Are you following a tractor

A couple of days ago, when I was at the roundabout, I saw a tractor entering on the right. Since it was on my right, it had the priority on the road. Then I entered the road and was behind it. The road was a A road – single carraige way. The tractor was driving at a speed of 20m per hour and I had no choice but to follow it. My vision was blocked by the tractor, I could not overtake since there was a oncoming traffic on the other road. All the traffic behind was driving at 20 miles per hour and the queue of cars was building up. We had to follow it for another 1 mile till the road become a dual carriage lane.

The question I would ask is, “Are we following trends in real life and accepting them ? ” Or can we change them or look issues in a different perspective.

1. Accounting Body: Being a member of a particular accounting body, your institute would be advising you on latest happenings through various medium like seminars, internet and journal. As a professional, you should be asking yourself, “Is my accounting body re they doing enough for the membership fees I pay?” If not, start communicating with your accounting body on what you need from your accounting body as tools for your knowledge and how your accounting body should interact with business. A positive public image of the accounting body and “Can do” approach helps the members in the profession. You are not there to drive your career at 20 miles per hour. Do you ?
2. Business Models: Most of us read a lot of books to understand the business models. And acquire a ready made recipe directly from the brains of management gurus without any effort. Don’t you feel we are restricting ourselves to think. Just find out any business that is different and analyse why it is successful E.g. I pondered when I picked up copy of Friday-Ad for free ads, how does it make money. And one of thing that caught my attention was the 070 telephone number on every ad. This looked to be a premium telephone number. So when the buyer calls the seller, he is being charged at a higher rate and Friday Ad must getting a cut. More the callers, more the revenue. !!! Did you notice on Amazon website, there are sponsored links of their competitors selling the same products amazon is selling ? How does it help Amazon ? … Amazon does follow trend, it creates them.
3. Corporate Governance: Recently the word “Corporate Governance” have taken a beating. Satyam scam (and banks going bust all over the world.) The company decorated with all the honours for good governance and numerous awards both locally and internationally. Today everyone is questioning, “Is audited financial statements reliable to judge a company ?” Our training in accountancy taught us to look at the financial statements along with non financial indicators like the directors report and then judge how the company is doing. I am wondering, whether Porter Diamond, be a good tool to analyse corporate governance ? E.g. MS Office is a expensive product but it is widely used. In developing countries, where the legal protection is not strong, piracy is a problem. So whether small business can afford it ? If we apply Porter’s diamond, our analysis for corporate governance would be under heading “Social” to arrive at any conclusion. A change in perspective would help to analyse the business. Analyse Satyam Computers using Porter’s Daimond for Corporate Governance for last seven years and see whether you get right answers.
4. Tail Wagging the Dog: You buy a laptop and then you subscribe for a broadband. The competition is so intense in the market that the broadband companies are offering laptop for free, if you subscribe to their broadband for a 18 months contract. You must have noticed, a song is available £0.99 for download and the ring tone for a whopping £1.50.!!! So people who are selling ancilliary products are making more than money than people who sell the originals. They are ahead of the tractor.
5. Knowledge from books: We generally tend to believe that all the knowledge is gained from books. It is true to some extent but sharing views in the forum would refine what you gained so far. When my views are challenged with proper arguments, I tend to view them from a different perspective. So participating in forums, social networking, comments on articles / blogs or start your own website are ways to break the trend. As a management accountant you have more to gain by doing new things rather than reading books.

Following a tractors may not be a good idea. Either make the tractor run faster or drive past before it comes.

Please share your views by commenting on this article ? Also let me know whether you are following any tractor ? May be we can discuss how you can drive ahead of it.

Regards,

Santosh Puthran

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1. Ethics on ACCA website 11-Feb-2008
2. Combined of Corporate Governance UK 20-April-08
3. MOU With CIMA ICWAI a historic agreement 12-Jan-09
4. Resistance to Change – Kotter and Schleinger
5. Strategic Drift

Filed under: Management Fundas

Changing role of Management Accountants

A couple of months back, Management Accountant Blog posted a guest post by CMA V R Kedia on “Emerging Role of Management Accountants in New Economy”. The role as described by CMA Kedia expected the management accounting practitioner should have attributes of a learning professional, a change agent and be hands on latest technology.

