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The new New Economy Analyst Report - Jan 26, 2002

Juergen Daum’s new New Economy Best Practice service

©2002 Juergen Daum. All rights reserved.

 

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Corporate Performance Management: Managing profitability and growth in the new environment

News categories: the New Economy Economics, enterprise and business strategy, Strategic Enterprise Management, Information Technology


by Juergen H. Daum 
 

 

 

Table of content:

Required: A new approach to Corporate Performance Management
The role of strategy
Every new economic era requires a new accounting and management system
A new management system for the 21st century
Managing Strategy and Corporate Performance
Managing Operational Processes
Performance Monitoring / The Management Accounting System
Accounting Principles and External Reporting
The Risk Statement
IT support the new concepts – Corporate Performance Management and information systems
Summary
Additional resources (update Jan 2005)

 


 

“Fixed budgets don’t work today. A budget is a too static instrument and locks managers into the past - into something they thought last year that it was right. To be effective in a global economy with rapidly shifting market conditions and quick and nimble competitors, organization have to be able to adapt constantly their priorities and have to put their resources where they can create most value for customers and shareholders. In order to do that, they need the right concepts, management processes and tools – concepts such as the Beyond Budgeting Management Model. The introduction of new management instruments such as the Balanced Scorecard, which help to better align the entire organization with corporate strategic objectives and to focus it on the essentials, has created the right foundation. Because if corporate strategy and the objectives are clear for all people in an organization, one can principally react faster to changing market conditions.  But then the fixed budget comes into their way and prevents them from really doing the right things. Though what is often missing is a more flexible operational planning and control model. The Beyond Budgeting model wants to fill exactly this gap.”   
   
                                                 Juergen H. Daum
 


New! - visit J.H.D.'s Beyond Budgeting Info Center 
- including latest BB insight materials, interviews with BB pioneers etc. - here an extract:

| J.D.'s insight article "Beyond Budgeting" | Interview with Lennart Francke, CFO of Svenska Handelsbanken | Panel Discussion with Borealis, Nestlé, and Unilever | Interview with Jeremy Hope – co-founder of the Beyond Budgeting Round Table | Interview with J.D. on finance and IT


 

Required: A new approach to Corporate Performance Management

We are today somehow at an inflection point in enterprise management. That is because the knowledge based new economy has changed the economics of the business enterprise: value drivers and value creating activities have shifted from the tangible to the intangible. Physical production capabilities have become a commodity – systematic product and business innovation and external relationship building with customers and business partners are some of the new value creating activities in which successful enterprises are engaged today. Therefore, the capability of an organization for speed in changing things and delivering results – whether it is time-to-market for new products and services or for a new strategy, or in the area of operational process improvements, became a critical success factor. This requires companies to conceive, implement and use new techniques in general management that will enable them to manage for sustainable profitability and growth and to drive innovation on all levels at the same time. Unfortunately, the known and usual management techniques originated from the industrial manufacturing enterprise and are therefore not appropriate anymore.

Take for example strategy management. Strategy is playing an even more important role in the new economy - but in a transformed way compared to as it used to be in the industrial era, where strategy work was more isolated from operations. In the old days it was much clearer, how an asset creates value – e.g. how a machinery contributed in a specific way to produce a specific kind of product (at specific costs) that was sold for a predefined price. Today it is harder, to establish that link when it comes to intangible assets. Today it exists not any more a direct one-to-one relationship between an assets, an intangible asset, like the knowledge of a worker, and a financial outcome. It can not be shown, that if a company sends employees to training programs for a month, that sales will go up or costs will go down. Instead management has to make the case that training will improve something like quality, and if quality will improve, customer confidence will improve, and if customer confidence improves, then they will buy more. The nature of an intangible asset is that companies have to describe, how they will combine their intangibles in a unique way in order to create value and they have to describe the steps that are involved in that value creation process. And that is how for example David Norton, from the Balanced Scorecard Collaborative, has characterized what strategy is (see my interview with him in the new New Economy Analyst Report from July 18, 2001. Describing this more complex value creation process is an important step forward. But describing things does not mean, that they will happen – especially in a highly dynamic environment, which requires constant adaption to changes and external influences, about which management has no control. The old model of strategic enterprise management, where a new strategy is decided in the board room and then executed through the hierarchy by “passing on the order and the message” does not work out anymore in a world, where hierarchies are outdated and changes on the “battle field”, in the market, happen so fast, that a strategy has to be constantly adapted during execution to be successful and to show results. But may be business managers can learn here something from the military.

