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Whole Business Thinking - Executive Management (Wbt - Em) A Guide To Exceptional Business Performance
Whole Business Thinking - Executive Management (Wbt - Em) A Guide To Exceptional Business Performance
Whole Business Thinking - Executive Management (Wbt - Em) A Guide To Exceptional Business Performance
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Whole Business Thinking - Executive Management (Wbt - Em) A Guide To Exceptional Business Performance

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WHOLE BUSINESS THINKING-EXECUTIVE MANAGEMENT addresses the needs of corporate decision makers, executives, managers, entrepreneurs and business owners who seek to understand and improve their company’s financial performance. WBT-EM introduces powerful concepts to help business people understand the past, identify and analyze alternatives, plan the future, execute their plans and evaluate performance.

WBT-EM demystifies complex financial concepts by explaining them in plain, easy to understand language. Readers will learn how to link past financial performance to future financial goals; how to connect decisions and actions, called “strategies” (performance indicators), to their financial consequences and how to link the language of finance with the language of operations. WBT-EM provides insight to help management analyze the details, synthesize the whole, make better business decisions and manage more efficiently and effectively.

In this profoundly important book, Robert Block has taken the focus of management to an entirely new level. Incredible! - Michael Gerber, Author E-Myth, and world renowned small business expert.

This book is a must read for anyone with management responsibility! It distills the author’s nearly six decades of active business and management experiences in advertising, media, telecommunication, energy, entertainment, education, software, etc. into a marvelous framework of EXECUTIVE MANAGEMENT - Dr. Raymond Yeh – Coauthor of The Art of Business & Zero Time

Robert Block makes financial management and financial strategy comprehensible even for those, like me, who are not trained or experienced in the basics of balance sheets. – Dr. N.S. Sridharan - Chief Architect for Knowledge Management, Intel (retired.).

The genius of his book is its ability to in lay terms impart his years of knowledge condensed beyond belief as a working tool that any embryo, or working executive can put to valuable use and can refer to time and again. It is the finest book on business management that I have ever had the pleasure to read. - Sheldon A. Saltman, President, 20th Century Fox Sports, Executive Vice President, G.M. 20th Century Fox Telecommunications

This book is an outstanding work that clearly shows management how to link past experience and the future financial goals. - Dr. Ibrahim Cakir - IC Limited President, successful businessman, former Director of Foreign Investment and Deputy Undersecretary of Treasury and Foreign Trade of The Prime Ministry, Turkey

This is an astonishing book: clear; concise; cogent. It is also wise. Whole Business Thinking - Executive Management is a vision and a blueprint for action. - Kate McKeown, Coauthor Beyond IBM with Louis Mobley. Kate teaches Entrepreneurship at the Fordham Graduate School of Business She taught for nine years in the Birthing of Giants program at MIT, co-sponsored by Inc. Magazine

LanguageEnglish
PublisherRobert Block
Release dateMar 12, 2012
ISBN9781452468310
Whole Business Thinking - Executive Management (Wbt - Em) A Guide To Exceptional Business Performance

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    Whole Business Thinking - Executive Management (Wbt - Em) A Guide To Exceptional Business Performance - Robert Block

    Whole Business Thinking: Executive Management (WBT – EM)

    A GUIDE TO EXCEPTIONAL BUSINESS PERFORMANCE

    By Robert S. Block

    3D Business Tools Publishing

    Whole Business Thinking — Executive Management (WBT — EM)

    A GUIDE TO EXCEPTIONAL BUSINESS PERFORMANCE

    3D BUSINESS TOOLS ENTERPRISE MANAGEMENT SYSTEM

    3DBT BUSINESS TERMS AND PERFORMANCE INDICATORS

    3DBT MATRIX

    Whole Business Thinking

    are trademarks of 3D BUSINESS TOOLS

    US and International Patents Pending

    IBM is a registered trademark of International Business Machines Corporation.

    Copyright 2012 Robert S. Block. All rights reserved.

    Smashwords Edition, License Notes

    This e-book is licensed for your personal enjoyment only. This e-book may not be resold or given away to other people. If you would like to share this book with other people, please purchase additional copies. If you’re reading this book and did not purchase it, or it was not purchased for your use only, then please purchase your own copy. Thank you for respecting the hard work of this author.

