The Perendie platform ® gives leaders greater control over and influence on the organisation, combines top-down leadership with bottom-up implementation and central control with local devolution, combines meritocracy with democracy, enables leaders to lead, staff to feel more fulfilled, and customers to be better served, increases employee motivation and productivity, helps people journey from the present to the future, and moves the organisation on from where it is.
- establishing a clear vision
- sharing that vision with others so that they will follow willingly
- providing the information, knowledge and methods to realise that vision
- co-ordinating and balancing the conflicting interests of all members and stakeholders.
- What will the world be like in future, in general?
- What will the consequences of this scenario be for the organisation?
- How should the organisation prepare for this world?
- Does the company have potential for sustained growth?
- Does management have the ability to exploit this potential and control the company through the growth phases?
- Does the possible reward justify the risk?
- Is this company a more or less attractive opportunity than others we are considering?
- Integration – everything the acquired organisation needs to do and employ to deliver its required outcomes, at all levels, is linked
- Predictability – the causes of success are identified, and the probability of the required outcomes being delivered is objectively predicted, mitigating risk
- Transparency – anyone internally and externally can see what the acquired organisation intends to employ, do and deliver, and the progress being made and expected
- stick to what they know
- encourage a common philosophy of shared business goals and quality standards
- communicate the objectives and results throughout their organisation
- concentrate their management information systems on what is critical to success
- build their team
- anticipate problems
- keep their investors, bankers and advisers fully informed
- explicit and implicit contracts between the company and the stakeholders for distribution of responsibilities, rights, and rewards
- procedures for reconciling the sometimes conflicting interests of stakeholders in accordance with their duties, privileges, and roles
- procedures for proper supervision, control, and information-flows to serve as a system of checks-and-balances.
- provides current, complete, essential, transparent, predictive and actionable board information
- predicts delivery, allocates accountability, mitigates risk, encourages responsible
behaviour, builds trust, and creates sustainable organisations
- increases the effectiveness and reduces the cost of governance, reporting and audit.
- integrates ERM with other management processes and the outcomes the organisation has said it needs
- devolves risk management responsibility throughout the organisation
- predicts the probability of mitigating the organisation’s risks.
- Leadership and governance
- Values and behaviours
- Business models and financial soundness
- Risk management and control
- Evidence on audit quality, including from the FRC’s annual programme of audit quality reviews.”
- providing leaders with a fast and efficient way of communicating their strategy, engaging people in its implementation, and assuring compliance with it
- increasing the visibility of peoples’ behaviour and performance and explicitly, objectively and transparently linking remuneration to the delivery of outcomes
- creating a completely integrated business model covering every aspect of the business
- predicting the probability of failure in time to take corrective action, and incorporating risk management into the business model
- facilitating audit quality review by providing a single joined-up view of everything an organisation is aiming and likely to achieve, do and employ.
- links every outcome, activity and resource in a dynamic network, improving governance and increasing connectivity
- integrates all management processes into a single process and platform, facilitating leadership and reducing cost
- encourages people to challenge current deliverables, ways of working, initiatives and resource allocations, simplifying processes and removing bureaucracy
- shows what everyone’s doing and what’s likely to happen, motivating performance and preventing problems
- lets people apply for any opportunity to contribute, fulfilling aspirations and increasing productivity
- creates self-managing teams, providing a hierarchy bypass, empowering people and releasing managers to be producers.
- They don’t help you to rethink your cost structure – they reduce costs within the existing structure.
- They don’t tell you which cost reduction strategy should be applied to which area of the business and when.
- They don’t tell you why you’re spending what you’re spending on what.
- They threaten product / service quality.
- They don’t deliver value for money and the outcomes you need to deliver.
- They potentially deprive strategy of the resources required for implementation.
- They don’t make optimum use of resources.
- Rethink your cost structure.
- Find out which cost reduction strategy should be applied to which area of the business and when.
- Discover why you’re spending what you’re spending on what.
- Increase product / service quality.
- Deliver value for money and the outcomes you need to deliver.
- Align resources with the strategy.
- Make optimum use of resources.
- Future-proof the council
- Define the required outcomes and their relationships
- Define measures and set bases and targets
- Assess risks and allocate rewards at the corporate level
- Think ahead systematically
- Clarify the strategy
- Release innovation and flexibility
- Make procurement encourage instead of inhibiting innovation
- Encourage self-fulfilment
- Work less, achieve more
- Cross organisational boundaries
- Walk the talk
- Rather than trying to improve the present (where you don’t want to be), it starts from the future (where you want to be), challenging the present
- It systematically aligns IT requirements with business outcomes, engaging stakeholders, and encouraging radical thinking about what IT can and needs to be deployed
- Reduce the number of committees, meetings, emails, reports and other time-consuming means of communication
- Halve the time, effort, cost, complexity, bureaucracy and uncertainty of management, make management simpler, faster, more flexible, cheaper and more effective, and lighten the management workload
- Increase the time available for revenue-generating work by reducing the time spent on non-revenue-generating activities such as corporate governance, risk management, business planning, job specification, job evaluation, budgeting, procurement, resource allocation, programme management, training, performance appraisal, performance management, remuneration, information technology management, knowledge management, internal communication, auditing and corporate reporting
- De-clutter your working life
- Reduce information overload
- Let you know what’s going on
- Enable and increase collaboration by showing immediately who else is working on the same outcome as you, or any outcome.
- Allow you to see all the required outcomes and apply to help to deliver any of them
- Provide early warning of risks and threats to a project or outcome
- Let you know at all times whether your outcomes are likely to be delivered
- Show the reward or bonus which will accrue on delivery of an outcome
- Objectively measure the delivery of outcomes
- Reward you for what you produce rather than through subjective assessments, the resource you manage or the hours you work.
Leadership is the action of leading a group of people or an organisation. Leadership involves:
A leader steps up in times of crisis, and is able to think and act creatively in difficult situations.