Management Accounting techniques has undergone a lot of development from preparing Cost-Volume-Profit Analysis to latest techniques like EVA, Activity Based Management, Target Costing, Kaisen and many more. The expectation from management accountant has been changing consistently with the advancement of technology and new challenges faced to analyse business for its competitiveness.

I wondered Management Accounting is a specialized field ….. is it necessary to have an accounting background ?

According to New Accountant USA,

“According to a study commissioned by the American Institute of Certified Public Accountants (AICPA), the average cost of the finance function has dropped from 2.2 percent of revenues in 1988 to 1.4 percent of revenues in 1996. The study further projects that costs may be reduced by as much as 50 percent in the next few years and that the number of people employed in finance should drop by one-third. Those accountants trimmed from finance will likely be individuals who are unwilling or unable to switch their focus from historical-based data-gathering activities to future-oriented, decision-focused activities.”

CIMA is one of the leading Management Accounting institutes in the world. The American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA) have agreed to collaboratively develop products and services that are in the common interest of their collective membership who work in business and industry. With its focus on management accounting and the latest developments in global business, CIMA is a natural partner for the AICPA’s Financial Management Center, which serves CPAs working in business and industry.

The first effort of the initiative is the “Developments in Management Accounting” series, which includes multiple titles concentrating on current management accounting issues and principles and strategies for implementation.

Further AICPA has partnered with CMA Canada – for the benefit of their members in business – to undergo programs focusing on selected financial management issues, MAGs provide guidance on current and evolving strategic management practices and concepts.

Legally, the finance and audit profession is regulated and protected by various legislation. The accountants who are interested in practice will go for accounting profession. The people who would like to work with the business and take up new challenges will pursue management accountancy as it opens up wide array of activities like analyzing the competitiveness of business to designing a smart management information system.

In future, courses like “Finance for non finance professionals” should be enough as a foundation courses for people pursing Management Accountancy. The course in management accountancy should cover in details about “Strategy”and more about management.

Regards,

Santosh Puthran

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You may also like to read

1. Beyond Budgeting – A radical proposition
2. Financial Accounting – ebook project
3. Cultural Web – A big challenge 22-June-08
4. Activity Based Management – Dispelling the myths Part I – 13-June-08
5. Activity Based Management – How to collect info 10-June-08
6. 10 myths about ABC by SSRK 26-Nov-06
7. Transfer Pricing 29-Dec-06
8. Throughput Accounting 17-Dec-06
9. SSRK’s Knowledge Repository 03-Dec-06
10. Stakeholder Analysis 19-May-08
11. Resistance to Change 26-Apr-08
12. Strategy Development 05-Apr-08
13. Strategic Drift 12-Apr-08
14. How to Share Blog posts with friends 25-May-08
15. Management Accountant Blog Home

Filed under: CIMA, ICWAI, Management Accountant, Management Accounting, Management Fundas

Changing role of Management Accountants

A couple of months back, Management Accountant Blog posted a guest post by CMA V R Kedia on “Emerging Role of Management Accountants in New Economy”. The role as described by CMA Kedia expected the management accounting practitioner should have attributes of a learning professional, a change agent and be hands on latest technology.

Management Accounting techniques has undergone a lot of development from preparing Cost-Volume-Profit Analysis to latest techniques like EVA, Activity Based Management, Target Costing, Kaisen and many more. The expectation from management accountant has been changing consistently with the advancement of technology and new challenges faced to analyse business for its competitiveness.

I wondered Management Accounting is a specialized field ….. is it necessary to have an accounting background ?

According to New Accountant USA,

“According to a study commissioned by the American Institute of Certified Public Accountants (AICPA), the average cost of the finance function has dropped from 2.2 percent of revenues in 1988 to 1.4 percent of revenues in 1996. The study further projects that costs may be reduced by as much as 50 percent in the next few years and that the number of people employed in finance should drop by one-third. Those accountants trimmed from finance will likely be individuals who are unwilling or unable to switch their focus from historical-based data-gathering activities to future-oriented, decision-focused activities.”

CIMA is one of the leading Management Accounting institutes in the world. The American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA) have agreed to collaboratively develop products and services that are in the common interest of their collective membership who work in business and industry. With its focus on management accounting and the latest developments in global business, CIMA is a natural partner for the AICPA’s Financial Management Center, which serves CPAs working in business and industry.