    REVIEWS

    In this profoundly important book, Robert Block has taken the focus of management to an entirely new level. Incredible! – Michael Gerber, author E-Myth and recognized small business expert

    ______

    Robert Block makes financial management and financial strategy comprehensible even for those like me who are not trained or experienced even in the basics of balance sheets. Like an easy-flowing symphony, the pages of this book sing in a grand manner. The use of Timeline to organize the sequence of various financial tables and the linking of strategy to financial ratios should help many business managers pick up the baton and make the music they want to hear. – N.S. Sridharan PhD, chief architect for Knowledge Management, Intel (retired)

    ______

    "This book is a must read for anyone with management responsibility! It distills the author’s nearly six decades of active business and management experiences in advertising, media, telecommunication, energy, entertainment, education, software, etc. into a marvelous framework of Whole Business Thinking – Executive Management (WBT – EM) for effective management of any organization. WBT – EM allows managers to have a bird’s-eye view of the whole business context from 30,000 feet while, at the same time, provides down-to-earth practical ways to handle their daily tasks in an effective and efficient manner. Furthermore, WBT – EM helps all managers in an organization to communicate effectively in linking their operational decisions to financial performances. This is one of the most practical and comprehensive management books I have read – and written in plain and easily understood language." – Raymond Yeh PhD, co-author of The Art of Business and Zero Time

    ______

    "Bob Block has been around enough to understand the facts about business and has a track record of seeing through assumptions about the future with remarkable clarity. In Whole Business Thinking – Executive Management he shares his insights with a generous portion of common sense in a way that allows you to tie that knowledge to your own experiences and perspectives.

    "WBT is a refresher course for business planning and management that interjects global and emerging truths into basic training and principles – a virtual boot camp where you sharpen your edge for business survival and success.

    "Block reminds you that the basis for financial plans, like all plans, is a set of assumptions. Facts occur in the past and present. Plans and assumptions address the future. You live, work and plan in the everchanging present. He recommends you use The Seven Steps of Dynamic Planning to develop your financial plan and then proceeds to explain just how to do that. (Even draws you a picture.).

    "If you think it is difficult to sort out business management thinking and financial management thinking, think again. Block’s common-sense portrayal of financial statements and their components, illustrated with examples, makes perfect sense to even those with no accounting knowledge. Then he describes how an ‘ideal’ business tool manages and delivers the business financial information to the best advantage of the business. And here he really draws the pictures.

    "Finally, he delivers the mother of all business glossaries. His Business Terms and Performance Indicators is beyond compare.

    Way to go, Bob! – Charles LeGrand, CIO of the Institute of Internal Auditors Research Foundation. Charles produced the landmark Systems Auditability and Control reports.

    ______

    "I’ve known Bob Block as a friend and partner for more than thirty-five years. Thinking out of the box is something he has always done with great success. Whole Business Thinking – Executive Management is a good example of Bob’s ability to creatively synthesize complex concepts into an easy to understand presentation." – Thomas P. Rosandich PhD, president of the United States Sports Academy, America’s University of Sport

    ______

    Many people have ideas! However, the rare few become successful when they know how to turn those ideas into a workable blueprint. Mr. Block's insight and knowledge of what it takes to successfully manage a business to a fruitful conclusion is without equal. He succinctly, based on his years of achievement and learned by both trial and error, explains what needs to be done. The genius of his book is its ability to impart in lay terms his years of knowledge, condensed beyond belief, as a working tool that any embryo or working executive can put to valuable use and can refer to time and again. It is the finest book on business management that I have ever had the pleasure to read. – Sheldon A. Saltman, former president, 20th Century Fox Sports, executive vice president, GM, 20th Century Fox Telecommunications

    ______

    "Executive Management provides corporate decision makers and business owners who want to integrate finance and operations with important information to control the financial consequences of business activities. This book is an outstanding work that clearly shows management how to link past experience and the future financial goals." – Ibrahim Cakir PhD, President IC Limited, successful businessman, former director of foreign investment and deputy undersecretary of treasury and foreign trade of the prime ministry, Turkey