An organisation’s processes and systems are based on historical requirements. Requirements change but the organisation’s processes and systems change more slowly and reactively. Consequently there is always a time lag, often long, between the changed requirements and what is done to meet them. Attempting to improve what exists and how things currently work means continually playing catch-up. Furthermore, change of what exists is always incremental, never transformational, because the complexity and proximity of what is happening now removes perspective and inhibits imagination of what could be.
It is impossible to predict the future fully, and the satisfaction of today’s demands has to take precedence. The pressures of the competitive environment mean that often we are reactionary, responding to the symptoms of a problem rather than an underlying cause The situation is exacerbated in a volatile and threatening environment. Despite the difficulty, such an environment requires an attempt to anticipate the opportunities and threats which will appear in future because cost-cutting is an unsustainable response.
Most organisations have given thought to the future, but sometimes this thinking is vague and has little effect on operations or behaviours. Other organisations are content with continual improvement, or with repeating tomorrow what they did yesterday. A few, such as Alphabet, Amazon and Apple, make tomorrow come today. More organisations could emulate these companies by taking time to think about the future and their place in it.
The biggest dangers to an organisation are the ones they don’t see coming. Understanding these threats – and anticipating opportunities – requires peripheral vision. The Scanning the periphery questionnaire helps an organisation’s leaders to assess their ability and propensity to think beyond current organisational and temporal boundaries.
Future-proofing then improves peripheral vision by answering the questions:
from the perspectives of the natural and economic environment, the customer segments and value propositions, the core business processes and value chain, and the learning and growth enablers.
We call the answers to these questions a Future-Proofing Benchmark because they are a way of comparing an organisation with what it needs to become, instead of comparing itself with the present situation.
The more specific an organisation’s definition of its future, the more likely it is to realise it.
Strategic outcomes are derived from the Benchmark, and displayed in a strategy & risk map.
A strategy map tells you what you need to produce to achieve your mission. It distils strategy documents into a single slide, increasing the probability of its execution. Everyone is invited to suggest improvements to the map, which engages people with it.
It’s also a risk map because it shows the outcomes which would threaten that achievement if they weren’t delivered.
An outcome is the result and benefit of achieving an objective, a desired future state, what an organisation wants to achieve. Outcomes are persistent long-term and independent of organisational structure; objectives are temporary short-term and specific to a particular organisational structure.
Outcomes are used in strategy mapping rather than objectives because they focus people on the future rather than the present. They help people to imagine they’ve achieved what they want to achieve and to visual the steps they took to do so. This is psychologically more powerful than aiming forward into the unknown.
Another reason for using outcomes is that they are persistent, unlike objectives which tend to change annually.
The Perendie platform ® helps organisations define the desired outcomes, the activities required to deliver the outcomes and the facilities, skills, information and money required to carry out these activities. It makes the causal relationships between the outcomes, the dependencies between the activities, and the connections between the resources explicit. It defines predictor and achievement measures of the outcomes and assesses the key risks to them.
This process stimulates innovative and objective thinking about what needs to be done and employed. It provides a way of predicting delivery, because it explicitly defines the causes of success. It facilitates risk management since the prior knowledge of the consequences of their actions gives people confidence to act and time to put things right before the opportunity passes or the budget has been spent.
The business model provides leaders with a fast and efficient way of communicating their strategy. Successive levels of the organisation are invited to say what they will contribute to the delivery of the strategic outcomes, what they will need to do to achieve the outcomes they have therefore committed to deliver, and what resources they therefore will need to employ.
The platform lets anyone contribute to the outcomes the organisation needs, increasing diversity and productivity. It identifies people who can’t contribute to the organisation’s future, saving money. It motivates and enables people to cooperate and deliver their outcomes by showing what everyone’s doing and what’s likely to happen. Doing so executes the strategy.
This approach gives the whole workforce the chance to fulfil their potential, a ladder they can climb and a career they can develop; and creates one team, overcoming divisions. It also leads people to challenge their current deliverables, ways of working and resourcing, stimulating innovation and reducing cost.
The platform helps people to challenge current deliverables, ways of working and resourcing, stimulating innovation and reducing cost.
When complete, the platform provides a single joined-up view of everything required. To avoid ambiguity, each outcome has only one achievement measure and one predictor indicator, and the key risk.
Anyone can see what everyone intends to employ, do and deliver, and their progress, increasing the visibility of their own and others’ behaviour and performance, and motivating delivery.
Traditional organisational hierarchies separate people, but productivity requires peple to collaborate and co-operate across organisational boundaries.
People are used to being organised by skill – accounting, human resource management, production, sales, marketing, etc. – and those in charge of these silos cherish the power they bring.
The Perendie platform ® provides a means of maximising collaboration and co-operation whilst leaving the existing organisational structure in place. It creates value-adding, self-governing, self-managing teams with the existing structure.
An organism doesn’t use or need committees, meetings, emails, reports and other inefficient means of communication to achieve its purpose. It communicates invisibly and seamlessly. Perendie uses a unique digital platform to help organisations transform themselves into organisms, automating the automatable aspects of governance, leadership and management, increasing the probability of a strategy’s execution and saving time and money throughout the organisation.
Co-ordinating teams and departments
Just as organisms suffer pain and even death when the parts do not co-operate due to sickness or disease, so organisations suffer inefficiency and loss when teams are misaligned through separation, ignorance or protectionism. The parts of a human, animal or botanical organism work together invisibly through the central nervous system; the Perendie platform does the same for organisations. It weaves together the aims and activities of otherwise disconnected people, teams and departments.
Everything is related
There are relationships between outcomes, risks, performance measures, activities, facilities, finance, customers, staff, society at large and the environment. Ignoring or being ignorant of these relationships will mean that things can’t be joined up and will lead to attempts to do everything at once and to produce things in the wrong order causing over-work, stress, mistakes, inefficiency, rework and failure. Knowing and using relationships is key to success.
