Performance of company reflects preparedness of board

12 April 2018 Consultancy.uk

Boards face an ever-expanding agenda as consumer preferences change and disruptive models arise. Being prepared and preparing for succession for the role is correlated with performance boosts to company financial performance, according to a new study.

Boards are said to play important roles in the supervision of their business, reportedly spending 27% of their time providing guidance in areas of strategy accounts, followed by performance management (20%) and organisational structure, culture and talent management (13%). However, the impact of boards on the concrete financial performance of a business remains opaque.

New analysis from McKinsey & Company from a survey of 1,100 board members, shows the importance of the board, however, as technologies and market conditions disrupt businesses. Keeping on top of changes is increasingly difficult, while board remits are increasing as digitalisation, information management issues  (particularly privacy concerns) and cybersecurity take hold in different industries.

Top efforts

When it comes to performance, a number of indicators are implicated in stronger performances. Long-term planning for succession saw a 16-point difference in financial outperformance when comparing those that say their boards have the practice in place compared to those that do not (61% and 45% respectively).

Induction of new members at a sufficient level to be effective in the role, was noted as contributing to a difference in outperformance of 13%, while board members’ collective skills and backgrounds being appropriate for organisation’s needs, was cited as garnering a 14% outperformance premium between companies that had such practices.

Nine potential business disruptions

A number of areas of concern for businesses are likely to arise – with some likely to be mutually exclusive. Changing customer behaviour and preference now tops the list of topics on boards’ current agendas, up from 57% two years ago. Disruptive business models have jumped from 42% two years ago to 57%, while digitalisation was up by 11 percentage points to 52% in the latest survey.

Changes

Disruptive changes are increasingly difficult to manage in as regulatory changes are likely – with rules like the GDPR and follow-ups, in light of industry abuses coming to light – likely to impact potentially hyped business models and revenue streams that may no longer permitted or deemed too risky in the near future. Political risks are meanwhile up five points to 42% of respondents, while cybersecurity has climbed 11 percentage points to 37% of total respondents.

Board understanding of business disruption

When it comes to the understanding of potential business disruption, variability was noted. 68% of boards said that they have somewhat or very good understanding of the impact of disruption from changing customer behaviour or preferences for their business, while those with a somewhat poor understanding stood at 9%.

Respondents are less confident regarding regulatory changes, with 59% citing at least  a somewhat good understanding of the impact of the possible disruption on their business. Political risks took third place. Digitalisation and disruptive business models were noted as areas in which there is less understanding overall – although most said that they are at least somewhat in the know.

The authors conclude, “No company is fully immune to the effects of cybersecurity, digitisation, and geopolitical risks, so these topics should be on every board’s agenda. Because companies’ businesses evolve and potential disruptions can arise at any time, it is important that boards maintain flexible agendas rather than become prisoners of their annual schedules.”

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How First Consulting generates more insight using fewer reports

08 March 2019 Consultancy.uk

Organisations are continuously investing in more advanced data collection and manipulation methods to enable smarter and more informed business decisions. In order to maximise their business value, companies understand the growing need for performance related insights from their data. First Consulting, a consultancy firm specialised in business change, has helped many clients in the utilities sector to deliver effective change through improved use of their data.

Most utilities firms are structured in such a way that every business unit has a team of analysts who are responsible for providing relevant data insights to their business colleagues. The business analysis teams form the link between business decision making and IT by translating business requests into meaningful actions and delivering information via reports.

Typically, the business user will receive a unique report for each information request, with each new report requiring individual, tailored support from the analyst team. This limits the productivity of the analyst teams and minimises their ability to address new data requests. The growing demand for information puts additional pressure on these teams, as a significant amount of time is required simply to gather and update the required data. This has caused reporting portfolios to expand dramatically. However, due to the analysts’ already stretched capacity, reports do not always deliver the most vital information and documentation is often incomplete.

Redesigning information delivery

At First Consulting, business consultants work in close collaboration with their clients to improve the mechanism for the delivery of information and analysis in response to business requests. The improved structure focuses on providing information per role type, rather than per request. As such, one dashboard is designed for each organisational role type, with all the relevant information presented in a single overview. This allows all individuals of a given role type to open a single dashboard and view what they need, as opposed to collating a large range of disparate links and unique reports which, previously, were all required to enable business decision making.

Moving from unique reports for each request, to reusing KPIs in a select group of dashboards

By implementing this new way of working, clients are able to reduce the reporting portfolio from over 100 reports to fewer than 20 dashboards (see figure above). In addition, the capacity for data maintenance can be reduced significantly by using modular KPIs, allowing for the re-use of data across multiple dashboards.

Changing while everyday work continues

In order to deliver effective change, it is essential that day-to-day processes remain unaffected whilst transitioning to a new reporting landscape. First Consulting achieves this by embedding business consultants within the client’s analysis team to gain feedback and determine exactly what visuals are necessary within the dashboards. This focuses effort on the outcome (such as what should be presented in the final dashboard) and allows a broad range of requirements to be considered in the business context and combined, where appropriate.

Key users and stakeholders are involved from the outset to help define what makes a high-quality dashboard. Adopting this approach helps the team to produce an optimal output that contains the key business information for the appropriate roles in an easy-to-use format.

Once it is clear what should be included in the final dashboard and how this should be presented, the team works according to the priorities set out by the product owner. This ensures that analysts work on the requirements which deliver the most value and which form the most coherent dashboards.

Main results

The advantages of implementing straightforward, no-nonsense solutions using fewer reports are particularly noticeable for the business and for the analyst teams:

  • Making adjustments is easier and maintaining and updating data costs less time
  • Management information is displayed in one location and is displayed according to defined standards, facilitating decision making
  • There is greater capacity within the business for complex analysis and project support

First Consulting combines process, technology, and implementation consulting to deliver impactful and value-adding solutions. The firm has more than 200 consultants based in the UK and the Netherlands.