The first effort of the initiative is the “Developments in Management Accounting” series, which includes multiple titles concentrating on current management accounting issues and principles and strategies for implementation.

Further AICPA has partnered with CMA Canada – for the benefit of their members in business – to undergo programs focusing on selected financial management issues, MAGs provide guidance on current and evolving strategic management practices and concepts.

Legally, the finance and audit profession is regulated and protected by various legislation. The accountants who are interested in practice will go for accounting profession. The people who would like to work with the business and take up new challenges will pursue management accountancy as it opens up wide array of activities like analyzing the competitiveness of business to designing a smart management information system.

In future, courses like “Finance for non finance professionals” should be enough as a foundation courses for people pursing Management Accountancy. The course in management accountancy should cover in details about “Strategy”and more about management.

Regards,

Santosh Puthran

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You may also like to read

1. Beyond Budgeting – A radical proposition
2. Financial Accounting – ebook project
3. Cultural Web – A big challenge 22-June-08
4. Activity Based Management – Dispelling the myths Part I – 13-June-08
5. Activity Based Management – How to collect info 10-June-08
6. 10 myths about ABC by SSRK 26-Nov-06
7. Transfer Pricing 29-Dec-06
8. Throughput Accounting 17-Dec-06
9. SSRK’s Knowledge Repository 03-Dec-06
10. Stakeholder Analysis 19-May-08
11. Resistance to Change 26-Apr-08
12. Strategy Development 05-Apr-08
13. Strategic Drift 12-Apr-08
14. How to Share Blog posts with friends 25-May-08
15. Management Accountant Blog Home

Filed under: CIMA, ICWAI, Management Accountant, Management Accounting, Management Fundas

Cost of buying information

In the Information Technology age, we have wide sources available for information that would help in decision making. A skilled user of internet will gather information free on internet and the lesser ones will seek advice from their friends or colleagues or buy information in the form of journals, magazines or library subscription.

What will you rely on when you make decisions in your company ?

Harvard Business School’s Francesca Gino published a working paper, “Getting Advice from the Same Source but at a Different Cost: Do We Over weigh Information Just Because We Paid for It?”

Gino’s results are based upon an experiment where subjects were asked to answer different sets of questions about American history and were provided the opportunity to receive free advice as well as costly advice—the same advice, as it turned out.

Gino’s conclusion: When the advice is costly, subjects are more inclined to take it into consideration and use it. And that conclusion can have profound consequences for consumers, managers, and organizations in their decision making, she says.

Click here to read More – Interview with Sean Silverthorne

Are you going to hire Management Consultants for a business process change in your company or rely on your own employees to initiate a change ?

Regards,

Santosh Puthran

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You may also like to read

1. Financial Accounting e-book project – Dr D V Ramana
2. Beyond Budgeting – A radical proposition
3. Emerging Role of Management Accountants
4. Cultural Web – A big challenge 22-June-08
5. Activity Based Management – Dispelling the myths Part I – 13-June-08
6. 10 myths about ABC by SSRK 26-Nov-06
7. Transfer Pricing 29-Dec-06
8. Throughput Accounting 17-Dec-06
9. SSRK’s Knowledge Repository 03-Dec-06
10. Stakeholder Analysis 19-May-08
11. Resistance to Change 26-Apr-08
12. Strategy Development 05-Apr-08
13. Strategic Drift 12-Apr-08
14. How to Share Blog posts with friends 25-May-08
15. Management Accountant Blog Home

Filed under: Management Accountant, Management Fundas

Customer Loyalty cards

Year 1998: Our company was selling merchandise directly to the end customer. The customer were small corner shops who were buying worth £ 100 worth products in mix and match. Our finance director insisted that when recording the sales in the computer system, the sale should be recorded customer wise instead of lumping it under miscellaneous customer.

The volume of sales was small in comparison to overall sales, but our finance director insisted on getting customer on the database.

Year 2008: Now when I go to any supermarket or a petrol pump, I have got loyalty cards for each of them. I prefer to go to a particular supermarket, since I get loyalty points and rebate coupon. Buying from a particular pump, I earn “free air miles”. Each time you checkout, you offer your loyalty card be swiped.

• Has the shopping experience changed in last 10 years ?
• Has the data gathering techniques about the customer preferences changed ?