Joining things up
There are so many relationships that information technology is needed to manage them. Computers can store massive amounts of information, and are far better at joining things up than people are. Computers are objective, incorruptible, a-political and selfless; and if programmed correctly, infallible. People have a dexterity, flexibility and creativity which computers currently lack. People and computers are both essential to delivery and should be used in ways which exploit their respective strengths.
Anyone including members of the public can look at anything on the platform, suggest improvements, volunteer to produce an outcome and propose changes to activities and facilities, subject to the outcome’s customers’ approval. Allowing anyone to offer to help to deliver any outcome helps to engage everyone in creating the organisation’s future, uses unknown talents and increases productivity. People who are unable to make a contribution are redundant, which reduces the headcount.
Most estimates of a company’s value are based on historical financial results and forecasts. Our human inability to predict the future is the major factor affecting the accuracy of forecasts, but causality can improve the accuracy of these predictions.
Fund managers and the companies analysts are researching want positive research. Since analysts work for fund managers, this can cause over-optimistic valuations.
“Whenever you put out a sell notice you incur the wrath of people who own the stock already as well as the company itself,” says Candace Browning, deputy director of research at Merrill Lynch. Consequently, 55% of research notes advise clients to buy shares and only 8% recommend selling.
Another reason for inaccuracy is the fact that most of the value contained in a company’s market capitalisation cannot be calculated from its physical assets.
Through its identification of the non-financial and intangible drivers of financial success, the Perendie platform ® improves the accuracy of forecasts and valuations.
The Perendie platform ® is a way of increasing the objectivity of acquisition selection and the probability of realising an acquisition’s business plan
Start with the future
The Perendie platform ® evaluates a potential acquisition’s business plan by drawing an integrated picture of its planned outcomes, activities and resources. It also identifies the causes of success, providing a more objective means of answering the following questions:
Commit everyone to their contribution to success
The platform also measurably defines what each set of stakeholders – investors, customers, employees and suppliers – will get out of the transaction and contribute to it. It enables and encourages them to align around the shared objective of a successful venture. The comparison of what could be with what is reveals opportunities to make quick and sustainable increases in productivity and profitability.
The consequences of using the platform
The platform delivers:
These deliverables enable the acquisition’s management team to
Increase the probability of success
The platform does not replace due diligence and financial analysis. However, the additional use of platform before a transaction would help with the identification of potential targets, more effectively coordinate the work of the other advisers, and increase the probability of the shareholders and other stakeholders deriving value from the transaction. In turn, this would increase trust in the company funding the transaction, enhance its reputation, and extend its business development capability.
Secure the benefits
Successive studies of mergers and acquisitions have found that the long-term value added by a deal is less than the value expected, in most cases. The problem usually occurs after the integration of organisational structures and the removal of duplicate functions. Separate cultures, attitudes, behaviours, processes, systems and data survive the structural integration. People remain uncertain about the future of the company and their own jobs. Consequently productivity declines and prevents the realisation of full value.
The Perendie platform ® translates a post-merger vision into what needs to be produced, done and employed to realise the vision. Putting the platform in place before the merging starts gives everyone clarity about the end game and an opportunity to say how they could make it happen, even though some will not be required. It collects and connects every outcome, activity and resource required to achieve the organisation’s purpose, encouraging collaboration across organisational boundaries. It lets anyone contribute to the outcomes the organisation needs, increasing diversity and productivity. It identifies people who can’t contribute to the organisation’s future, saving money. It motivates people to cooperate by showing what everyone’s doing and what’s likely to happen. It challenges current deliverables, ways of working and resourcing, stimulating innovation and reducing cost. It measurably defines the required benefits of a merger and commits everyone from the combining organisations who can contribute to their realisation.
We are here confining governance to corporate governance, which is the action or manner of governing an organisation, particularly a business.
Corporate governance is the framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company's relationship with its all stakeholders (financiers, customers, management, employees, government, and the community).
The corporate governance framework consists of
The Perendie platform ® is a generic unprescriptive system applicable to any sort of organisation. It collects and connects every outcome, activity and resource required to realise an organisation’s outcomes, encouraging collaboration across disciplinary and organisational boundaries. It lets anyone contribute to the outcomes the organisation wants, increasing stakeholder participation and diversity. It encourages ethical behaviour and facilitates audit by showing what everyone’s doing and what’s likely to happen. It explicitly links remuneration to the delivery of outcomes. It motivates people to challenge current deliverables, ways of working and resourcing, stimulating innovation and reducing cost. It enables interested parties to assess the likelihood of the organisation delivering the outcomes it has decided to deliver, and whether directors have performed their duty under section 172 of the Companies Act 2006.
We humans are inherently conservative. Most of us avoid change unless it is clearly in our interests; and most of us resist radical change. Therefore the Perendie platform ® is intended to support the production of board packs, not to replace them. It would be certain to fail if it was aimed higher because directors are not ready to let go of board papers.
The global financial crisis and the disillusion with parliamentary democracy has proved that there is a problem with the way we govern ourselves, as organisations and states, and a need for a radical change to the way we govern ourselves in companies and states. The disconnected, obfuscated and backward-looking governance we have employed to date has consistently failed, from Enron to the global financial crisis. Our leaders’ response has been more of the same; but if you do the same things you get the same response, and flogging a dead horse doesn’t get you anywhere.
National and corporate governance failures continue unabated, proving that existing approaches to governance don’t work, despite incessant tinkering, because they suppose good behaviour, work against psychology, under-use IT, and are elitist, unstrategic, fragmented, ill-informed, reactive and redundant.
There is growing consensus that culture and people are the weak link in governance. However attempts to solve the problem by changing a Board’s composition or increasing regulation fail to tackle the root cause and so the same sort of crises recur.
