of innovation is the introduction of
new things and new methods.
Macquarie Dictionary
1) Dissatisfaction with the status quo
2) Inspiration from other sources
3) Invention
4) Internal and External validation
http://sloanreview.mit.edu/article/how-management-innovation-happens/

7. 1) Dissatisfaction with the status quo
TPS, Target Costing, Jidoka, Kaizen, Lean

8. 2) Inspiration from other sources
Sir James
Dyson
3) Invention !
4) Internal and External validation

9. What is Entrepreneurship?
Someone who organises and manages
any enterprise, especially one that
involves considerable risk; an employer
of productive labour Macquarie Dictionary

10. • Desire
• Belief
• Life Experiences
• Imagination
• Planning for the purpose of action
• Decision making mastery
• Persistence
• Influencing the subconscious mind (trust)
Problem solving and engaging others to action accordingly
Think and Grow Rich – Napoleon Hill
Entrepreneurial Mind Set

11. Great Innovative and Entrepreneurial Organisations
create new needs through innovative products!
– Motor Car
– Walkman
– Cyclone Vacuum Cleaner
– iPad
Great Innovative and Entrepreneurial
Organisations

12. Where is CPM and management
reporting heading?
1) Office-of-finance CPM — largely involves the
improvement of financial processes
2) Strategic CPM — supports organization wide
transformation and growth

13. Strategic CPM — supports organization
wide transformation and growth
How do you leverage Management Reporting to;
1) Highlight dissatisfaction with the status quo
2) Act as a catalyst to see inspiration from other sources
3) Advance those who organise an enterprise that involves
risk and employs productive labour
What is your Entrepreneurial Value; what is your product
or service that facilitates organisation wide
transformation and growth?

14. Communicate
the Problem
Highlight the
destination
Communicate
the Solution
Provide the
path to the
Solution
Implement
and solve the
Problem
Where are we now? The Responsibility
holders problems and challenges and
fears.
Where we need and can be.
The benefits of alternative
scenario. Clarity in
information, improved
communications, aligned
goals, improved decision
making , higher personal
esteem amongst peers
Outline the benefits of a
driver based budget and
forecasts for decision insights,
forward planning and
managing communications
with key stakeholders
Provide a budgeting and
forecasting process that
enhances decision insights,
forward planning and
communications with key
stakeholders
Enhanced
Budget &
Forecast Buy
in and
collaboration
Budgets and business influencing
a framework

15. It begins with Trust!
The framework provides a starting point from which the end goal can be achieve
through a logical sequence of action.
However to engage your internal stake holders, your clientele, the establishment of both
perceived and real goal congruence will be a critical factor.
• Do you understand the key motivators of your clientele (internal)
• How are they rewarded?
• What are their measures of success?
• What are their short term goals?
Have you asked the question? Or have you made assumptions?
By asking the right questions you begin the process of establishing goal congruence
Is a framework enough?

16. • Enhance interdepartmental understanding
through transparency
• Friend v Foe - moving from gate keeper to
solution provider
• Alignment of Culture and common goals.
• Underpinned by consistent delivery of
reporting, commentary and insights
Ultimately delivering actionable information in
the appropriate context to facilitate the goal
achievement of your clientele.
Every Month End, Business Case and Tender
evaluation, Finance project provides and
opportunity to build trust. The establishment of
consistent service provides a platform from
which to enhance engagement in the budget
and forecasting process
Leveraging Goal Congruency

17. Enhanced Budget and Forecast
engagement
underpinned by Singular objective
Facilitate Goal
Congruence
Deliver
Consistency in
Service
Build Trust
Enhance
Budget and
Forecast
Engagement
facilitate organisation wide transformation and growth
Align Culture

18. Case - Kyocera Amoeba Management
Drill Down
0.0
50.0
100.0
150.0
200.0
250.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Profit from operations
Profit from operations
（Unit: Billions of yen）
Founded by Kazuo Inamori
Kyocera has never recorded a loss in 54 years of
operations
► Amoeba Management
Accounting Philosophy
► Business Units Fiscally
independent, self contained
and aligned with overall
corporate goals
► A principle of Cash basis
management
► Monthly Profit management
focused on forward activity
► Key measures at Business Unit
Level - Hourly Efficiency System

19. Case - Kyocera Amoeba Management
Drill Down
Facilitate Goal
Congruence
Deliver
Consistency in
Service
Align Culture
All business units “Amoebas” focus on improving
the “Effective Hourly Rate” measure as the all
encompassing measure of progress. Transparent
calculation and collective understanding of
implications.
Philosophy - Segregates company into
autonomous self managed “Amoebas” who
operate on a share philosophy of continuous
improvement challenging the status quo in
competitive environment, underpinned by “Good
citizen” culture
Forward focused reporting that facilitates action
plans for the week/month ahead on requirements
to return to goals or embed advantages . Reporting
underlined by collective problem solving outcomes

20. Facilitate Goal
Congruence
Budget - “The Fiscal Year Master Plan”
- A summary of objectives for the entire company
- Management objectives are represented as goals in clear
numbers for each Amoeba unit (Sales, net Production,
and Hourly efficiency )
- Amoeba leaders are left to create their own master plan
on how the objectives will be reached.
Monthly Reporting
- Forward looking, focused on action planning for only the
immediate month ahead
- Clear link between activity and financial numbers must be
made.
- Monthly plan must make reference to annual plan goals.
Adapted from Kazuo Inamori – Amoeba Management: The Dynamic Management system for Rapid Market
Response
Case - Kyocera Amoeba Management
Deep Dive – Budgeting and Reporting
Principles

21. “a lot of the time, people don’t know
what they want until you show it to
them”
Steve Jobs