Sense and Respond: Weathering the Storm

  Business Intelligence   Manufacturing   Strategy  

Year after year in this age of powerful technology, companies pull shocking news in the capital markets by drastically restating earnings. Consider the recent case of General Motors, which revised its first quarter earnings from a billion dollars positive to a billion dollars negative.

As an investor, I'd feel comfortable when earnings are within 10 percent of the target, but to reverse a positive gain to a negative by 200 percent is simply unacceptable. Many excuses were given by GM, including high prices of oil, rising steel, slow sales and increasing healthcare costs. However, these are costs that are universal to many manufacturing companies, yet they did not have such a drastic reversal of fortune. What it does go to show is that GMs "sense and respond" mechanisms around gauging financial conditions are extremely weak.

In this new world, the ability to "sense and respond" is a critical capability to success. With the economy so volatile and prevalent rapidly changing conditions, businesses need to sense change in real-time and respond rapidly. While it is true that rapidly responding for large companies may be a difficult proposition, the "sense" attribute must be a foundational element of the business.

In GMs case, understanding the dire financial changes should not have been such a dramatic event. Steel prices, oil prices and …

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