Spero Consulting

Decision-​making & Implementation

From sim­ple rel­e­vant costs and ben­e­fits analy­ses to detailed Monte Carlo sim­u­la­tions and sto­chas­tic, dynamic pro­grams, we can help you think more clearly about busi­ness issues and problems.

For exam­ple, if a series of seem­ingly opti­mal deci­sions have not turned-​out as antic­i­pated, it could be sim­ply bad luck, or it could be the inac­cu­rate iden­ti­fi­ca­tion and spec­i­fi­ca­tion of the prob­lem. That means you might be includ­ing irrel­e­vant fac­tors or exclud­ing rel­e­vant ones in your deci­sions. Or, could mean that you made a sound deci­sion but it was poorly imple­mented. The lack of proper con­trols, includ­ing poorly-​designed incen­tive schemes, can doom the best inten­tions of men and firms.

We can’t change your luck, but we can (1) help pro­tect against bad luck and (2) help with almost any con­trol–related issue or problem.

What do we mean by con­trol?

We use the word ‘con­trol’ a lot because con­trol involves deter­min­ing and imple­ment­ing poli­cies, pro­ce­dures and actions to accom­plish one’s goals. It’s what you are try­ing to do every­day when you man­age and lead your firm or orga­ni­za­tion; so, it involves all types of deci­sions – both short-​term and long-​term, includ­ing the choice of strate­gies and invest­ments, ways of orga­niz­ing func­tions as well as tac­tics and modes of operating.

We don’t want it to sound too gen­eral, because we help solve very spe­cific prob­lems, but with a broad frame­work, we’re often able to show con­nec­tions and rela­tion­ships (and causes) of prob­lems that would oth­er­wise stay hid­den (and doom your prospec­tive chances of success).

Con­trol also involves the per­for­mance mea­sure­ment of busi­ness units and indi­vid­u­als, and gen­er­a­tion of feed­back (reports) to adapt poli­cies and plans to increase the like­li­hood that goals are met in the future. Thus, con­trol involves the opti­mal design and imple­men­ta­tion of infor­ma­tion sys­tems, includ­ing finan­cial infor­ma­tion and/​or account­ing systems.

We excel at being able to deter­mine the behav­ior impli­ca­tions of infor­ma­tion sys­tem design, includ­ing how to sub­tlety influ­ence employ­ees by the infor­ma­tion you present to them.

Ask a typ­i­cal IT con­sul­tant about the behav­ioral impli­ca­tions of infor­ma­tion sys­tem design, and most likely, you’ll get a blank stare that says, “what do man­age­ment infor­ma­tion sys­tems have to do with peo­ple?” Our answer: just about everything.

Our con­trol prac­tice is very broad and encom­passes almost all aspects of finance, account­ing, and strat­egy. (We taught and con­sulted on all of those top­ics.) It seems to con­tin­u­ally expand into new areas.

It includes deci­sion making; the design of con­trol, incen­tive, and per­for­mance man­age­ment and mea­sure­ment sys­tems; the design of cost and infor­ma­tion sys­tems, and the deter­mi­na­tion and esti­ma­tion of rel­e­vant costs for short– and long-​term deci­sions. Here are a few examples:

• The link­age of strate­gies, orga­ni­za­tional struc­ture, and con­trol, includ­ing opti­mal per­for­mance mea­sure­ment. We often ask: do you want infor­ma­tion from your sub­or­di­nates or effort? Gen­er­ally, it’s dif­fi­cult or infea­si­ble to get both. More pre­cisely, it’s dif­fi­cult to get both in an effi­cient (profit-​maximizing) way, i.e., you can’t get both cheaply!
• The devel­op­ment of cost report­ing sys­tems that sup­port the organization’s goals and strate­gies. This is much more inter­est­ing and impor­tant than many man­agers think. Don’t leave it to the accoun­tants to deter­mine what infor­ma­tion you need for your decisions.
• The deter­mi­na­tion of cost behav­ior and the iden­ti­fi­ca­tion of rel­e­vant costs for all types of orga­ni­za­tional deci­sions. We have noticed that many projects that start else­where end here with the same basic issue: deter­min­ing what’s rel­e­vant and what is not. For exam­ple, one firm wanted a new activity-​based cost­ing sys­tem to help iden­tify addi­tional rel­e­vant costs. We explained that such a sys­tem would be very expen­sive. It would be much more detailed, but it would not pro­vide any new infor­ma­tion (rel­e­vant costs) for any oper­at­ing deci­sion that could not be esti­mated for the exist­ing sys­tem. (Instead, we showed them how to extract avail­able infor­ma­tion from the exist­ing sys­tem and thereby save a lot of money.)