 

The role of strategy

War is the oldest form of competition between human organizations; business is a relative newcomer. There were no large business organizations until a couple of centuries ago. But humans have been fighting wars for millennia, and war has driven the evolution of techniques for organizing, supplying, leading, and motivating large numbers of people. And it is no wonder, that many invention in business management have their roots in military planning like for example the technique of scenario planning, described in one of my earlier reports (see the new New Economy Analyst Report from Sept 08, 2001). It is not the question of becoming more martial in business, instead to learn from military thinkers how they approached complex organizational and people problems in a highly competitive environment and to translate these techniques into the business world.

Carl Phillip Gottlieb von Clausewitz (1780 – 1831) was a Prussian soldier and intellectual, who became famous for his book On War (original German title: Vom Kriege) unquestionably the most important single work ever written on the theory of warfare and of strategy. In book III, chapter I of On War he writes about the role of strategy:

“[…] in other words, Strategy forms the plan of the War, and to this end it links together the series of acts which are to lead to the final decision, that, is to say, it makes the plans for the separate campaigns and regulates the combats to be fought in each. As these are all things which to a great extent can only be determined on conjectures some of which turn out incorrect, while a number of other arrangements pertaining to details cannot be made at all beforehand, it follows, as a matter of course, that Strategy must go with the Army to the field in order to arrange particulars on the spot, and to make the modifications in the general plan, which incessantly become necessary in War. Strategy can therefore never take its hand from the work for a moment.”

In short, Clausewitz says that the problem with strategy is, that not everything can be decided in advance, because information and knowledge about the situation, where action and operational decisions are required to execute on strategic objectives, is missing at the time, when a decision on the strategy is made. And this decision may be based on incorrect assumptions and information too, requiring corrections in the execution phase – in the battle field. He therefore states “dass die Strategie mit ins Felde ziehen muss“: strategy must go with the Army to the field.

How does this translate into the world of business ?

Strategy has to become an integral part of the management system of an enterprise. Strategy work can’t be delegated just to the CEO, his executive colleagues and to the strategic planning department that is serving as a staff department to the CEO. Everyone in an organization who makes decisions has to be linked to strategy and into a strategic feedback loop that feeds back important information as fast as possible about what is working and what is not working to those, who have to make or change major strategic decisions. For the management system of the enterprise that means, that strategy has to be linked and integrated with the operational management. Tying strategic planning to performance monitoring and decision support at a tactical level creates a very powerful approach. But this is not all, what companies need to do in order to be successful in the new economy.

 

Every new economic era requires a new accounting and management system

If we look at the economic history, we see that different types of economies required a different type of management system for enterprises. In fact, in the evolution of the business enterprise through the different economic eras every transition to a new phase required also an extension of the management system concept that was in place:

The era of trade: The larger business organization was born in the 15th century when companies like Jakob Fugger & Söhne in Germany emerged as large trading houses. Jakob Fugger & Söhne, the model and dominating enterprise in Germany at this time, was much centred around mining, ore trading and later banking, when Jakob Fugger became the “banker of the pope” and of kings like Maximilian I., king of the German Reich, who was one of the largest debtors of the company. The Fugger company made most of its money through trading on an international level. To manage this larger business, Fugger needed two things: correct recording of business transactions to enable him to control the company’s subsidiaries, which had been located all over Europe (the so called Faktoreien), and an information system which transferred internal and external business information as fast as possible to Augsburg, where the headquarter had been located. Recording of business transactions took place via a new system which was invented in Italy, where Jakob Fugger learned about this new double entry accounting system at the “Fondacio dei tedeci”, the Italian trading center of the Germans in Venice. This was the general ledger accounting system as we still know it today. And the general ledger was the right tool to record the economic activities of a company and their results, when most of the economic value was created through trading – that is, through legally binding transactions of which the accounting system recorded the economic consequences as debit and credit entries. The second element of Jakob Fuggers management system was the so called Fugger Newspaper, printed newsletters which had been send from the subsidiaries to the headquarter on a regular basis to inform “corporate management” about local business activities and their economic results, but also about local economic and political trends.

