Managed to Lead posts are organized into the categories below and are about what can be managed in order to be a better leader. There is a category for each of seven actions motivated by seven simple truths about leaders and organizations which, if followed, can help you change the world.
Revenue Forecasts asserts that a certain amount of revenue will be earned in a certain period of time with a certain probability that the actual revenue earned in the period will be within a certain tolerance of the forecast. For example, management may forecast that there is a 90% chance of actual revenue being not more than 10% less than a forecasted amount.
Generally speaking, the percent probability of revenue from a source is assigned by management based on their judgement in light of their collective past experience with similar revenue generating opportunities in similar circumstances.
Some managers set forecasts equal Expected Value; that is, their revenue forecast equals the sum of potential revenue generating opportunities each multiplied by an assigned probability of occurring. There are several potential problems with this approach that should be considered carefully before proceeding:
Summing expected values allows fractional results when there may actually be little to no chance of fractional results. For example, an opportunity to generate revenue of $100,000 with a 50% probability of occuring would contribute $50,000 to a forecast computed as a weighted sum even though the actual result is more likely to either be $0 or $100,000.
Actual Results are more likely to binary; that is the the result either happens or it does not happen, so fractional results do not occur.
The percent probability assigned to a given opportunity may reflect the probability of the revenue ever occuring but not be specific to the period in which the revenue will occur. A good approach to forecasting needs to set the probability of revenue in a specific period
Probabilities assigned often reflect stage of progression through a sales process but do not represent a real assessment of probability of the event occurring. For example, one might assign a 75% probability to all prospective sales for which a proposal has been submitted because it is, at the point of submission, about 75% of the way through the sales process but it may be, in reality, that only 50% of all proposals are successful.
Failure to account for any or all of the three cautions can lead to actual revenue results that are consistently outside the forecast tolerance range.
Leaders who are in control of operations compare their organization’s actual performance results to:
Past results to know whether their organization is trending up, down or sideways.
The results other organizations that are doing things similar to theirs achieve in order to know how well they are doing relative to industry benchmarks, especially relative to those who do best what they are doing.
Plan, budget, projection, or forecast in order to hold themselves accountable to what they said would happen.
Target or goal to know if it is time to be done with what they are doing!
The exhibit below provides precise definitions of terms leaders can use to talk about their organization’s performance with their leadership team and organization stakeholders.
Great leaders learn what each direct report likesto do and what s/he is good at doing in order to help each decide to wantto do what s/he is good at and likes doing. It is worth the considerable effort and thoughtful analysis required because it increases the odds of executive engagement, happiness, and high-performance.
Many people want to do something different than what they like and what they are good at because they believe others think that something else is more valued. Continue reading Personal Alignment→
The following are definitions of phrases that use the word strategy. They provide a useful way to think about the term and matters directly related to it:
Strategy is what people in an organization plan to do in order to “win” whatever game they are playing.
Strategic thinking is how decisions and actions are made in the immediate-term in a manner that is mindful of long-term implications and consistent with a strategy.
Strategic planning is the structured process that management uses to periodically engage leaders in advancing their strategy.
Strategic plan is a description of an organization as it presently exists and where it is to be in the future along with how it will go from where it is today to where it will be next on the way to achieve a long-term vision.
Strategic initiatives are projects identified as part of strategic planning and documented in the strategic plan that are to address what is most important to change next in order to increase the odds of winning.
Strategic management is what is done to deliberately operate and develop the organization in a manner that is entirely consistent with its strategy.
There are many ways to use the word strategyand it conjures up different things for different people in different contexts. What for example is the difference between strategic thinking and a strategic initiative and strategic planning? (For an answer see this taxonomy of strategic terms.)
Leaders who are asked: “What is your strategy?” might want to reply: “my strategy for what?” The reason is that every organization necessarily has many strategies.
There is a strategy for selling, a strategy for doing what the organization does, a strategy for managing and developing offerings, a strategy for recruiting, a strategy for developing people, a strategy for raising funds, and so on. Each strategy addresses how things are done now, and what must be done so as to achieve an envisioned future.
Answering the following five questions is a good way to start laying out an organization’s strategy:
