Connecting Behavior to Results: A new approach to Lean Management

“We realize that there is a direct connection between what people do every day and how they succeed, so our solution is always about understanding the connection between behavior and results.”
– Guy Amisano, founder and president of Salient Management Company

The value chain entails thousands or millions of transactions, events, and decisions. The difference between success and failure can be seconds of indecision or ignorance. Communicating the integration and impact of individual actions relative to organizational goals is essential.

“Connecting Behavior To Results” is comprised of three fundamentals in the pursuit of a new approach to lean management.

First, a clear articulation of the company’s value equation, as defined by a basic business principle of “We make Investments in a relationship in order to produce Returns” (MBA 101). Everyone understands how the investments of services, assets, processes, and people are intended to maximize margins and potential growth, while optimizing relationships with suppliers and customers.

Second, the value equation is actionable. The organization institutionalizes knowledge, power, and stake to all individuals. Knowledge on how actions improve Value; empowerment to take action; and stake through congruent metrics that provide a direct link between actions and rewards.

Third, individuals are positioned for competitive advantage. Processes and tools enable immediate and intelligent decision making. The traditional information silos are eliminated with transparency across the organization.

Salient Management Company is uniquely positioned through performance accounting solutions on five principles for competitive advantage:

  1. Specific: a comprehensive accounting of value created by every transaction in every cycle
  2. Holistic: text, video, documentary content connected directly to transactions
  3. Flexible: to follow curiosity down any path, in any direction, in any form, without limit
  4. Scalable: to embrace and reconcile data from all sources and perspectives across the enterprise
  5. Enables easy CI Practice: to interact with data graphically, cull the outliers from patterns and trends, examine input versus output over time, adjust inputs in time, get better over time

Improving productivity requires continuous feedback. It means having the ability to see quickly and clearly how decisions affect outcomes, asking “why” more than once, and drilling through layers of data across related facts and down to the few details that matter for the decision of the moment. Any compromise to those three principles inhibits responsiveness to the situation — and could be the difference between winning and losing.

Salient Management provides a radical advance in lean management capability, used by more than 115,000 managers and operators in 61 countries.

  • It is radical because it pulls data from existing systems and automatically computes the economic realities of day-to-day business processes — resulting in near real time P&Ls at every level, from the transaction up through the enterprise.
  • It is radical as an investigative tool because it is faster than attention span. Users can investigate, find outliers, pursue them to root cause, refine processes, and direct resources — all in real time.
  • It is radical because its output is an unarguable factual basis for alignment, motivation and performance compensation.

Performance Accounting

Traditional methods of cost accounting have been adequate in situations where direct costs were identifiable and significant. The indirect costs (overhead) were assignable based on reasonable, but simple rules. However, in organizations where expenses are indirect functions that support commercial and technical processes for delivering products to customers, a better method for assigning costs is needed.

Performance accounting enables a correlation of overhead activities and their respective drivers. Salient Performance Management builds the relationships from the “bottom-up”, not the “top-down” as typical of many performance accounting systems and approaches.

Salient’s solution captures every transaction, event, and asset usage — enabling updated and unarguable accounting.

Examples include:

  1. The procurement activities are directly related to the specific products based on their time or number of purchase orders, etc.
  2. The customer service and sales activities are related to customers based on their time, or square footage, or number of SKUs, etc.

Performance accounting is not just an accounting approach. It is an invaluable process for continuous improvement through the identification of the cost drivers. Salient Performance Management provides real-time assessment of how all transactions (and expenses) are directly related to products and customers.

Situational Intelligence:

Situations change constantly through the course of the business day. From moment to moment, managers deal with new sets of people, places, things and events. Each momentary situation has its own data history.

However, in the common, “command-driven” IT process model, history is aggregated across entities, attributes and events, and then organized in hierarchies. For most managers, it takes too much time and work to get to the right level of detail at the right time to make a difference in transactional outcomes. This is why most don’t use computers directly to support decision-making.

In Salient’s “demand-driven” information management model, the user formulates information requirements by clicking on “tabs”, “icons” and “lists”. Managers create their own reports of the “history of the present moment” for immediate analysis and further exploration.

Salient’s radical innovation is its system’s ability to process data fast enough, specifically enough and simply enough… to get the computer and the process out of the way of the information.

Salient Management creates a continuous and current P&L and Productivity Scorecard available for every person, customer, product, supplier and asset. Users see revenues, costs, growth and efficiency, from the individual to the enterprise Managers can measure the effectiveness of their decisions and improve practices over time in support of lean management objectives.

Companies can correct process anomalies before they manifest. Because Salient ties actual value to individuals in exquisite detail, results become unarguable. The absence of contention about sources of value contribution is a new capability in itself. A perfect and concurrent scorekeeping of value-add from bottom to top enables true alignment of individuals to corporate objectives and commensurate pay for actual performance.

Benefits Summary

With the combination of a powerful source of information and a responsive repository of understanding detailed information about each element of a business, Salient Management provides a powerful motivational tool as well as a new and better approach to lean management.

Departments and users become keenly aware as to how everyday activities are affecting bottom line results. Activities can then be fine-tuned and adjusted in the current business cycle to ensure that goals are met and exceeded. This type of information management provides “Situational Intelligence”.

Situational Intelligence is the ability to ask questions of the data to determine the best course of action, with zero technical expertise. We bring business data to the hands of the people who need it — easily, quickly, and in a format they can use. No more need to wait for the end of the week, month, quarter or year. This continuous, relevant feedback loop is critical to success.

Our interactive UXT Inquiry Engine combined with expert consultancy allows you to fit odd pieces of the total picture together, while giving “on demand” users the ability to fashion together the view of information that is most valuable to them “right now”.