Perendie’s solution is to use artificial intelligence to automate the automatable aspects of leadership, governance and management. Automation reduces dependence on people and culture, and provides two necessary conditions of effective governance which are missing from current governance, namely transparency and predictability. By transparency we mean every stakeholder being able to see what each stakeholder is producing, doing and employing. By predictability we mean a 5 part mechanism which predicts whether the organisation’s mission is likely to be achieved. Together they influence people to do the right thing and enable them to do business with confidence.
There is so much data and so many relationships (between outcomes, risks, performance measures, activities, facilities, finance, customers, producers, society at large and the environment) that it’s difficult for directors to obtain the information they need to fulfil their statutory duties.
The Perendie platform ® gathers, creates and displays for non-executive directors and others a single picture of everything the organisation is aiming and likely to achieve, do and employ. It provides current, complete, essential, transparent, predictive and actionable board-level information.
By linking and integrating all the causes of success, the platform automatically and objectively determines whether a fact or circumstance would affect the ability of the entity to generate or preserve value in the long term. It also determines the relative importance of the matter to the entity’s development, performance, position or future prospects, and the impact of its activity.
It enables non-executive directors to assess the likelihood of the organisation delivering the outcomes it has decided to deliver and whether directors have performed their duty under section 172 of the Companies Act 2006.
The Perendie platform ® provides an organisation with a comprehensive view of every outcome it needs to prosper in future and the relationships between them, how they should be measured, what risks will prevent their delivery, and what activities and resources are required to deliver them. It automatically shows what everyone’s doing and what’s likely to happen, enabling and motivating people to collaborate, reducing risk through early warning of problems, removing the effort of manual data collection and collation, and providing more current, predictive and integrated reporting than is proposed by < IR >.
By linking and integrating all the causes of success, the Perendie platform ® automatically and objectively determines whether a risk or KPI is relevant, “whether a fact or circumstance would affect the ability of the organisation to generate or preserve value in the long term”, and “the relative importance of a matter to the entity’s development, performance, position or future prospects and the impact of its activity.” The platform measures the outcomes the organisation is seeking to achieve, rather than setting unrelated key performance indicators. It explicitly links remuneration to the delivery of outcomes, and integrates non-financial with financial information. It enables interested parties to assess the likelihood of the organisation delivering the outcomes it has decided to deliver, and whether directors have performed their duty under section 172 of the Companies Act 2006.
The strategy map tells us what we need to produce to achieve our mission. It’s also a risk map because the outcomes would threaten the achievement of the mission if they weren’t delivered.
Risk appetite is determined by the outcomes on the strategy & risk map: the more ambitious the outcomes, the greater the risk appetite.
Risks from the existing risk register are integrated with the outcomes they threaten and those which threaten no outcome at any level are deleted. (We’re using the word risk in the sense of. ‘chance’, and the word threat in the sense of ‘warning’.)
Risk weighting is determined by the corresponding outcome’s position in the outcome hierarchy.
The Perendie platform ® manages risk by identifying the causes and effects of each outcome, the contributory outcomes, the key risk to the outcome, a predictor indicator, and the activities required to mitigate the risk.
The platform requires successive levels of the organisational hierarchy to say how they will contribute to the outcomes the organisation needs and makes the information visible to anyone at the touch of a button. This encourages ethical behaviour and facilitates risk management by showing what everyone’s doing and what’s likely to happen, incidentally making risk management part of everyone’s day job.
The use of causality provides a predictive ERM framework which prevents problems, instead of trying to put things right when they’ve gone wrong.
Existing risk registers are integrated into the platform by assigning risks from the registers to the outcomes they threaten and deleting those which threaten no outcome.
It’s an approach to Enterprise Risk Management which:
The Parliamentary Commission on Banking Standards’ report Changing banking for good says that “audited accounts conspicuously failed accurately to inform their users about the financial condition of banks”.
Parliamentarians and the public expect auditors to prevent disasters like the banking crisis. The many governance failures since the banking crisis may indicate that the expectation is unrealistic even when an audit is carried out correctly because of the way in which audits are carried out.
Although audit has improved since the financial crisis, it is still retrospective, dependent on people behaving properly, subjective and unsystemic. It examines what has happened, and the past is an unreliable guide to the future. It can’t provide assurance.
Even if the expectation is unrealistic, it’s unlikely to change. It’s an opportunity for audit firms because many organisations and people would like auditors to prevent financial disasters.
Influence the future
To move from examining the past to influencing the future, audit would need to change from focussing primarily on finance, the end of the value chain and what has happened, to look also at the root causes of success and what will probably happen. It would need to become predictive.
Make corporate reporting predictive
The digital Perendie platform ® allows and requires successive levels of the organisation to say what outcomes they will contribute to the delivery of the strategic outcomes, what they will need to do to achieve those outcomes, and what resources they therefore need to employ.
Consequently, the platform gradually collects and connects every outcome, activity and resource required to achieve an organisation’s mission. It integrates all the causes of success and leads people to challenge their current deliverables, ways of working and resourcing.
The information on the platform is open to inspection by any stakeholder at the touch of a button, which encourages ethical behaviour, predicts delivery and prevents problems by showing what everyone’s doing and what’s likely to happen, incidentally making audit part of everyone’s day job.
The Perendie platform ® would close the gap between the public expectation that audit should prevent problems and the reality that audit is primarily retrospective.
It automatically and objectively determines whether a fact or circumstance would affect the ability of the entity to generate or preserve value in the long term, the relative importance of a matter to the entity’s development, performance, position or future prospects, and the probable impact of its activity.
The platform enables interested parties to assess the likelihood of an organisation delivering the outcomes it has decided to deliver, and whether directors have performed their duty under section 172 of the Companies Act 2006.
It explicitly and transparently links remuneration to the delivery of outcomes, exposing unfair and excessive remuneration.
