Reflections on Module 5

Reflections on Module 5 Concepts.

Why is it important to understand the factors that impact cash flow?

It is important to understand the factors that impact cash flow because each decision may have an impact on the P&L. Understanding costs of materials, profit margins, operating income, net profit, assets, liabilities, gross profit, revenues and expenses are equally important. Leaders, especially in the launch phase, must have a clear direction on strategic imperatives. A great way to measure daily activity is the development of a balanced scorecard for managers to guide daily activities. These elements are measurable and directly related to the strategic direction of the company. Each action/decision can have a positive or negative affect on the financials. The more informed an organization is on financials the probability of better decision making will occur. The more benchmarks and comparisons that are reviewed, the better managers can navigate to strategic success.

How can the factors vary based on the waves of change?

The scorecard elements may change based on what stage of the business lifecycle they are in. Launch phase business scorecard elements may be focused on growth, advertising and growing market share. Conversely as a product matures, the scorecard may change to retention and new market development activities. Either way, scorecards that analayze and measure progress towards strategis goals are critical for leadership.

Does a leader’s lens perspective impact the benchmarks he or she identifies as critical for his or her organization and/or the analysis of such benchmarks? Explain.

Absolutely. For example, a leader’s perspective may be focused solely on financials in a given company. This is great, but, there are more areas of a scorecard to analyze. Areas such as internal processes, employee training, employee satisfaction, external customer related perspectives such as customer satisfaction and loyalty, and learning initiatives. Each area contributes to the overall success of a company.

Many organizations that use the balanced scorecard approach require different people within different functional areas as well as different levels of the organization to complete a balanced scorecard evaluation. Why would it be important to obtain different evaluations? Would you recommend this approach? Why or why not?

It is important to include as many different levels and perspectives when developing a scorecard. The more ways a company can compare and review benchmarked activities, the more likely performance will be enhanced. Operating without some sort of balanced scorecard would be similar to driving a car blindfolded. A scorecard provides a balanced method for managers and leaders to identify critical strategic success factors and measure activities over time. Benchmarking and milestone planning plays an important role in the success of the organization within the scorecard element.