Performance Dialogue using CXO Cockpit

1. Ask the right questions!
Conducting a performance dialogue using CXO Cockpit
Patrick Tullemans
October 2017

2. “We spend too much effort on answers instead of the questions we should be
asking to understand and drive business performance”
Google’s CEO Eric Schmidt:
“We run the company by questions, not by answers. So in the strategy process we've so far
formulated 30 questions that we have to answer […] You ask it as a question, rather than a
pithy answer, and that stimulates conversation. Out of the conversation comes innovation.
Innovation is not something that I just wake up one day and say 'I want to innovate.’
I think you get a better innovative culture if you ask it as a question.”

3. What do you want to take away from a performance dialogue?
• What an entity is actively doing to meet business objectives
• Why the numbers move one way or another
• Backward looking
• What happened: material variances in performance
• Why it happened: root causes of variances (backward looking)
• Forward looking
• Risks and opportunities,
• Assumptions regarding how business drivers evolve
• Corrective measures
• To improve the situation
• Including where or from whom we need help
3
“You should never stop asking questions.”

4. The performance dialogue is structured around 4 Key Performance Questions
(KPQs)
4
Data Insight
Information Knowledge
Actions Decisions
1. Did we do what we said?
2. Are plans realistic?
3. Are plans enough?
4. What are gap closing actions?

5. A Key Performance Question (KPQ) articulates what managers must know
to drive business performance
• KPQs focus attention on topics during the review of current and future performance
• KPQs guide collection and presentation of management information and narratives.
Strategic Objective
Strategic Objective
KPQ
KPQ
KPI
KPI
KPI
KPI

6. It takes 7 steps to attune your dashboards to KPQs using CXO Cockpit
1. Audience
2. Strategic
Objectives
3. Review and
communication
4. KPQs5. KPIs
6. Data
7. Dashboarding

7. 1. Did we do what we said?
Report: Trend in Forecast accuracy
Comments and narratives:
 Looking at forecast bias trends, which product group/country tends to systematically over-sell or under-sell?
 Which SKU’s systematically show the highest bias levels for key account in country XYZ?
 What are the root causes of major variance within the short to long term forecast?
 To what extend are these root causes impacting future performance and what does it mean for the outlook?
 What changes or corrective actions have we executed which were agreed during the previous review cycle?

8. 2. Are plans realistic?
Report: Revenue in current month and last month forecast
Comments and narratives
• What are the main changes in your outlook (CMF) compared to previous period (LMF)?
• Which assumptions to the budget and strategic are still valid?
• What are you actively doing to make these assumptions to RE real?
• What are the key risks and opportunities to the plan (CMF)?
• To what extend does the revenue forecast consistently reflect market size and market share development?

9. 3. Are plans enough?
Report: Crawl chart of Revenue in current month forecast versus target/budget versus last year
Comments and narratives:
• What are the gaps against forecast and budget that I have and what are the options to fix the gap?
• What are we specifically doing to ensure we deliver on target? Which corrective actions are already included in the forecast?
• Which opportunities are there to bring our plan back on track and would require executive approval?
• What is the value and return on these opportunities?

10. In short
• Management reports often lack a clear
understanding what an entity is actively doing
to meet business objectives
• A dialogue enforcing 2-way communication
can be structured around KPQs
• Your dashboards can be attuned to KPQs
using CXO Cockpit
10
Want to know more?
Finext Performance Management
Patrick Tullemans, Senior Consultant
patrick.tullemans@finext.nl
+31 6 8366 9742