It provides, current, transparent and predictive Integrated Reporting.
Supporting data analytics, it pre-determines meaningful patterns in data, providing a business-driven taxonomy to grasp data, make sense of it, make it useful, and view it from a leadership perspective.
Application by auditors
The Perendie platform ® is applicable to any organisation. Its application is a consultancy service which can legitimately be delivered by an organisation’s auditor because the current, complete, transparent and predictive information it provides would improve the quality of the audit. It would also increase the chance of smaller firms obtaining work from large organisations because the platform would simplify and expedite data gathering.
Most people avoid change unless it is clearly in their interests; and even more resist radical change. Therefore the platform is applied gradually, starting with the leaders developing a strategy & risk map to communicate their strategy succinctly and powerfully.
Support the FRC’s five pillars
“The Financial Reporting Council (FRC) has announced plans to enhance its monitoring of the six largest audit firms to avoid systematic deficiencies within firms’ networks, disruption in the provision of statutory audit services and instability in the financial sector.
The FRC will focus its attention on five key pillars that are critical to the stability of the audit firms and quality of audit work. These are:
Objective assessment of the proposed five key pillars would be a significant improvement on the FRC’s current assessments of audit quality which are wholly subjective. Moreover, the skills and technology required to assess the five pillars differ from those of a regulator like the FRC, and their assessment would be useful only if it was objective and systematic. The Perendie platform ® would fill these gaps by:
The Perendie platform ® explicitly and transparently links remuneration to the delivery of outcomes, and measures delivery objectively, valuing everyone for their contribution and reducing opportunities for prejudice and bias.
In corporate environments, people usually earn more or less according to their position in the organisational hierarchy and the number of years they’ve been employed by the organisation. The rewards are a closely-guarded secret which can enable excess and abuse. Perendie’s digital platform reveals the reward dependent on delivery of an outcome, making rewards transparent and visible to everyone. It motivates people to deliver the outcomes they’ve offered to deliver because the delivery of outcomes is objectively measured and rewarded, and their success or failure is visible to everyone, including the public.
The Perendie platform ® motivates ethical behaviour and encourages collaboration across disciplinary and organisational boundaries by displaying everyone’s current and prospective progress towards the delivery of the outcomes they have committed to deliver.
The Perendie platform ® lets anyone contribute to the outcomes that the organisation wants, increasing participation and diversity.
Reorganisation and restructuring are the traditional management technique for bringing about change. However reorganisation de-motivates people, creates more losers than winners, and doesn’t change what people do or how they do it, leading to a reduction in productivity. By definition, organisations divide people. The Perendie platform ® avoids the need for reorganisation and overcomes the ‘silo’ effect of organisation by defining virtual teams and networks. By making these networks explicit, The Perendie platform ® gives them recognition which increases their effectiveness. It allows and requires everyone to state the contribution they will make to the corporate outcomes, and how they will do so. It says how they will be rewarded for their contribution. This aligns everyone and everything around the corporate goals, internally and externally; and encourages joined-up working without changing the traditional functional organisational units.
Culture is difficult to define, and cultural change is difficult to measure. It is useful to start by asking the following questions. Is ethical leadership a sufficient condition of corporate integrity? Do traditional jobs and human-resource led job specifications inhibit corporate integrity? Does integrity require integration? Does talking about culture change it? Is a systemic approach needed to change culture? Does a systemic approach need a platform?
Volunteer instead of being told
The Perendie platform ® provides leaders with a fast and efficient way of communicating their strategy. Successive levels of the organisation are invited to say what they will contribute to the delivery of the strategic outcomes, what they will need to do to achieve the outcomes they have therefore committed to deliver, and what resources they therefore will need to employ.
The platform lets anyone contribute to the outcomes the organisation needs, increasing diversity and productivity. It identifies people who can’t contribute to the organisation’s future, saving money. It motivates and enables people to co-operate and deliver their outcomes by showing what everyone’s doing and what’s likely to happen. Doing so executes the strategy.
This approach gives the whole workforce the chance to fulfil their potential, a ladder they can climb and a career they can develop; it also creates one team, overcoming divisions. It leads people to challenge their current deliverables, ways of working and resourcing, stimulating innovation and reducing cost.
Build a better working world
The Perendie platform ® enables the collaborative, integrated, transparent and predictive world many of us yearn to see.
Management is the organisation and co-ordination of the activities of a business in order to achieve defined objectives.
Management is often included as a factor of production along with machines, materials, and money.
The digital Perendie platform ® increases profit by increasing productivity and reducing cost.
It increases productivity by emancipating people to define their own roles, making rewards dependent on the delivery of objectively and unambiguously measured outcomes, providing predictions of outcome delivery, and displaying all of this information to all stakeholders online.
It reduces cost by inspiring people to stop any current processes and products which don’t deliver the required outcomes, and identifying people and other resources which aren’t contributing to the strategic outcomes.
It is possible to improve services and cut costs simultaneously, but a new approach is required, one which uses a picture of the future to challenge the present, makes the causal path between outcomes and money explicit, and engages everyone in the delivery of the outcomes required.
The Perendie platform ® provides the golden thread which joins everything up.
The Perendie platform ® automates the automatable aspects of corporate governance, risk management, business planning, job specification, job evaluation, budgeting, procurement, resource allocation, programme management, training, performance appraisal, performance management, remuneration, information technology management, knowledge management, internal communication, auditing and corporate reporting.
Consequently, the platform increases the productivity and effectiveness of the Board; the Executive Team; Corporate Governance; Enterprise Risk Management; Business Planning; Job Specification; Job Evaluation; Budgeting; Procurement; Resource Allocation; Programme Management; Performance Appraisal; Performance Management; Remuneration; Information Technology Management; Knowledge Management; Internal Communication; Auditing; and Corporate Reporting.