The era of industrial manufacturing: In the 19th century most economic value started to be created not any more from mining and trading activities but through industrial mass manufacturing. The challenge was to manage the inside of the now complex business organization with its different functional departments and complex production processes. The main task for management was to organize the resources, work and the efforts of employees, workers and of the organization in total in the most effective way. Therefore, in addition to the general ledger, the most important management tool throughout the entire 20s century became cost accounting, which accounted for the internal efforts and resource consumption and made them transparent and manageable. The basic management theorem was that lower costs differentiate businesses and make them compete successfully. In order to keep costs systematically low and also to make the right pricing decisions, management needed more detailed information about costs on a product level. Therefore the general ledger had to be complemented through a very detailed cost accounting system.

The new knowledge and intangibles based economy: The problems involved with these traditional practices of accounting in today’s knowledge-based enterprises are mainly focussed on the fact that today’s decisive value drivers are either insufficiently, or not at all represented in the accounting and management system. In the new economy, where most value is created through a new strategy (that means a unique combination of certain knowledge assets or other winning factors), through product innovation and relationship building with customers and business partners, the traditional accounting approach from the industrial age has to be complemented with additional insights and therefore with new tools. The main reasons are: The traditional cost accountant toolbox is lacking in instruments for the systematic monitoring and optimization of external output factors, for example, network effects, sales partnerships, or user communities. Nowadays, these factors are just as important to the success of an enterprise as managing costs. In addition, to manage successfully product innovation projects in R&D requires more than just cost information. For example, if development projects are managed as pure investment projects with a fixed budget the danger of this is that product development becomes too strongly based upon technology without seizing decisive market opportunities. Often, the most important information needed for successful management is missing: the valuation of the market side, and thus the development risk, but also opportunities that may be missed. And in addition, the traditional accounting system does not record and report any information on successful or unsuccessful execution of a new strategy.

 

A new management system for the 21st century

The most important challenge for enterprises, whose value added is increasingly based on intangible assets and knowledge capital, is to develop the ability to use and expand this intellectual capital to increase value for the enterprise. This requires the use of a suitable management system and supportive management accounting instruments. The main task of this system is firstly to increase the positive effects of the intangible assets belonging to the enterprise. This usually means the systematic triggering and retention of growth (such as by effective monitoring of the partner activities) and to quickly recognize and overcome growth restrictions, for example, through a institutionalised strategy management process. Secondly, the efficiency of the operational processes must continually be increased, and their risks minimized. The latter also applies to strategic (long-term) risks, such as the risk of following the wrong market trends.

 

The key to this is the availability of the corresponding objective information on the process and market status of the enterprise activities and the existence of methods and processes that enable a fast and efficient information exchange between the managers in the enterprise. This is to ensure that the information is put to its best use, which is enabled by the implementation of suitable management processes. Both management processes and management accounting or monitoring systems provide the basis for the management system. It institutionalises decisions on strategy adjustment, but also on the enterprise activities and resource allocation in the management processes. This should enable the enterprise to continually control and optimise its short and long-term success in a dynamically changing enterprise environment.

 

 

 

Managing Strategy and Corporate Performance

 

The strategy must show how the enterprise wants to create value for its shareholders and stakeholders, and which assets and in which combination it wants to do this. This requires the use of a strategic management system, which makes strategy work a continuous process rather than a one off, and establishes a continuous strategic dialog in the enterprise. This is because one of the main characteristics of intangible assets is that their value is normally far more dependent on external factors, such as for example market perception, than is the case with the value of physical assets. In addition, external factors are not under the full control of management. Unique competitive positions in the market based on intangible assets can only be retained or even expanded if the enterprise is always one step ahead in this kind of external development, and has already adapted its own strategy before a change occurs. In the strategy planning process as a subprocess of strategy management, methods such as scenario planning are used (for identifying and managing long-term strategic risks), real option valuation (for managing larger project and investment risks), and system thinking (for identifying growth restrictions in the system). The strategy management process has to be enhanced through a structured and well organized external communication process with shareholders and other stakeholders, that helps to engage them for the enterprise (sometimes also called value reporting).