According to article “The card up their sleeve” published in the Guardian, UK

Enter the loyalty scheme, beginning with the Tesco Clubcard introduced in 1995. One year later, Clubcard holders were spending 28% more at Tesco and 16% less in arch-rival Sainsbury’s. The latter soon followed suit with its Reward card, launched the same year and with a membership of 10m by 1998. Safeway introduced its version, the ABC card, in 1995 – although this was ditched in 2000 – and Boots rolled out the Advantage card in 1997. Scores of other operators – Barclaycard, BP, Shell, WHSmith – developed similar schemes and then, in September 2002, Air Miles founder Keith Mills introduced the consortium concept that is the Nectar card. With heavyweight companies such as Sainsbury’s, BP, Debenhams and Barclaycard among its members, the Nectar scheme was thrust upon us with the biggest advertising campaign since the National Lottery, costing a reported £50m. By February this year, Nectar had signed up 11m UK households (out of a total of 22m). Today, the Tesco Clubcard has 10m active households, while the Boots Advantage scheme, current favourite in the card-pack, claims 15m members.

Consider the detailed information that every loyalty card user volunteers to the store. Each swipe of the card sends your spend – what you bought, where and how you paid for it – into a databank profile of your purchase history, along with the personal information you gave when you signed up for the card.

Loyalty Cards: Reward or Threat? By Martin H. Bosworth makes an interesting point

Details of loyalty points and the point-gaining transactions are being captured by a stand-alone card terminal and transferred to a PC or a back-end server for further analysis. The loyalty software maintains a complete database of all customer rewards and reward suppliers.

And, just as data brokers like ChoicePoint collect personal data and use it to build an aggregate “profile” of individual consumers, supermarket chains use their stored data to target buyers with “special” offers and “preferred” advertisements from their marketing partners.

The problem that we faced as business for collecting data has been quite easily solved by technology – the loyalty cards program. So business not only gets the data about the customer but also gets information about the customer profile so that they can target the any business segment.

Companies analyze the data by data warehousing solutions and convert it to information. Slice and dice sales with product / product group / customer / customer group or region or any geography.

With the added information, the business can manage their supply chain better. The business that has information is the king.

Do you have loyalty cards ? What do think about it from a customer point of view ?

Regards,

Santosh Puthran

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You may also like to read

1. Business, Customer Value & Management Accounting 19-June-08
2. Activity Based Management – Dispelling the myths Par I – 13-June-08
3. Activity Based Management – How to collect info 10-June-08
4. Combined Code on CG – Appointment of Directors 02-April-08
5. Infosys to buy Axon
6. Sustainable Development
7. Requirement Analysis
8. Transfer Pricing 29-Dec-06
9. Throughput Accounting 17-Dec-06
10. SSRK’s Knowledge Repository 03-Dec-06
11. Stakeholder Analysis 19-May-08
12. Resistance to Change 26-Apr-08
13. Strategy Development 05-Apr-08
14. Strategic Drift 12-Apr-08
15. How to Share Blog posts with friends 25-May-08
16. Management Accountant Blog Home

Filed under: Management Fundas

Customer Loyalty cards

Year 1998: Our company was selling merchandise directly to the end customer. The customer were small corner shops who were buying worth £ 100 worth products in mix and match. Our finance director insisted that when recording the sales in the computer system, the sale should be recorded customer wise instead of lumping it under miscellaneous customer.

The volume of sales was small in comparison to overall sales, but our finance director insisted on getting customer on the database.

Year 2008: Now when I go to any supermarket or a petrol pump, I have got loyalty cards for each of them. I prefer to go to a particular supermarket, since I get loyalty points and rebate coupon. Buying from a particular pump, I earn “free air miles”. Each time you checkout, you offer your loyalty card be swiped.

• Has the shopping experience changed in last 10 years ?
• Has the data gathering techniques about the customer preferences changed ?

According to article “The card up their sleeve” published in the Guardian, UK

Enter the loyalty scheme, beginning with the Tesco Clubcard introduced in 1995. One year later, Clubcard holders were spending 28% more at Tesco and 16% less in arch-rival Sainsbury’s. The latter soon followed suit with its Reward card, launched the same year and with a membership of 10m by 1998. Safeway introduced its version, the ABC card, in 1995 – although this was ditched in 2000 – and Boots rolled out the Advantage card in 1997. Scores of other operators – Barclaycard, BP, Shell, WHSmith – developed similar schemes and then, in September 2002, Air Miles founder Keith Mills introduced the consortium concept that is the Nectar card. With heavyweight companies such as Sainsbury’s, BP, Debenhams and Barclaycard among its members, the Nectar scheme was thrust upon us with the biggest advertising campaign since the National Lottery, costing a reported £50m. By February this year, Nectar had signed up 11m UK households (out of a total of 22m). Today, the Tesco Clubcard has 10m active households, while the Boots Advantage scheme, current favourite in the card-pack, claims 15m members.