The business model created in the Perendie platform ® is used as a benchmark to challenge existing deliverables, processes, systems, information skills and behaviours, objectively and systematically. and those which don’t help to deliver the outcomes of the future would be stopped. This removes unnecessary deliverables, stops redundant activities and information, and releases resources to deliver the required outcomes.
The Perendie platform ® gives everyone a radical forward-looking way of challenging and aligning current deliverables, initiatives, ways of working and resourcing, replacing existing management processes and eliminating waste whilst improving quality and stimulating innovation. Instead of automating current processes, effectively pouring electronic concrete around them, the platform makes people ask ‘If we didn’t have the processes we have, how simply could we achieve the outcomes everyone wants?’
The cost structure of an organisation is defined as the distribution of costs among the processes an organisation uses to deliver its products or services. An outcome is defined as the result and benefit of achieving an objective, or a desired future state.
Of the 670 organisations we have researched, few ever rethink their cost structures, though all frequently look for cost reductions. The relationship between money and outcomes is largely unknown, and there is no way of ensuring that money is converted into the desired outcomes. They believe that more money will produce better outcomes – but it won’t because they don’t have a system to turn money into outcomes. They think that reorganisation will reduce cost – but reorganisation de-motivates people, and doesn’t change what they do or how they do it.
So what is to be gained from rethinking cost structures, and what is lost by restricting attention to cost reduction?
Drawbacks to current cost reduction strategies
The conventional approach to cost management is to start with the costs and find ways to prevent or reduce them. Well of course, what else could you do? Seems obvious, doesn’t it?
Current cost reduction strategies include outsourcing, category management, process standardisation, leverage of purchasing power, low cost market procurement and some Internet sales models. These strategies work and are very successful in reducing costs.
However, they have defects in common:
Looking at cost from a different perspective
Here’s a different way to look at it. Instead of letting your cost structure determine your outcomes, let your outcomes determine your cost structure. Instead of starting with cost reduction strategies, start with an outcome delivery strategy. Such an approach lets you have your cake and eat it. You get all the benefits of conventional cost reduction strategies but you also:
Consider an analogy
The Titanic had a double-bottomed hull that was divided into 16 watertight compartments. Because four of these could be flooded without endangering the liner’s buoyancy, it was assumed unsinkable. Shortly before midnight on 14th April 1912, the ship collided with an iceberg; five of its watertight compartments were ruptured, causing the ship to sink at 2:20 AM on 15th April.
What lessons can be applied from the Titanic to rethinking cost structures?
Firstly, take a unified approach. Instead of relying on watertight compartments, treat the organisation as a whole. Instead of operating like a ship, whose purpose is to resist its environment, operate like a fish which lives in and co-operates with its environment.
Secondly, look ahead. The pace of change continually increases and so does the need to rethink cost structures. Thinking ahead to what the future outcomes will and should be gives you the ability to define the required cost structure.
Thirdly, use your picture of the future to challenge assumptions and convention. Starting with outcomes gives you a cost structure from which to challenge existing practices, procedures, processes, programmes and even products.
Former GE chief Jack Welch called the budget “the bane of corporate America”. For most organisations, the annual budget process is a painful, distracting exercise that consumes an enormous amount of time and energy and quickly becomes outdated.
The financial budget is a way of allocating financial resources and controlling their use – functions that it performs with some effectiveness.
Critics of traditional budgeting argue that it’s slow, cumbersome, expensive and hinders effective management during rapid change. Operation of the current budgeting process sometimes requires the persuasive powers of Attila the Hun!
The fixed-period of the budget inhibits organisations from adjusting priorities as conditions change. Innovation and competitors do not work to an exact calendar year. Also the budget year often does not necessarily coincide with the business cycle of the organisation. Consequently, most budgets are misaligned with the outside world from the outset.
Another problem with traditional methods of budgeting is that they are protracted, involving preparation by many departments, followed by collation and review by senior management before final approval. This increases the gap between the budget and ever-changing market and regulatory environments.
Most financial and performance management systems are designed around the annual budget, focusing attention on short-term finances only. While this is a necessary part of management, it’s not enough. To survive, the organisation also needs to change itself for the future.
Once the budget is approved, the organisation works within its confines, reconciling results to the original flawed numbers. Budget increases are hard to achieve. Thus the budget reduces the organisation’s ability to adapt to changing conditions.
Since few organisations systematically derive their budgets from the outcomes they need to achieve, budgets can only be based on the previous year’s budget, increased for inflation. Consequently, there is no way of challenging budgets logically.
Doing the same things takes the same resource, regardless of management dictates. Prescribing budget cuts harms outcomes and reduces productivity. The key to efficiency gains is doing things more simply.
With conventional budgeting, evaluation of the cost of support services such as Finance, HR and IT requires benchmarking but, at best, this only makes your support services as cheap as your peers’ – it doesn’t align these services with the required outcomes.
Usually budgets are produced by individual departments in isolation. However outcomes – for example, innovative products and satisfied customers – are hardly ever produced by a single department alone, creating a mismatch between resources and outcomes.
Most budgets are formed bottom-up. The lowest level organisational units are asked to submit their estimates of expenditure for the next year. Senior management meanwhile have made a forecast of the income they expect to receive. There is a negative variance between the forecast revenue and the sum of the departments’ budgets. The variance is resolved by lengthy discussions or arbitrary decisions, both of which cause dissatisfaction and demotivation.
The fundamental problem with the current approach to budgeting is its lack of an explicit connection with strategy, outcomes, processes and customers. There are causal relationships between them, yet these relationships are rarely used explicitly to produce budgets. The disconnection between what is needed and what is spent results in the setting of financial targets which are at odds with the intended outcomes of the organisation. This leads to the use of more resources than necessary, or a failure to produce outcomes of the best possible quality.
A different way of budgeting
A more effective budgeting process exists, one that turns traditional budgeting on its head by starting with the outcomes to be achieved, rather than the money to be saved.
In order for an organisation to use its resources to the greatest effect, budgets need to be explicitly linked to the required organisational outcomes. This link to strategy not only avoids waste but also makes the achievement of long term goals more likely. Rather than thinking in the past or even the present, organisations focus on the future outcomes that they need to achieve.
Business Alignment defines the specific measurable outcomes and targets to be achieved, re-engineers what needs to be done to deliver the outcomes, and encourages radical thinking about the skills and facilities needed to carry out the re-engineered activities. Consequently, the outcomes define the money required, rather than the money constraining the outcomes delivered.
Outcome-driven budgeting provides a framework for prioritising expenditure. By definition, the top level outcomes are the top priorities. It also evaluates support services in terms of the contribution they make to strategic outcomes.
By setting targets for the number of outcomes required and estimating the duration of the activities needed to produce them, an organisation can calculate the full-time equivalent employees and facilities needed to carry out the activities. Thus, outcome-driven budgeting replaces departmental budgeting.
Let’s use a London council as an example. One of its required outcomes is Being well led, well managed, ambitious and clear about our goals. The people with prime responsibility for delivering this outcome are the 30 directors of the council, and they are therefore the cost driver of this outcome.
The top level activities required to deliver the outcome are:
We know from previous experience that it will take each director, individually and with other directors, the following time to carry out each of these activities:
|Future-proof the council||10|
|Define the required outcomes and their relationships||15|
|Define measures and set bases and targets||20|
|Assess risks and allocate rewards at the corporate level||10|
We therefore need 55 x 30 = 1,650 directors’ days to deliver the outcome. Assuming 228 working days per annum, that means we need 7.24 full-time equivalent directors. The average total cost of a director including facilities such as accommodation, information technology and travel is £175,000 per annum. Therefore the budget for the outcome is £1,266,447.
Most organisations make operational budgetary calculations of this sort. However, as this example shows, outcome-driven budgeting budgets for intangible outcomes as well. It also enables rolling budgeting because it’s unconstrained by the calendar.
If the organisation is required to produce an annual budget, this is derived by estimating the period required to deliver the outcome and allocating the outcome budget proportionally over the period. For example, if the directors are available on average two days a month, then the outcome will be delivered in 55 / (2 x 12) = 2.29 years. The annual budget will be £1,266,447 / 2.29 = £552,631 in the first two years and £552,631 x .29 = £161,184 in the third year.
My research within 670 organisations has revealed an untapped source of productivity which the generally-accepted means of improving productivity are unable to tap.
The key to productivity is the knowledge, skill, flexibility and creativity of people, supported by technology. However, organisations tend to inhibit these capabilities rather than tap into them to increase productivity.
To extract the latent productivity, leaders and organisations need to:
Think ahead systematically
The pressures of daily life tend to focus a person’s attention on the here and now. Consequently, most organisations will repeat tomorrow what they did today. Doing the same things produces the same results. For instance, most business planning and budgeting processes reuse the previous year’s plan and budget. The productivity opportunity here is to use a systematic process to develop a balanced and measurable strategy looking ahead ten years or more since this provides perspective and inspires people to let go of the past.
Clarify the strategy
Most strategies contain generic aspirational statements. However, people can’t translate generic statements into specific actions. The productivity opportunity here is to give everyone a clear understanding of what the organisation needs to deliver, how they can contribute and how their contribution will be recognised and rewarded, since this helps people to challenge existing outputs and ways of working.
Release innovation and flexibility
Change is risky and threatening. Therefore, organisations are reluctant to consider radically new ideas, focus on cutting costs rather than adding value, and have too many incremental initiatives resulting in a lack of fundamental change. At the same time, excessive regulation stifles the will to innovate. The productivity opportunity here is to implement holistic risk management and make people accountable for the delivery of self-defined outcomes, since this will embolden and motivate people to leave their comfort zones.
Make procurement encourage instead of inhibiting innovation
Procurement processes are tender-driven and so exclude unique innovations like the Perendie platform ® because buyers won’t know about them and therefore won’t request them. There needs to be a way to bring unique innovations to the attention of buyers in order to permit innovation.
Despite claims to be flat and empowered, the organisations researched were invariably hierarchical. Key decisions are made by a few people, while narrow job specifications and contracts are used to compel others to implement those decisions, inhibiting self-fulfilment. This practice deprives the organisation of most of the capability of the people they interact with – internally and externally – and frustrates their attempts to do their best. The productivity opportunity here is to empower employees, suppliers, partners and customers, which dramatically increases motivation and productivity.
Work less, achieve more
Hard work within organisations is expected and respected. However, there is little connection between hard work and the outcomes the organisation needs to achieve. Manager and peer pressures, as well as organisational constraints, distract most people from working effectively. The productivity opportunity here is to encourage and allow people to focus on their outcomes and control their environment since this causes them to work less and achieve more.
Cross organisational boundaries
The compartments into which organisations are divided – operations, production, customer services, information technology, human resources, finance etc. – act as functional silos. They inhibit internal and external co-operation, acquire their own cultures and loyalties and focus on the achievement of their own objectives, thereby reducing their contribution to the corporate goals. Restructuring and transformation merely replace one set of compartments with others. The productivity opportunity here is to put in place a leadership and management system which works across organisational boundaries.
Walk the talk
Most of us have at some time said one thing but done another. Such behaviour is common in organisations with detrimental effects, particularly cynicism, demotivation and resistance to change. The transparency of the Perendie platform ® increases honesty and trust.
The clarity of purpose provided by the Perendie platform ® inspires everyone to say what and how they will contribute to the outcomes on the map, either directly or through the contributions of others. Doing so will gradually collect and connect every outcome, activity and resource needed to achieve the organisation’s mission. By showing what everyone’s doing and what’s likely to happen, people are motivated and enabled to deliver their outcomes and so implement the strategy.
This gives the whole workforce the chance to fulfil their potential, a ladder they can climb and a career they can develop. It creates one team, overcoming divisions, and leads people to challenge their current deliverables, ways of working and resourcing, stimulating innovation and reducing cost.
We are motivated to act in our own self-interest. Any system of management should work with this natural motivation, and intervene only to prevent people acting in their own self-interest to the detriment of others.
Anyone can see what everyone intends to employ, do and deliver, and their progress, thus increasing the visibility of peoples’ behaviour and performance, and motivating delivery.
Think about your own most recent day at the office, and try to recall it in some detail. What would hidden observers have been able to learn had they been watching you go through that day? They might have read e-mails you composed, looked over the numbers you put into spreadsheets, reviewed the reports you prepared. They would have noted your interactions, in formal meetings or corridor encounters, with colleagues, subordinates and superiors, and listened in on a presentation you delivered. They would have heard your end of various telephone conversations, perhaps with customers, suppliers, or consultants. Maybe they would have watched you sitting quietly for a while, looking off into space, jotting down a few notes.
But would these observers really understand your inner work life that day? Of course not. In having those conversations and writing those reports, you were not only dealing with the task at hand. As events unfolded, you were also forming and adjusting perceptions about the people you work with, the organisation you are part of, the work you do, and even yourself. You were experiencing emotions, maybe mild states of satisfaction or irritation, maybe intense feelings of pride or frustration. And these perceptions and emotions were intertwining to affect your work motivation from moment to moment—with consequences for your performance that day.
People experience a constant stream of emotions, perceptions, and motivations as they react to and make sense of the events of the workday. As people arrive at their workplaces they don’t leave their hearts and minds at the door. Unfortunately, because inner work life is seldom openly expressed in modern organisations, it’s all too easy for managers to pretend that private thoughts and feelings don’t matter.
This is what the researchers mean by inner work life: the dynamic interplay among personal perceptions, ranging from immediate impressions to more fully developed theories about what is happening and what it means; emotions, whether sharply defined reactions (such as elation over a particular success or anger over a particular obstacle) or more general feeling states, like good and bad moods; and motivation—your grasp of what needs to be done and your drive to do it at any given moment. Inner work life is crucial to a person’s experience of the workday but for the most part is imperceptible to others. Indeed, it goes largely unexamined even by the individual experiencing it.
People perform better when they are positive about their work. This comes about “when they see their organisations and leaders as collaborative, cooperative, open to new ideas, able to evaluate and develop new ideas fairly, clearly focused on an innovative vision, and willing to reward creative work.”
The most important factor in satisfaction, and therefore motivation, is knowing that one is productive in one’s work. This takes clear and connected goals and feedback on progress. Next in importance is being treated decently as human beings.
The value created by knowledge workers in particular is heavily influenced by the emotions swirling around in knowledge workers’ heads. This will not be news to those of us who’ve seen productivity plummet when we encountered stress, depression, or low self esteem.
Peter Drucker, in a 2002 Harvard Business Review article They’re Not Employees, They’re People, wrote, “Knowledge workers are not labour. They are capital. And what is decisive in the performance of capital is not what capital costs. What’s critical is the productivity of capital.”
The Perendie platform ® uses the psychology of the workplace to increase productivity.
“Every company competes on the basis of continual innovation. And to be commercially successful, new product and service ideas must, of course, meet a real—or perceived—customer need. Hence the managerial mantras: “Get close to the customer” and “Listen to the voice of the customer.”
The problem is, customers’ ability to guide the development of new products and services is limited by their experience and their ability to imagine and describe possible innovations.
How can companies identify needs that customers themselves may not recognize? How can designers develop ways to meet those needs, if even in the course of extensive market research, customers never mention their desires because they assume those desires can’t be fulﬁlled?
A set of techniques we call empathic design can help resolve those dilemmas. At its foundation is observation- watching consumers use products or services.
But unlike in focus groups, usability laboratories, and other contexts of traditional market research, such observation is conducted in the customer’s own environment- in the course of normal, everyday routines.
In such a context, researchers can gain access to a host of information that is not accessible through other observation-oriented research methods.”
(Spark innovation through empathic design, Dorothy Leonard and Jeffrey F. Rayport, Harvard Business Review, November – December 1997).
These are sound principles, permanently relevant, and insufficiently practised.
In the 670 organisations we’ve researched, the relationships and dependencies between outcomes, processes, departments, staff, facilities and money are understood intuitively rather than explicitly. Since everyone’s intuition differs, the imperfect and differing knowledge of relationships and dependencies causes rework, error and unnecessary cost, and prevents people converting money into the desired outcomes. The larger the organisation, the greater the inefficiency.
The Perendie platform ® contains the information about, and relationships between, outcomes, risks, performance measures, activities, facilities, finance, customers, staff, society at large and the environment. This information is key to success. The platform places it where it’s needed, at the point of use.
Many organisations invest in information technology in the hope that it will deliver a demonstrable return on the investment, without specifying and measuring the outcomes it will support, saying explicitly how it will enable the delivery of these outcomes, or making the process and behavioural changes needed. Consequently, information technology does not always deliver the expected value.
Information Technology Alignment explicitly, systematically and measurably aligns information technology with the business, defining where and how information technology can best assist the achievement of business outcomes.
Many approaches make this sort of claim, but how things are done affects their effectiveness. Information Technology Alignment differs in the way it achieves the claimed results:
A Service-Oriented Architecture is derived from the Perendie platform ®, identifying ways to reduce the current systems portfolio and its maintenance and licence cost, and releasing IT resource to add value to the organisation. It future-proofs, simplifies and reduces the cost of IT.
Supporting data analytics, the Perendie platform ® pre-determines meaningful patterns in data, providing a business-driven taxonomy to grasp data, make sense of it, make it useful, and view it from a leadership perspective.
The Perendie platform ® would:
The Perendie platform ® would: