In the Beyond Budgeting community we have a particular interest in finding better ways to measure and analyse performance. Variance analysis (‘how are we doing against plan?’) is a cornerstone of traditional management and budgeting. It is one of the reasons why budgeting is so hard to eradicate and why we need to find alternatives. If the only tool we have to analyse performance is a variance, then we have to have budgets even if we do not believe in budgeting itself. Therefore, finding better ways to measure, analyse and communicate performance will remove a serious obstacle to the adoption of Beyond Budgeting.
Steve Morlidge has just completed his third working paper on variance analysis. The first paper set out the reasons why conventional approaches to performance measurement don’t work. The following paper was about understanding the patterns of behaviour and establishing dynamic measures. This third paper is titled “Signals from noise” and addresses the problem we face when trying to make meaning of large quantities of data. To read the paper click here
Steve Morlidge has spent most of his professional career in designing and running performance management systems in Unilever. He co-authored ’Future Ready: Mastering business forecasting’ (John Wiley, 2010) and has written many papers on business forecasting. Steve is the former Chairman of the BBRT and remains a tremendous support of our network for which we are most grateful.