Consider the detailed information that every loyalty card user volunteers to the store. Each swipe of the card sends your spend – what you bought, where and how you paid for it – into a databank profile of your purchase history, along with the personal information you gave when you signed up for the card.

Loyalty Cards: Reward or Threat? By Martin H. Bosworth makes an interesting point

Details of loyalty points and the point-gaining transactions are being captured by a stand-alone card terminal and transferred to a PC or a back-end server for further analysis. The loyalty software maintains a complete database of all customer rewards and reward suppliers.

And, just as data brokers like ChoicePoint collect personal data and use it to build an aggregate “profile” of individual consumers, supermarket chains use their stored data to target buyers with “special” offers and “preferred” advertisements from their marketing partners.

The problem that we faced as business for collecting data has been quite easily solved by technology – the loyalty cards program. So business not only gets the data about the customer but also gets information about the customer profile so that they can target the any business segment.

Companies analyze the data by data warehousing solutions and convert it to information. Slice and dice sales with product / product group / customer / customer group or region or any geography.

With the added information, the business can manage their supply chain better. The business that has information is the king.

Do you have loyalty cards ? What do think about it from a customer point of view ?

Regards,

Santosh Puthran

Post Accountancy Jobs on Management Accountant Job Board

Join Management Accountant Groups

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You may also like to read

1. Customer Satisfaction – Concepts
2. Acquiring Customer CRM
3. Business, Customer Value & Management Accounting 19-June-08
4. Activity Based Management – Dispelling the myths Par I – 13-June-08
5. Sustainable Development
6. Throughput Accounting 17-Dec-06
7. Stakeholder Analysis 19-May-08
8. Resistance to Change 26-Apr-08
9. Strategy Development 05-Apr-08
10. Strategic Drift 12-Apr-08
11. How to Share Blog posts with friends 25-May-08
12. Management Accountant Blog Home

Filed under: Management Accountant, Management Fundas

Sustainable Development

Sustainable development is a pattern of resource use that aims to meet human needs while preserving the environment so that these needs can be met not only in the present, but in the indefinite future. The term was used by the Brundtland Commission which coined what has become the most often-quoted definition of sustainable development as development that “meets the needs of the present without compromising the ability of future generations to meet their own needs.”

The field of sustainable development can be conceptually broken into three constituent parts:

• environmental sustainability,
• economic sustainability and
• sociopolitical sustainability.

UK priorities

In terms of focusing our efforts, the UK has identified four priority areas for immediate action, shared across the UK, these are:

• Sustainable Consumption and Production
• Climate Change and Energy
• Natural Resource Protection and Environmental Enhancement
• Sustainable Communities

Source: http://www.sustainable-development.gov.uk/index.asp

Source: www.geographyalltheway.com

India’s Initiative at glance

The Centre is thinking of eco-friendly ways to deal with the power shortage situation. It has come up with a plan to develop 60 cities as “Solar Cities”. This will be achieved through energy-efficiency steps and power generation from renewable-energy installations.

The Indian National CDM Authority has accorded host country approval to 753 projects, facilitating investment of more than US$ 16 billion, in areas of energy efficiency, fuel switching, industrial processes, municipal solid waste and renewable energy and has the potential to generate 421 million CERs by 2012. India has registered the largest number of Clean Development Mechanism (CDM) projects in the world. The World Bank has said that the carbon trade market, which is set to grow from the present level of US$ 30 billion annually to US$ 100 billion, can prove to be another IT sector for India. CERs are set to rise by 75 per cent in 2008 and India accounts for 43 per cent of emission reductions. The carbon market size, which was US$ 62 billion in 2007, is likely to grow up to US$ 94–100 billion in 2008.

Green buildings are constructions in which resources like energy, water, and materials are used efficiently, through better design, construction, operation, maintenance, and removal of waste, reducing negative impacts on human health and the environment.

Green fuel or Biofuel can be broadly defined as solid, liquid, or gas fuel consisting of, or derived from biological material, mostly plants. It is now emerging as an eco-friendly option as compared to fossil fuels. India will replace 10 per cent of its transport fuels with biofuels like ethanol and jatropha in the next 10 years to cut carbon emissions.

• Tata Motors and space agency ISRO are likely to launch the prototype of the world’s cleanest vehicle that will run on hydrogen and leave behind nothing more than a trail of water vapour, in 2008.
• Bajaj Auto, Ashok Leyland, Tata Motors, Mahindra & Mahindra and Eicher Motors have come together to develop hydrogen-blended compressed natural gas (HCNG)-run vehicles.

Efforts for making farming more eco-friendly are on.

A team of biochemists at the Indian Institute of Science (IISc) in Bangalore, has discovered a new microorganism that can produce large quantities of a popular bio-insecticide to fight pests. The Kerala government will execute a broad organic vegetables farming programme targetted at making the State self-sufficient in vegetables production. The programme will be launched in 2008 and it envisages bringing in 5,000 hectares of land, extended over 1,000 villages, under vegetable cultivation.

CSR: From Awareness to Achievement

Over 80 per cent corporates in India are involved in corporate social responsibility, according to a detailed survey about CSR in India by Partners in Change, an agency set up by the NGO ActionAid. Out of the 536 companies surveyed, various categories of CSR undertaken included: health (66 per cent) followed by education (56 per cent), natural resource management 38 per cent, infrastructure development (per cent), community support (28 per cent), livelihood non-farm based development (20 per cent) and livelihood farm-based development (12 per cent).

Notable companies include Coca-Cola, Lenova, Cisco, ArcelorMittal, Intel and HCL.

Source: www.ibef.org

UK initiatives explains how you can as an individual make a difference to your community.

Whether you are a resident’s group, sports club, neighbourhood group, faith group or an other kind of community group, there are lots of practical actions you can take which will make a big difference locally, nationally and even globally. By working together it can be much easier and lots of fun too. Here are five ways any community group can make a big difference.

1. Be a ‘carbon free community’ to help beat climate change.
2. Make your community group a Fairtrade zone
3. Recycle now – recycle together. The possibilities are endless!
4. Be a ‘buy local’ group and help make local food work
5. Be a ‘cleaner, safer, greener’ group

Reality Check: Did you contribute towards sustainable development to your neighbourhood or community ?

If yes, please share your experiences by commenting on this post.

Regards,

Santosh Puthran

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You may also like to read

1. Business, Customer Value & Management Accounting 19-June-08
2. Activity Based Management – Dispelling the myths Par I – 13-June-08
3. Activity Based Management – How to collect info 10-June-08
4. Combined Code on CG – Appointment of Directors 02-April-08
5. Transfer Pricing 29-Dec-06
6. Throughput Accounting 17-Dec-06
7. SSRK’s Knowledge Repository 03-Dec-06
8. Stakeholder Analysis 19-May-08
9. Resistance to Change 26-Apr-08
10. Strategy Development 05-Apr-08
11. Strategic Drift 12-Apr-08
12. How to Share Blog posts with friends 25-May-08
13. Management Accountant Blog Home

Filed under: Management Fundas

Cultural Web – A big challenge

A big challenge in most organizations is whether they know what their culture is – and whether it is the right culture to support their strategy!! Organizational analysis aims to generate an understanding of the organizational structure and culture of the system the project is looking at. This can help in understanding the ease or difficulty with which new strategies can be adopted.

Check these for your own organisation:

• How would you describe your organisational culture?
• How would the workforce describe it?
• Would this be the same as the directors and top management think?
• How would your clients, customers, users and suppliers describe it?
• What is the does this mean about the way the organisation operates?
• Does this culture support or sabotage your strategy?
• What are the clues which tell people about your strategy?

Source: Flickr

The Cultural Web, developed by Gerry Johnson and Kevan Scholes in 1992, provides one such approach for looking at and changing your organization’s culture. Using it, you can expose cultural assumptions and practices, and set to work aligning organizational elements with one another, and with your strategy.