 

In addition, a performance management process that is integrated with the strategy management process is required. This is needed to provide more control over the continual conflicts between short-term and long-term performance, which typically increases with the portion of intangible assets in the enterprise. The aim of the performance management process is to optimize the enterprise activities and resources with regard to the short-term profit targets (for example, communicated annual turnover and profit targets) across functions, geography and lines of business. The aim of the strategy management process is to create and expand long-term options that add value. In other words, the performance management process optimizes the use of existing assets with regards to short-term profit targets, and the strategy management process accelerates the creation of such assets (always relative to the market). Since both processes require different methods and a different mental attitude, but are normally processed by the same management team, it would make sense to separate the resulting tasks. This could be done, for example, by holding performance review meetings for both tasks separately but at regular intervals (see figure 1).

 

Figure 1: The integrated process of strategy and performance management

 

 

 

Managing Operational Processes

 

In conceiving the management system of the new economy, all activities that add value in today's enterprises must be taken into account accordingly. We therefore first have to investigate which processes create value in today’s enterprises and we have to adapt and extend the traditional enterprise operations model.

 

Therefore to this traditional operations model, which consists of production and sales processes, one important adding value process has to be added first: a process which is often called product lifecycle management. Its task is to manage investments in product development so that value is increased. But also the sales process must be expanded so that it becomes a process for a comprehensive customer relationship management, that is able to create long term value through a loyal and profitable customer base. In order to do that, the companies have to invest in extending their fulfillment processes from a solely internally managed and optimized production process to an integrated collaborative supply chain management processes, that integrates all activities across the supply chain in a way, so that customers can be served faster, with better quality and at lower costs. To enable companies, to acquire, develop and retain the critical resources that have become important and often scarce success factors for the new operational processes, so called support processes need to be established that look after and manage these important basis resources of today’s enterprises. This applies in particular to the acquisition, development and retention of suitable human capital or also of alliance partners, the acquisition and exploitation of Intellectual Property internally and through for example third party licenses, the provision and expansion of suitable information technology and an information and knowledge base in the enterprise, as well as an efficient management of the financial resources, and of the financial supply chain (see figure 2).

 

Figure 2: Operational Value Added Processes in the Enterprise based on Intangible Assets

 

This generic model needs to be adapted to the enterprise for which a new management system should be conceived. Also a systematic procedure needs to be devised for the way in which the management of these operational processes is to be integrated into the main process of the operational management (the performance management process) and which check points need to be defined between the different management processes.

 

A method for this could be the concept of the so called Management Cockpit, a kind of corporate war room, where the walls depict in ergonomically designed graphics the most relevant performance indicators. It could serve as the link between corporate performance management (represented through the so called “Black Wall” which displays the main indicators) and operational performance management of internally orientated processes and resources (the „Blue Wall“: internal processes and resources) und externally related processes („Red Wall“: markets and customers) – see figure 3.

 


Figure 3:  The Management Cockpit – a corporate war room for efficient management team meetings

 

 

Performance Monitoring / The Management Accounting System

It is the task of the performance monitoring / management accounting system to provide managers with the status of all value adding processes.

 

So the new management accounting system should, for example, provide a complete picture of the product innovation process, from the discovery to the development phase and finally to the commercialization phase. If this is done comprehensively, management not only receives information on the efficiency of the product development (project progress vs. resource usage) but also on the effectiveness (development of possible future market shares and revenues). This, for example, enables the enterprise to continuously optimize its product development portfolio, so that it can minimize the risks and make better use of available market opportunities.

 

The same applies to customer relationship management, in which significant value is either created or destroyed in enterprises today. Not only does the management require information on (short-term) sales and profitability, but more importantly, also on the development of the long-term customer value (customer lifetime value). This is the only way to identify the potential in the existing customer base and in new market segments as a means of optimizing the customer portfolio and creating a long-term, profitable customer base that can also be used for marketing future products. Also information on the efficiency of the supply chain management or the fulfillment system has to be included. As a process secondary to the customer-related business processes, value is created in supply chain management from delivery liability, flexibility (for example, being able to quickly reconfigure the supply chain network when customer demand is changing), and efficiency (low costs, low capital tie-up).

 

In addition, other indicators should be able to report on the status and the productivity of the most important enterprise resources that are critical for the value creation processes, for example, human capital, information technology, intellectual property and financial capital. As well as providing this operational information (aimed at the operational value creation system of the enterprise), the management accounting system should always be able to report on information about the overall performance (profit & loss, sales revenues, ROI) across functions and about the status of the implementation of the currently valid enterprise strategy.

 

Thus, the new management system should provide a holistic view on all activities of the enterprise, that generate value or are critical for value creation. It therefore has to include a monitoring system based on key figures, which reports on all the relevant operational value adding processes and the implementation of the enterprise strategy and the current overall performance. Using it, management can gain an insight into the overall situation and quickly make decisions accordingly. Figure 4 shows the “Tableau de Board” developed by Juergen Daum, which is based on the principles of the French concept with the same name. This provides information on the overall performance of the enterprise and the status of the most important value adding processes.

 

 

Figure 4: The Tableau de Bord is the key figure system for controlling the entire enterprise and the main value adding processes. It Integrates the Balanced Scorecard concept for strategy and general performance management, the Value Chain Scoreboard approach from Baruch Lev for managing the product and market development process, with modern operations and resource management concepts.

 

 

Accounting Principles and External Reporting

A key figure based performance monitoring system that represents the value adding processes of an enterprise is the first step towards the support of the new management system. However, this alone is not sufficient. For example, to be able to report on the returns on an investment in the creation of intangible assets, which is forming very often the basis of today’s value creation processes for example in product development and customer relationship building, these investments also need to be treated as investments in financial accounting. For reasons of consistency and practicability, this should also take place in financial accounting and not as an additional calculation.

 

However, a change in the official accounting rules, which would be necessary for a broad adoption of this approach, has not yet happened, although some activities are already underway in this direction. For example, the FASB (Financials Accounting Standards Board) and the SEC (Securities and Exchange Commission) in the USA are working intensively on this matter. Harvey L. Pitt, the new SEC Chairman, presented his view in a speech at October 22, 2001, and said that public disclosure of companies has to move from a periodic approach to “current” disclosure (new technology, such as XBRL may be helpful here) and that accounting has to provide a more realistic view on corporate performance by for example including more information about intangibles.  In Europe, the European Commission is conducting research programs on this subject, and in Denmark, enterprises that have significant intangibles will, in the future, be obliged to submit a "supplementary intellectual capital statement" with their financial figures. There are already definite suggestions as to how intangible assets can be recognized in accounting as assets without neglecting the required caution in the disclosure of the balance sheets. Baruch Lev, Professor of Accounting and Finance at the New York University Stern School of Business, suggests that investment in research and development should be capitalized once the probability of the success can be proven to have significantly increased, e.g. by means of a successful clinical trial (pharmaceuticals) or a successful beta test (software). The capitalized investments should then be periodically appraised by the management and either retained in the original value approach or, if the outlook has worsened, the values be adjusted. This procedure would provide investors with a more realistic view on a company, that disposes of major intangibles.

 

A taskforce of the American SEC has examined how external reporting can be improved with regards to intangible assets. The taskforce recommends that enterprises should use a "supplement report" to make a structured report on the value adding process and the development of intangible assets, as well as their normal financial statements (see the taskforce’s report). A forerunner of this method is the Swedish financial service provider Skandia. This was no doubt the first enterprise that submitted this type of supplement report as a supplement to the 1997 annual report. The figures section of this report was called the "navigator", since it was designed to enable investors to establish the actual value of the enterprise, including the intangible assets, called intellectual capital by Skandia (see Skandia’s navigator for 1998). This method has the advantage that the reporting does not require adjustment within the accounting system, and is thus generally regarded as being a good interim solution.

 

The Risk Statement

Since the risk related to investment in intangible assets is greater than that in fixed assets, but at the same time, the ratio of this investment to overall investments is continuously increasing, the subject of risk management is likely to become more important in corporate management and reporting. The KonTraG law in Germany, which requires company to establish procedures that help to discover and manage large corporate risks, is already looking in this direction. In the same way that enterprises might, in the future, measure and report on their performance in the most important value adding processes by using a key figure system, the risks in each area should also be reported by using a key figure system. The approach whereby an enterprise concentrates on the value adding processes, described for the design of a performance monitoring system, is also suitable for this. This is because this value adding processes represent exactly the areas where the operational risk in an enterprise lies. Strategic risks must be determined and valuated using other methods, such as the scenario planning approach already mentioned. Both of these could represent the content of a risk report or risk statement, providing information on the operational risks by using a key figure report, and on the strategic risks by using the description of future scenarios and their possible consequences. It is conceivable that this type of structured and formalized risk statement could become a normal part of the financial statements of a corporation, like the balance sheet, income statement and cash flow statement.

