We see a lot of businesses where the idea of the “back office” is treated as a necessary evil at best, or as an afterthought. Something to ignore while the “real” parts of the business are tended to.
We can understand the reason for this view. Particularly in small firms, where every dollar has to be devoted to sales and operations, skimping on costs and focusing on revenues and service delivery are a clear priority. And in any firm, no matter how large, it’s important to control costs and ensure discipline and accountability.
But discipline and accountability require high-performing administrative functions. That’s the very meaning of “administer.” If you’re skimping on the “business of the business” you’re limiting your ability to grow, building up risks, and handing a gift to your competitors.
Do you have a HUD?
One of the key challenges many leaders face is understanding exactly what information is important, and what should be ignored.
Consider an F/A-18 fighter jet. The pilot of a modern fighter has to process staggering amounts of information that includes: data feeds from numerous sensors; the position, velocity, and altitude of her own ship; the bearing, distance, altitude and airspeed of friendly and enemy aircraft; the status of various weapons systems; the status and performance of the aircraft’s engines; and voice communications over multiple radio networks. Without a Heads Up Display (HUD) system to efficiently distill all this information and present it to the pilot in an integrated display, the aircraft would be absolutely ineffective as a weapons system. The cognitive load on the pilot would be so high that simply flying and navigating the aircraft would take up most of her attention, leaving no room for higher-order cognitive functions such as managing the battlespace and employing weapons.
HUDs are so incredibly effective not just because of what they display to the pilot, but because of what they don’t display. A well-designed information system filters out the extraneous items while presenting the most important data in a clean, compelling visual system. Moreover, the system provides context for the data–information is presented when it matters, in conjunction with trend information and related, relevant content.
So a Heads Up Display is not much different than a well-crafted business dashboard. Both systems are designed to reduce cognitive load, surface and identify critical information and trends, and empower users to take proactive actions that drive toward a particular mission.
Companies with effective HUDs universally have a high-performing back office tending to the critical tasks of gathering and curating information. Those that don’t embrace this concept usually have ineffective and underfunded administrative units. They can often be identified with a few questions:
“So how’s your run rate this quarter compared to last? And to your plan?”
“Umm…well accounting hasn’t finished closing the books. But when they finally do, it’s most likely too late to do anything useful with the information.”
“Do you have pipeline on track to replace the backlog you’ll lose on this big contract when it expires next year?”
“Well…the BD team has been going to a lot of conferences and buying lots of drinks and meals. There are a few RFPs coming out soon, and I know we have a spreadsheet somewhere…”
“So what’s your biggest frustration?”
“Honestly - I just can’t seem to get the information I need when I need it. It seems like I get a thousand emails a day, but I can’t keep track of reports. I ask for financial reporting and it takes nearly the whole day for accounting to get me what I want. Then don’t even think about trying to ask for the data filtered another way…”
“So what key performance indicators do you look at every single day?”
Working In the Business…or On It?
If you find yourself frequently diving deep into day-to-day details, hassling with issues such as payroll, accounting, and training and development, and fighting fires, you’re working in the business, not on it.
At times this can be necessary. But over the long-term, CEO crisis management transfers responsibilities away from the staff, placing them squarely on the CEO’s shoulders. This approach is exhausting. Moreover, it means there is no leverage, no training and development of staff, and no ability to scale.
At some point CEOs and their senior leadership team need to transition out of the day-to-day if the company is ever going to scale effectively. Working “on” the business means anticipating strategic opportunities and threats, objectively assessing strengths and weaknesses, identifying processes that need to be improved, and investing in the training and development of the team. It requires time to think, and to build relationships and networks with external stakeholders. Working on the business entails thinking about the hard things: mission, vision, strategy.
In our view, a high-performing back office is a critical component of this transition. An effective administrative team manages the “business of the business” and keeps things running smoothly. The timely data and reporting it provides empowers leaders to interpret, anticipate, and respond to new opportunities and threats. Like the pilot of an F/A-18, leaders in the company have the tools available to move the company through a complex, confusing battlespace and achieve a mission.