Elements of the Cultural Web

The Cultural Web identifies six interrelated elements that help to make up what Johnson and Scholes call the “paradigm” – the pattern or model – of the work environment. By analyzing the factors in each, you can begin to see the bigger picture of your culture: what is working, what isn’t working, and what needs to be changed. The six elements are:

1. Stories – The past events and people talked about inside and outside the company. Who and what the company chooses to immortalize says a great deal about what it values, and perceives as great behavior.
2. Rituals and Routines – The daily behavior and actions of people that signal acceptable behavior. This determines what is expected to happen in given situations, and what is valued by management.
3. Symbols – The visual representations of the company including logos, how plush the offices are, and the formal or informal dress codes.
4. Organizational Structure – This includes both the structure defined by the organization chart, and the unwritten lines of power and influence that indicate whose contributions are most valued.
5. Control Systems – The ways that the organization is controlled. These include financial systems, quality systems, and rewards (including the way they are measured and distributed within the organization.)
6. Power Structures – The pockets of real power in the company. This may involve one or two key senior executives, a whole group of executives, or even a department. The key is that these people have the greatest amount of influence on decisions, operations, and strategic direction.

Source: Little Boy with a Bat

These elements are represented graphically as six semi-overlapping circles (see Figure 1 below), which together influence the cultural paradigm.

Source: Mind Tools. Click here to read more

If you like the article, please rate, comment and share.

Regards,

Santosh Puthran

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Cultural Web – A big challenge

A big challenge in most organizations is whether they know what their culture is – and whether it is the right culture to support their strategy!! Organizational analysis aims to generate an understanding of the organizational structure and culture of the system the project is looking at. This can help in understanding the ease or difficulty with which new strategies can be adopted.

Check these for your own organisation:

• How would you describe your organisational culture?
• How would the workforce describe it?
• Would this be the same as the directors and top management think?
• How would your clients, customers, users and suppliers describe it?
• What is the does this mean about the way the organisation operates?
• Does this culture support or sabotage your strategy?
• What are the clues which tell people about your strategy?

Source: Flickr

The Cultural Web, developed by Gerry Johnson and Kevan Scholes in 1992, provides one such approach for looking at and changing your organization’s culture. Using it, you can expose cultural assumptions and practices, and set to work aligning organizational elements with one another, and with your strategy.

Elements of the Cultural Web

The Cultural Web identifies six interrelated elements that help to make up what Johnson and Scholes call the “paradigm” – the pattern or model – of the work environment. By analyzing the factors in each, you can begin to see the bigger picture of your culture: what is working, what isn’t working, and what needs to be changed. The six elements are:

1. Stories – The past events and people talked about inside and outside the company. Who and what the company chooses to immortalize says a great deal about what it values, and perceives as great behavior.
2. Rituals and Routines – The daily behavior and actions of people that signal acceptable behavior. This determines what is expected to happen in given situations, and what is valued by management.
3. Symbols – The visual representations of the company including logos, how plush the offices are, and the formal or informal dress codes.
4. Organizational Structure – This includes both the structure defined by the organization chart, and the unwritten lines of power and influence that indicate whose contributions are most valued.
5. Control Systems – The ways that the organization is controlled. These include financial systems, quality systems, and rewards (including the way they are measured and distributed within the organization.)
6. Power Structures – The pockets of real power in the company. This may involve one or two key senior executives, a whole group of executives, or even a department. The key is that these people have the greatest amount of influence on decisions, operations, and strategic direction.

Source: Little Boy with a Bat

These elements are represented graphically as six semi-overlapping circles (see Figure 1 below), which together influence the cultural paradigm.

Source: Mind Tools. Click here to read more

If you like the article, please rate, comment and share.

Regards,

Santosh Puthran

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1. Business, Customer Value & Management Accounting 19-June-08
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4. Combined Code on CG – Appointment of Directors 02-April-08
5. Transfer Pricing 29-Dec-06
6. Throughput Accounting 17-Dec-06
7. SSRK’s Knowledge Repository 03-Dec-06
8. Stakeholder Analysis 19-May-08
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Understanding the Three Stages of Change

You may have encountered in the working life that your organisation definitely needs a change for survival or stay competitive. And the employees around are happy with what they are doing and would prefer to continue the same way in future. You are a Change Manager and see what is coming in future.

Here the idea of 20th century psychologist Kurt Lewin.