 

 

IT support the new concepts – Corporate Performance Management and information systems

In today’s complex business organizations and their dynamic environment such a new management system can be brought to life only with the massive support of information technology. Many executives have dreamt for years to have the information available at their fingertips they need, to run their companies. A lot of money has been invested in the last couple of years in new software systems to enable companies to manage their business better, increase customer service and reduce costs. But these software systems, called Enterprise Resource Systems (ERP) were developed to automate and integrate business functions on a operational or transactional level and were focusing only on internal processes. What is missing, are information systems and integrated software applications, that help to manage not operational processes but corporate performance and strategic management processes across functions, geography, lines of business and across the entire ecosystem. Faced with this situation, enterprises are now looking beyond ERP and other transactional applications for solutions that will help them to manage their business more effectively.

Corporate performance management systems are a new breed of application that totally integrate the management planning and control process. They allow organizations to link strategies to operational plans and budgets, support continuous monitoring and plan adjustments, and ensure that everybody involved in the decision-making process to have the most up-to-date information and analyses at their fingertips (such as SAP’s Strategic Enterprise Management and Business Analytics software suite). But Corporate Performance Management (CPM) is not just a software based approach. CPM is used to describe the methodologies, metrics, processes and systems used to monitor and manage the business performance of an enterprise. Although many enterprises use elements of CPM today, few do this already in an integrated and consistent way across all levels of the enterprise. But the ones which are able to integrate their management processes from the strategic to the operational level and vice versa, will be not only able to faster react to changes in their business environment and to execute strategies more successfully, they also will be able to make a quantum leap in operational efficiency and reduce significantly costs. So companies will move forward in the next couple of years in investing in such new systems and management processes. A key enabling concept for it is the one of a corporate business intelligence competence center which will be operated by a Chief Value Officer (CVO). The task of the corporate business intelligence competence center is to provide support for managers in understanding the economics of the business, of new business problems, and for strategic planning and other management processes that require in-depth economic knowledge. It consolidates the competencies in the enterprise on economics, controlling and management systems and related IT know-how in one shared services center. Services provided by the business intelligence competence center, which is a kind of a back-office for all kind of managers, will include the collection and editing of relevant unstructured internal and external business information and the supply of business management self services through user profile specific web portals for different type of managers, financial analysts and investors (see figure 5). It creates the foundation for the management innovation center, a new concept for the former corporate center, that will be described in one of the next new New Economy Analyst Reports.

Figure 4: The corporate business intelligence competence center is the cornerstone of the new corporate performance management concept

 

 

Summary

 

We are today somehow at an inclination point in enterprise management which requires companies to conceive, implement and use new techniques in general management that will keep them in business in the future and enable them to manage for sustainable profitability and growth in an environment, that is totally different from the one, where most of our management techniques of today originated: from the industrial manufacturing enterprise. The concept for a management system for the new economy has to be enhanced in two major ways compared to the traditional approach: First it has to capture and report information about all value adding tasks in and outside modern enterprises (which includes product innovation, strategy work and external relationship building). Second it has to integrate more tightly strategic planning and strategic management processes with operational management on in day-to-day activities: Strategy must go with the Army to the field – how Clausewitz has written it nearly 200 years ago. New management processes, measurement systems but also software applications play a key role in bringing the new corporate performance management system to life. It will be exciting in the near future to see, how the concept will evolve.

 


Managing Intangible Assets


“The importance of intangible assets, the immaterial value of companies such as relationships with business partners, brand awareness and new business ideas, but also know-how, corporate culture, and the ability to innovate, has greatly increased in the last two decades. One clear indication of the trend is that the portion of a company’s total market value that exceeds its book value has increased from 40 percent of in the early 1980s to over 80 percent at the end of the 1990s. Unfortunately traditional accounting and management instruments are not able to capture these new values and report on them. But what you can’t measure, you cannot manage ! At the beginning of the 20th century, industrial mass production served as the motor to generate value; this required more complex cost accounting, beyond the abilities of previous accounting practices, to enable management to control and optimize these new value creation processes. In the same way, we must now expand accounting, controlling- and management systems to a new level, to enable companies to optimize, manage and report on today’s new value creating activities and processes”.


                                                                                    Juergen H. Daum

 

visit: Intangible Assets and Value Creation (J.H.D.s thoughtleading book)  
J.D.'s Insights Article "Value Drivers Intangible Assets" | Interview with J.D. on Intangibles | A European Peer Discussion…| Intangible Assets and Intellectual Capital Management | Interview with David Norton | Interview with Leif Edvinsson | Interview with Baruch Lev |  

 


 

 

Additional resources:

Juergen Daum’s Beyond Budgeting Information Center  New!

Interview with Jeremy Hope (co-founder of the BBRT): 
The Origins of Beyond Budgeting and of the Beyond Budgeting Round Table (BBRT)
  

Enterprise Management, Leadership and Business Control for Value Creation
- presentation from Juergen H. Daum, held at the Executive Briefing on Performance Measurement of the Centre for 
Business Performance, Cranfield School of Management, 27 January 2004 in London, UK 
program of the briefing

Beyond Budgeting on the move: report from the First Annual Beyond Budgeting Summit in London, 1-2 July 2003

Enterprise Management in the 21st Century - A Blueprint for a New Approachand the role of Information Systems  Presentation held by Juergen Daum at the BBRT member's meeting, 26 June 2003 in Walldorf/Germany, and held as well at the First Annual Beyond Budgeting Summit, 2nd July 2003 in London/UK program of the summit         

Interview with Lennart Francke, CFO, Svenska Handelsbanken, Stockholm:
Managing without budgets at Svenska Handelsbanken

Successful Enterpirse Management through Employee Empowerment and Financial Efficiency:
"
Beyond Budgeting"
(
Presentation of Juergen H. Daum prepared for the SAP Human Resources und Financials Congress, December 2002, in Karlsruhe/Germany) deutsche Version

Performance Management and Business Controlling in the 21st Century (Presentation held by Juergen Daum at SAP's European mySAP Financials Conference, June 2002, Strassbourg / France) deutsche Version

Presentations held by Juergen H. Daum at the Beyond Budgeting Round Table member's meetings:
- Dec 07, 2000, London/UK:
Strategic Enterprise Management 
- May 16, 2002, London/UK: Information System Requirements for Performance Management Beyond Budgeting 

Approaching the next level of shareholder value management - basics (part 1) – article by Juergen Daum

Approaching the next level of shareholder value management – the art of corporate performance management (part 2) – article by Juergen Daum

New Accounting for A New Economy (an article from Prof. Baruch Lev)

Speech of Harvey L. Pitt, the former U.S. SEC Chairman, about the requirements for a new financial reporting model at October 22, 2001

A Guideline For Intellectual Capital Statements (Result of a research program of the Danish Agency for Trade and Industry where 17 Danish companies have contributed)

 

Intangible Assets: The Art of Creating Value - in an interview with sapinfo.net Jürgen H. Daum explains the limitations of our traditional management tools in our economies of today and why an overhaul is necessary

 

Juergen Daum's Beyond Budgeting Information Center - the knowledge economy of today requires companies to find a new approach to operational enterprise management and control beyond the inflexible budgeting and a command and control model

Intangible Assets and Value Creation (Wiley, 2002) – a book by Juergen Daum, focusing on a new enterprise model and on the new management system “beyond budgeting” for the new knowledge and intangible assets based economy of today, comprising many examples and case studies. It describes the new environment and its consequences for businesses, the rules that can be extracted from this understanding for the design of a new management system, and it develops a framework for a new management system and describes its elements, as well as how a company can set it up and bring it to live.
   More about this book…

Value Drivers Intangible Assets – Do we need a new approach to accounting, controlling and management systems ? – article by Juergen Daum

 

Business Management in the new, New  Economy - How to exploit Intangible Assets to Create Value (Presentation held by Juergen Daum at SAP's European mySAP Financials Conference, June 2001, Basel / Switzerland) 

Strategic Enterprise Management - Translating Strategy into Action: The Balanced Scorecard (SAP White Paper)

Challenges in Implementing Value Based Management - Panel Discussion at the SAP Strategic Enterprise Management Conference, September 1998, Strasbourg / France

 

 

Previous new New Economy Analyst reports related to the topic of the new performance management system (updated Jan. 2005):

Dec 29, 2004 - Interview with Patrick M. Georges: How can executives improve their personal productivity?

