Information For Wealth Creation - Drucker

1. Information For Wealth Creation - Drucker • “Enterprises are paid to create wealth not control costs” • Wealth creation requires four types of information: • Foundation Information • Productivity Information • Competence Information • Resource Allocation Information

2. Information For Wealth Creation - Drucker • Foundation Information: • Cash Flow, liquidity projections, inventory levels, account receivables • When normal, don’t tell us much • When abnormal they represent a problem that needs fixing

3. Information For Wealth Creation - Drucker • Productivity Information: • Deals with productivity of key resources • Need data on total factor productivity eg Benchmarking and Economic Value Added Analysis (EVA)

4. Information For Wealth Creation - Drucker • “Enterprises are paid to create wealth not control costs” • Wealth creation requires four types of information: • Foundation Information • Productivity Information • Competence Information • Resource Allocation Information

5. Information For Wealth Creation - Drucker • Foundation Information: • Cash Flow, liquidity projections, inventory levels, account receivables • When normal, don’t tell us much • When abnormal they represent a problem that needs fixing

6. Information For Wealth Creation - Drucker • Competence Information: • Core competencies of a company • Must keep track of orgs. and competitors’ performance – helps identify competencies • Core competencies are different for each company, but every org. should be competent in Innovation CORE

7. Information For Wealth Creation - Drucker • Resource Allocation Information: • Allocation of Scarce Resources: Capital and People • Capital appropriations process: ROI, DPV, Cash Flow, Payback – use all 4 • Need to ask what will happen if project fails/succeeds and the reprecussions

8. Information For Wealth Creation - Drucker • Resource Allocation Information: • Performing people one of the scarcest resources • Human resources need to be allocated as purposefully and thoughfully as Capital

9. Information For Wealth Creation - Drucker • “Enterprises are paid to create wealth not control costs” • Wealth creation requires four types of information: • Foundation Information • Productivity Information • Competence Information • Resource Allocation Information

10. Information For Wealth Creation - Drucker • Foundation Information: • Cash Flow, liquidity projections, inventory levels, account receivables • When normal, don’t tell us much • When abnormal they represent a problem that needs fixing

11. Information For Wealth Creation - Drucker • Productivity Information: • Deals with productivity of key resources • Need data on total factor productivity eg Benchmarking and Economic Value Added Analysis (EVA)

12. Information For Wealth Creation - Drucker • Competence Information: • Core competencies of a company • Must keep track of orgs. and competitors’ performance – helps identify competencies • Core competencies are different for each company, but every org. should be competent in Innovation CORE

13. Information For Wealth Creation - Drucker • Resource Allocation Information: • Allocation of Scarce Resources: Capital and People • Capital appropriations process: ROI, DPV, Cash Flow, Payback – use all 4 • Need to ask what will happen if project fails/succeeds and the reprecussions

14. Information For Wealth Creation - Drucker • Resource Allocation Information: • Performing people one of the scarcest resources • Human resources need to be allocated as purposefully and thoughfully as Capital

15. Information For Wealth Creation - Drucker • Where the Results are: • The 4 kinds of information tell us about the current business. They inform and direct tactics • Strategy needs info. about the environment • “Inside the organisation there are only cost centres. The only profit centre is a customer whose check hasn’t bounced”

16. Information Executives Need for Their Work - Drucker • To produce the info they need, executives have to ask: • What info do I owe others? • What info do I need from others? Information

17. Information Executives Need for Their Work - Drucker • They have to: • Organise their information • Have no surprises • Go outside the org. for information

18. Decisions and actions which affect pricing • Decisions and actions which affect volume • Decisions and actions which affect overhead orstructural cost • Decision and actions which affect product or service cost • Decisions and actions which affect asset turnover (Ward Fredericks)