He developed an influential three-stage model of how organizational change occurs. Lewin’s model was based on his observations of group dynamics and organizational development. This “unfreezing-change-refreeze” model focuses on how people can be motivated to accept organizational change and reject and replace the status quo with a new approach.

Understanding the Three Stages of Change

Understanding Lewin’s Model : If you have a large cube of ice, but realize that what you want is a cone of ice, what do you do? First you must melt the ice to make it amenable to change (unfreeze). Then you must mold the iced water into the shape you want (change). Finally, you must solidify the new shape (refreeze).

By looking at change as process with distinct stages, you can prepare yourself for what is coming and make a plan to manage the transition –looking before you leap, so to speak. All too often, people go into change blindly, causing much unnecessary turmoil and chaos.To begin any successful change process, you must first start by understanding why the change must take place. As Lewin put it, Motivation for change must be enerated before change can occur. One must be helped to re-examine many cherished assumptions about one self and one’s relations to others.”This is the unfreezing stage from which change begins.

Source: Best Landscapes

Unfreeze

This first stage of change involves preparing the organization to accept that change is necessary, which involves break down the existing status quo before you can build up a new way of operating. Key to this is developing a compelling message showing why the existing way of doing things cannot continue. This is easiest to frame when you can point to declining sales figures, poor financial results, worrying customer satisfaction surveys, or suchlike: These show that things have to change in a way that everyone can understand.

To prepare the organization successfully, you need to start at its core –you need to challenge the beliefs, values, attitudes, and behaviors that currently define it. Using the analogy of a building, you must examine and be prepared to change the existing foundations as they might not support add-on storeys; unless this is done, the whole building may risk collapse.

This first part of the change process is usually the most difficult and stressful. When you start cutting down the“Way Things Are Done”,you put every one and every thing off balance.You may evoke strong reactions in people,and that’s exactly what needs to be done. By forcing the organization to re-examine its core, you effectively create a (controlled) crisis, which in turn can build a strong motivation to seek out a new equilibrium. Without this motivation,you won’t get the buy-in and participation necessary to effect any meaningful change.

Change

After the uncertainty created in the unfreeze stage, the change stage is where people begin to resolve their uncertainty and look for new ways to do things. People start to believe and act in ways that support the new direction.

The transition from unfreeze to change does not happen overnight: People take time to embrace the new direction and participate proactively in the change. A related change model, the Change Curve, focuses on the specific issue of personal transitions in a changing environment and is useful for understanding this specific aspect in more detail.

In order to accept the change and contribute to making the change successful, people need to understand how the changes will benefit them. Not everyone will fall in line just because the change is necessary and will benefit the company. This is a common assumption and pitfall that should be avoided.

Tip:

Unfortunately, some people will genuinely be harmed by change, particularly those who benefit strongly from the status quo. Others may take a long time to recognize the benefits that change brings. You need to foresee and manage these situations.Time and communication are the two keys to success for the changes to occur. People need time to understand the changes and they also need to feel highly connected to the organization throughout the transition period. When you are managing change, this can require a great deal of time and effort and hands-on management is usually the best approach.

Refreeze

When the changes are taking shape and people have embraced the new ways of working, the organization is ready to refreeze. The outward signs of the refreeze are a stable organization chart, consistent job descriptions, and so on. The refreeze stage also needs to help people and the organization internalize or institutionalize the changes. This means making sure that the changes are used all the time; and that they are incorporated into everyday business.

With a new sense of stability, employees feel confident and comfortable with the new ways of working.The rationale for creating a new sense of stability in our every changing world is often questioned. Even though change is a constant in many organizations, this refreezing stage is till important. Without it,employees get caught in a transition trap where they aren’t sure how things should be done, so nothing ever gets done to full capacity. In the absence of a new frozen state, it is very difficult to tackle the next change initiative effectively. How do you go about convincing people that something needs changing if you haven’t allowed the most recent changes to sink in? Change will be perceived as change for change’s sake,and the motivation required to implement new changes simply won’t be there.

As part of the Refreezing process, make sure that you celebrate the success of the change – this helps people to find closure, thanks them for enduring a painful time, and helps them believe that future change will be successful

Sources:

1. Kurt Lewin’s Change Model
2. Phoenix Rising (S) Ltd – Pdf document

Simple Task for you for Change Management

Change people to use instead of Internet Explorer

Regards,

Santosh Puthran
AICWA

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