Publications
Strategic information management: bridging the information gap (2002)
Strategic information accurately reflects the real economics of your business: both where it has been, and, more importantly, where it is going. In today’s complex business environment, having the right information about your business and its environment is essential, as these examples show:
- A leading manufacturing company realized, after years of negotiating big contracts with its major customers, that many of its largest contracts were delivering a negative economic profit. Customers that seemed most important to the business were actually destroying shareholder value.
- A retail company was surprised to find it had invested heavily in new distribution channels that failed to become profitable. The company took a closer look at the market and realized that, in fact, no competitor was profitable in those channels. Further analysis demonstrated that the situation was unlikely to improve in the foreseeable future.
- A large telecommunication company’s performance seemed to regularly exceed industry expectations and competitor results. However, investors soon learned that the financial information being presented masked the true economics of the business. The company filed for bankruptcy after the true results became apparent.
- Towards the end of a quarter, a global technology company announced that it would miss earnings estimates by a substantial margin due to a surprise fall-off in business. Managers were unaware that market conditions had led to a significant reduction in orders. The resulting loss of investor confidence caused the stock price to drop by 75%. The CEO was soon dismissed.
As these examples illustrate, the cost of not having and not using strategically important information can be significant. Early warning signals about performance can help managers ask the right questions, refocus strategies, improve performance and communicate effectively with investors. Ultimately they will be making better decisions faster. Timely, accurate and insightful information, which is focused on the future, is immensely valuable – and necessary – for corporate success in today’s competitive markets.
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