 

Sept 30, 2004 - The Management Cockpit “War Room” at Iglo-Ola (Unilever Belgium): An Interview with Iglo-Ola’s Financial Controller Ghislain Malcorps 


Aug 05, 2004 - Vector-Based Performance Measurement: Linking the Subjective and Objective Dimension into One System of Performance Measurement

 

Mai 02, 2004 - Panel discussion: Beyond Budgeting – breaking free from the annual fixed budget

 

Jan 10, 2004 - Interview with Jeremy Hope: The Origins of Beyond Budgeting and of the Beyond Budgeting Round Table (BBRT)

 

July 04, 2003 - Beyond Budgeting on the move: report from the First Annual Beyond Budgeting Summit in London

 

Febr 24, 2003 - Interview with Lennart Francke: Managing without budgets at Svenska Handelsbanken

 

January 15, 2003 - Why companies need new management systems to achieve sustained profitability - especially in difficult economic times

 

December 28, 2002 - Approaching the next level of shareholder value management – the art of corporate performance management (part 2) 

December 20, 2002 - “Intangibel Assets and Value Creation” – English version of Juergen H. Daum’s book is now available!

 

November 30, 2002 – A European Peer Discussion: “Measuring and Managing Intangible Values in Today’s Economy”

 

September 22, 2002 – The book of the month: “Building Public Trust: The Future of Corporate Reporting” by Samuel A. DiPiazza Jr. and Robert G. Eccles

 

August 03, 2002 – Approaching the next level of shareholder value management – basics (part 1)

 

June 11, 2002 – Intangible Assets: a central topic at the mySAP Financials conference in Strasbourg 

June 08, 2002 –  Performance Management Beyond Budgeting: Why you should consider it, How it works, and Who should contribute to make it happen

March 06, 2002 – Interview with Baruch Lev: Accounting, Reporting and Intangible

Dec 28, 2001 - How to create value with Real Options based innovation management

Nov 27, 2001 - Leveraging e-Business Opportunities for Finance – Q&A with Juergen Daum

Nov 13, 2001 - Interview with Leif Edvinsson: Intellectual Capital: the new wealth of corporations

Nov 10, 2001 - The new FASB rules for reporting on Intangible Asset - The U.S. versus the European way

Oct 30, 2001 - The book of the month: “Intangibles: Management, Measurement, and Reporting” by Baruch Lev

Oct 06, 2001 - How Systems Thinking / Systems Dynamics helps to identify limits to growth to boost innovation value

Sept 08, 2001 - How scenario planning can significantly reduce strategic risks and boost value in the innovation chain

July 26, 2001 - How accounting gets more radical in measuring what really matters to investors

July 18, 2001 - Interview with David P. Norton: "Intangible Assets and the Balanced Scorecard" 

July 06, 2001 - Today’s #1 management challenge: How to better exploit intangible assets to create value 

June 14, 2001 – The book of the month (May / June): “The Value Reporting Revolution” by Robert G. Eccles, et al.

May 22, 2001 - Beyond Budgeting: How to become an adaptive sense-and-respond organization

May 12, 2001 - A revolution in stakeholder oriented corporate disclosure – case study: The Shell Report

March 28, 2001 – The book of the month: “The Innovator’s Dilemma” by Clayton M. Christensen

Febr 26, 2001 -  eXtensible Business Reporting Language (XBRL) is moving forward

Dec 09, 2000 – The Book of the Month: “The Strategy-Focused Organization” by Robert Kaplan and David Norton

Nov 01, 2000: The Book of the Month: “Meta-Capitalism” by Grady Means and David Schneider

Oct 16, 2000: Dynamic revenue management: a major building block of wealth creation in the new economy

Oct 03; 2000: The book of the month: “Future Wealth” by Stan Davis and Christopher Meyer

More about Enterprise Management Best Practice and related topics will be continued here in the new New Economy Analyst reports. To subscribe for Juergen Daum’s free-of-charge e-mail newsletter (a regular summary of the recent reports) click here

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