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, dont 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, dont 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, dont 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 hasnt 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)