    ______

    "This is an astonishing book: clear; concise and cogent. It is also wise. Whole Business Thinking – Executive Management is a vision and a blueprint for action. Robert Block is your guide – a very seasoned, experienced guide – and he walks you, short step by short step, from the simplest concepts to the most profound views of operational and financial performance. In a remarkably few pages, you get an understanding of financials and what drives them: how to read them, how to use them. Probably even how to like them. But more, you think about your business differently. You get comprehensive and integrated and smarter than you knew you could get about your whole business. Few books can dramatically improve the quality of your thinking about your business ... this one does." – Kate McKeown, coauthor Beyond IBM with Louis Mobley. Kate teaches Entrepreneurship at the Fordham Graduate School of Business. She taught for nine years in the Birthing of Giants program at MIT, cosponsored by Inc. magazine

    ______

    "Everyone involved in business management should be armed with a copy of this much-needed book. In his revised Whole Business Thinking – Executive Management, Bob Block has mobilized his formidable analytical and communication skills, as well as his experience of growing successful businesses over many years to achieve a remarkable double – he provides a clear, fully comprehensive and user-friendly guide to the complex language of financial management and at the same time his Whole Business Thinking concept demonstrates the benefits of the active awareness and involvement of all levels of management in an organization’s financial strategic planning and management." – Richard Hilliard, managing director, Xpertfunding Limited, London

    ______

    "Three words: Clear. Concise. User-friendly. Executive Management Tips & Tools is an excellent user guide providing valuable information in a level of vernacular that both the practical doer and theoretical thinker could easily understand, appreciate and apply. Indeed, businesses are made of various key players with different views on how a business operates ... this book helps bring out the best business concepts and execute them with foresight, as only Whole Business Thinking (WBT) could!" – Ahmet Cosar PhD, finance and business executive with more than thirty years of executive experience in financial and general management in businesses serving multicultural Fortune 100 companies that include ITT, Alcatel, Warner-Lambert, Hoescht and Volkswagen

    ______

    Robert is one of the most innovative persons I know. If you pay a visit to his office, you will be overwhelmed by the huge number of patents he obtained. He is extremely experienced in doing business. While having concrete theoretical base to support his ideas; he is also very practical in the application of them. I am sure that readers, especially those who want to start their own businesses will find this book very useful. – Samson Tam, chairman, Group Sense Ltd. Hong Kong

    ______

    "Powerful and thought-provoking, Whole Business Thinking – Executive Management bonds financial and operating executives into an efficient and effective multidimensional team. This book is packed with ideas that can be implemented quickly, resulting in positive changes to the bottom line." – Thomas J. D'Amico, president, CEO, American Flags Express Inc., www.FlagsExpress.com"

    PREFACE

    Whole Business Thinking – Executive Management addresses the needs of corporate decision makers, executives, managers, entrepreneurs and business owners who seek to understand and improve their company’s financial and operational performance. WBT – EM introduces powerful concepts to help businesspeople understand the past, analyze alternatives, plan the future, execute their plans and evaluate performance.

    You will learn how to link past financial statements to future financial goals, how to connect decisions and actions, called strategies (performance indicators), to financial consequences and how to link the language of finance with the language of operations. WBT – EM provides insight to help you analyze the details and synthesize the whole so you can manage more efficiently and effectively.

    WBT – EM also provides the language and the logic to empower every person in the organization with a sense of common goals and unified strategies.

    Every effort has been made to keep the language used in WBT – EM easy to understand. The goal is to communicate sophisticated financial, nonfinancial and economics concepts to nonfinancial people within your company and to significant outsiders.

    The concepts introduced in WBT – EM have been fully integrated and automated in 3D Business Tools Enterprise Management System and Business Management System, designed for companies of all sizes.

    ACKNOWLEDGEMENTS

    A great deal of credit belongs to the many people that have helped Whole Business Thinking –Executive Management become a reality.

    My thanks start with my wonderful wife, Carol, who put up with years of all-night sessions at the computer and on the phone. Next, I must thank my grandson, Aaron Slotnick, for his untiring help and significant contributions to many aspects of WBT – EM, my daughter, Debbie Block, for all the work she has done for our company; and to my son, David, for his support and willingness to let his company, become a test bed and early beta site for the 3DBT Business Management System.

    Many thanks also go to Jonathan Lau, 3D Business Tools’ extraordinary and creative vice president and chief technical officer. Jonathan and his dedicated software development team of up to fifty people in Hong Kong and Bangalore have turned every item on my wish list into an extraordinary software management system.

    I am grateful to Richard Otto and Sri Sridharan, PhD, for helping me turn this book into a three-day seminar and soon into a full college course.

    Thank you, as well, to Judith Harlan and Cindie Geddes for their help with the design of this ebook.

    I also want to acknowledge the important work of my deceased partner, Louis R. Mobley. Lou’s work as the founder of IBM Executive School led him to create the Mobley Matrix. Lou and I were partners in the development of the DOS-based Mobley Matrix software. Chris Mobley, Lou’s son, and Kate McKeown, Lou’s co-author of Beyond IBM, were also early contributors whose help was vital.

    My thanks also go to Jahn Ballard, David Turner and Jack Schnabel and Arco Verolme for their great patience and consistent support during these many years.

    I also want to acknowledge the late Chuck Kremer for his thoughtful work in the promotion of the Matrix concept and for his dedication to financial clarity. His encouragement of my work, his help and his friendship were important to me. Chuck is missed.

    DEDICATION

    I dedicate this book to my loving wife, Carol, and all the good partners and wonderful clients I’ve had over the years. Most of what is in this book, I learned from you. – Robert S. Block (Bob)

    TABLE OF CONTENTS

    REVIEWS

    PREFACE

    ACKNOWLEDGEMENTS

    DEDICATION

    SECTION I: EXECUTIVE MANAGEMENT

    CHAPTER 1: INTRODUCTION

    CHAPTER 2: PLANNING

    CHAPTER 3: FINANCIAL STATEMENTS

    CHAPTER 4: 3DBT FINANCIAL STATEMENT MATRIX

    CHAPTER 5: 3DBT DECISION MATRIX

    CHAPTER 6: BUSINESS METRICS

    CHAPTER 7: STRATEGY MANAGEMENT

    CHAPTER 8: CASH FLOW MANAGEMENT

    CHAPTER 9: REPORTS AND GRAPHS

    SECTION II: BUSINESS TERMS AND PERFORMANCE INDICATORS

    ABOUT THE AUTHOR

    SECTION I

    EXECUTIVE MANAGEMENT

    INTRODUCTION

    Whole Business Thinking – Executive Management (WBT – EM) addresses the needs of corporate decision makers, executives, managers, entrepreneurs and business owners who seek to understand and improve their companies' financial performance. You will be introduced to powerful concepts to help you understand the past, identify and analyze alternatives, plan the future, execute the plans and evaluate performance.

    You will learn how to link past financial performance to future financial goals; how to connect decisions and actions, called strategies (performance indicators), to their financial consequences; and how to link the language of finance with the language of operations. This book provides insight to help management analyze the details, synthesize the whole, make better business decisions and manage more efficiently and effectively.

    Management’s most important tasks include (1) defining assumptions, (2) creating and implementing plans, (3) making good and timely decisions, (4) taking appropriate actions, (5) reacting to change to overcome unforeseen obstacles and to take advantage of unexpected opportunities. How well management performs these tasks largely determines the company’s future, just as it has determined its past.

    The accuracy and level of detail used to record facts and the ability to organize those facts in meaningful ways limits management’s understanding of what happened in the past, why it happened and how to plan what happens next. WBT – EM introduces new ways to think about how to record and use the company’s experience to plan its future.

    The objective of this book is to help managers. An effective manager is one who can see his or her company as an integrated whole business, recognize the important roles of stakeholders and clarify complex management and financial concepts by explaining them in plain, easy to understand language.

    Whole Business Thinking VS. SILO MANAGEMENT THINKING

    Most new companies are highly integrated. A few key people who know and trust each other usually form them. The founders work together to launch and build the new business. Their focus is the whole business. However, as the company grows, more and more organizational structure is imposed on it. Silos are formed following the lines of authority, which are almost always vertical. Vertical (Silo) management can be seen easily in any typical business table of an organization.

    • The president reports to the board of directors – Vertical

    • The vice presidents report to the president – Vertical

    • The department managers report to the vice presidents – Vertical

    • And so on down the line.

    An organizational decision to operate the company on the principals of Whole Business Thinking (WBT) will affect the allocation and distribution of power and authority and the synergy of management’s operating and financial focus. WBT will improve the timing and effectiveness of information flow, planning, budgeting, decisions and executions, resulting in a healthier company that can respond to real-world changes faster and more effectively. Following are some of the important differences between Silo thinking and Whole Business Thinking.

    POWER AND AUTHORITY

    SILO THINKING: Power accumulates in Silos. It is concentrated at the top and flows from top to bottom. Silo managers often try to gain more power for their Silos and thus for themselves by controlling decision-making and information flow.

    Whole Business Thinking: WBT stimulates shared organizational power and authority. Information exchange and decision authority are distributed throughout the organization, according to the needs of the business. Managers become coaches able to guide the team to success. Teamwork to achieve corporate goals is the operative mode. The decision process is able to respond to real-world events and strategy changes. The result is innovation and positive change

    INFORMATION FLOW

    SILO THINKING: Communications in Silo-organized companies tend to pass up and down the vertical chain of authority. Only required information is passed among departments or divisions, (other Silos) resulting in a degree of isolation between Silos.

    Silo focused thinking results in the establishment of departmental policies and procedures and the purchase of systems without regard for the policies and procedures and systems used by other divisions or departments. Communication barriers grow and inefficiencies become the norm and accepted as part of corporate life.

    Whole Business Thinking: WBT requires real-time information flow among all departments at virtually every level. WBT organizational structure can be thought of as a 3D matrix rather than a series of Silos. Communication paths link all related cells in the 3D matrix.

    To achieve the efficiency and effectiveness required for a modern business, an enormous amount of information must be created, captured, analyzed and shared within the company and with customers and suppliers.

    MANAGEMENT FOCUS

    SILO THINKING: Overall business objectives are divided among Silos and expressed as Silo goals. Silo leaders focus on achieving their specific goals. That makes changes in business objectives and/or execution plans very difficult.

    Silo companies achieve optimum performance only when there is strong central control capable of overcoming internal conflicts.

    Whole Business Thinking: Business goals are shared throughout the organization creating multiple owners of corporate objectives. The formation of formal and informal interdepartmental teams creates interdependencies and fosters teamwork and cooperation throughout the organization.

    WBT is far more likely to achieve outstanding performance than Silo based companies.

    The transition from Silo thinking to Whole Business Thinking requires a new way of working. To achieve the extraordinary performance WBT can generate, it is important for the company to implement a fully integrated, real-time management system that supports information creation, capture, analysis and sharing. Much of this book is based on Whole Business Thinking principles.

    CENTRALIZED VS. DECENTRALIZED MANAGEMENT

    Centralized management is a form of management wherein most decisions are made by a relatively small group of people located at the company’s headquarters. Centralized management implies centralized data systems to support management decisions.

    Centralization benefits include: uniform decisions being made by people who know most about the overall company goals, strategies and resources. Because central managers have control over their area of responsibility, they are motivated to achieve the company’s established goals.

    Centralization problems include: a tendency for managers to lose sight of the local effects of their decisions and actions. Centralized management tends to be less flexible, slower to respond to market changes and often migrates to Silo thinking, resulting in internal inefficiencies.

    Decentralized management is a form of management wherein most decisions are made by employees in company subunits, closer to the people affected by the decisions. Decentralized management implies distributed data systems to support decision makers.

    Decentralization benefits include: decisions being made by people who know most about local conditions. Because local managers have more autonomy and control over their area of responsibility, they are motivated to achieve their unit goals.

    Decentralization problems include: a tendency for managers to focus on their individual area without regard for the effect on the company as a whole. This is a form of Silo thinking and often results in implementation of incompatible internal systems, which results in costly duplication and a reduction of information sharing.

    Most companies employ a blend of centralization and decentralization.

    Whole Business Thinking is neither centralized nor decentralized; it is a distributed approach that requires integrated and balanced policies, procedures and systems. The WBT decision process is shared to achieve optimum performance. Each job description within the company includes a defined list of the primary and secondary decisions the job holder is responsible to make. The allocation of decision responsibility is somewhat fluid. Decisions can be transferred to or from employees or shared by several employees as needed to maintain optimum performance. The information needed to make the right decisions is provided to each employee in accordance with their responsibility. The allocation of decision making within a company is dependent on many factors including: employee competence and training, company size, organizational and geographical structure, business type, maturity, etc.

    WBT implies a fully integrated enterprise management system, installed throughout the company, that collects detailed financial and nonfinancial information, which is then made available to appropriate personnel at every required level in the company.

    The development of decision-based job descriptions is a very powerful tool for WBT companies. It starts with gathering information from each employee with respect to what decisions they make, which other employees contribute to the decision process, what information is needed to improve decision making, and which employees, departments and other stakeholders are affected by their decisions.

    Much of this book is based on Whole Business Thinking principles.

    Whole Business Thinking PRINCIPLES

    Whole Business Thinking provides a structure for optimizing the effectiveness of decisions and actions for the benefit of all company Stakeholders. It provides the perspective, understanding, methods and means to guide effective implementation. The way problems are viewed (perspective) and defined (understood) has an enormous effect on problem solving.

    The division of problems into their component parts, which are then attacked separately, is a popular technique taught in MBA programs. While problem division is a useful and recommended approach, it is not sufficient. The whole is often greater than the sum of its parts. For example, a house is more than a pile of building materials, and a home is more than a set of rooms. Whole Business Thinking helps executives to see the whole ... not just the parts.

    The Whole Business Thinking framework is used throughout this book to generate new perceptions, broader understanding and more effective implementation. WBT is a:

    • Paradigm for problem definition and business solutions

    • Systematic management approach that coordinates and integrates the strategic (big picture)

    •30,000-foot view and the operational (detail) in the trenches view"

    • Set of shared organizational values to achieve optimum productivity performance

    Principle 1: WBT is a way of looking at the changing business environment.

    Whole Business Thinking systematically engages the real-world facts of accelerating change (pervasive and rapidly changing demands occurring within the company and in the market environment) — empowering the organization at every level to make better decisions faster, resulting in a more agile, efficient and effective organization.

    Principle 2: WBT is a way of understanding the past, present and future cause and effect.

    Whole Business Thinking uses both financial and nonfinancial metrics, including key performance indicators, trends and strategies to help management understand the past, identify and analyze alternatives, plan the future, execute plans, evaluate performance, and adjust plans based on real-world barriers and opportunities.

    Principle 3: WBT is a method of planning and analysis.

    Whole Business Thinking encourages both executive (top-down) and manager (bottom-up) planning approaches. It involves four types of planning (strategic, business, operational and financial) – enabling executives and managers to analyze details, synthesize the whole, set objectives and assign priorities that unite and integrate the entire organization.

    Principle 4: WBT is a structure of information flow and decision authority sharing.

    Whole Business Thinking creates a communication structure for information and decision authority sharing – enabling the establishment of teamwork interdependencies and multiple owners of shared business objectives to achieve outstanding performance.

    Principle 5: WBT recognizes both the independence and interdependencies among stakeholders.

    Whole Business Thinking requires the identification, recognition, understanding and inclusion of both the independence and interdependencies among all stakeholders when making plans and decisions and taking actions. It is this fundamental system thinking approach that will help prevent the establishment of isolated Silos.

    CREATING SUSTAINABLE GROWTH

    Successful companies create value by doing three things:

    1. Do the right things – that is, do things worth doing

    2. Do things right – that is, do things efficiently

    3. Create the future – that is, prepare for change

    To do the right things, a company must have direction and control. The company’s Mission or Vision Statement provides the long-term direction ... the reason for the company to exist. The company’s Value Statement provides the ethical foundation on which performance must rest.

    Doing the right things means the company must respond to market needs by providing the goods or services that customers want to buy. One important

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