Go Beyond Numbers To Gain Key Insights

Published in: Print Profit, Fall 2005

To find the kind of in-depth knowledge today's graphic communications companies need to position themselves more effectively — and more profitably — they must look beyond their financial statements.

While timely and accurate financial information can provide valuable insights into how a business is performing, such quantitative information in and of itself is not sufficient for today's increasingly complex graphic communications companies.

To be successful in today's highly competitive business environment, a company must determine if and how it needs to change its business model to respond effectively to changing market dynamics. This requires complementing quantitative financial information with strategic and tactical information and communicating it throughout the company.

ASSETS

The Human Factor

Managers "must look beyond the bricks and mortar, the equipment, and even the cash that traditionally constitute balance sheet assets and focus on the undisclosed assets that produce the greatest value" for stake holders in the company, advise the editors of Finance for Managers.

"In most cases, those assets are the people who create the bonds between the enterprise and its customers, who create innovations that people are eager to pay for, and who know how to get others to work productively," they add, noting that the accounting profession is beginning to debate including these intangible assets in financial statements.

Strategic information includes the answers to the following key questions about organizational objectives:

  • Where are we going as an organization?
  • What are we working to accomplish?
  • What customer markets and accounts are we targeting?
  • What are our customers choosing us as their supplier vs. the competition?

Tactical information that every employee should have and understand thoroughly includes:

  • What's most important about the job I'm working on?
  • Who is the new employee and what is his role in the company?
  • What customers are visiting our company this week and why?
  • How is the company performing?

Better Decisions

Making sure employees receive these kinds of strategic and tactical information — and soliciting their input — can go a long way to enhancing each person's contribution to the overall company mission by providing them with clear answers to these questions:

  • What is the company's strategic direction and what has to change to help us get there?
  • How am I expected to contribute to attaining these goals?
  • Where are areas for improvement?

Establishing regular communication among managers and between employees and management can give a company the kind of strategic information it needs to make better business decisions. Some effective approaches for gathering this information include:

  • Department reviews. Each department should regularly review its performance and identify areas that need improvement, soliciting cooperation from other departments when required, and offering everyone in the department an opportunity to provide input.
  • Company reviews. An in-depth review of financial and customer performance by the senior management team (perhaps with the participation of department managers) conducted monthly, or at least quarterly, can help a company track progress and identify problem areas.
  • Weekly senior management luncheon. Choosing an offsite location for this kind of unstructured meeting can help put managers more at ease, eventually eliciting valuable insights that may not have come to the fore front in the regular office environment.
  • Weekly or biweekly letter from the president to all employees. Employees appreciate receiving information about important company issues from the senior person in the organization.

Finding effective ways to communicate key information through the company and elicit valuable feedback is an essential part of continuously improving organizational performance and, as such, should be a priority for senior management.