When better reports still lead to poor decisions

The reports answered what happened last month, but not why, and not what to do next. Budgets, performance reports and investment evaluations all existed, and all of them worked — independently of each other.

More reporting was making decisions worse rather than better. Leadership could see the pieces of performance without seeing how they moved one another, so every number invited a debate about the number instead of a decision about the business. The finance team was not underperforming; it had been built to report, and was being asked to advise.

1. Budgeting tied to strategy

   Budgets built from strategic priorities rather than from last year's numbers with a percentage added.

2. Reporting that explains the driver

   Performance reporting rebuilt to explain the operational drivers behind a financial result, so a variance points at a decision rather than at a department.

3. Margin analysis as a live tool

   Margin analysis moved from a periodic exercise to something management uses while a decision is still open.

4. One financial picture

   Structured evaluation of capital decisions, with treasury, procurement and credit brought into a single financial picture instead of three.