With the ever growing complexity of operations, it is increasing becoming difficult to have a holistic view of the direction in which an organization is moving and identify the key links that are missing.
As a manager’s mindshare is largely occupied in daily chores and operational exigencies, decisions are often taken on the managers’ perception rather than customers’ perspective, employees’ perspective and competitors’ perspective.
Operations and accounts are two unconnected worlds. In an organization, while finance managers record & report profitability, it is the operational managers who create the profitability. Today, Financial statements at best serve as newspaper reports to the operational managers who get to know the outcomes but not the triggers of the outcomes. A financial P&L has to be converted into an operational P&L. Operational P&L in turn should be linked to those parameters which impact profitability across dimensions & aspects. Only then a functional manager can find out the source of the problem and act to improve profitability.