Consider the following three scenarios:
You are the CEO of a growing enterprise. You need to simultaneously manage numerous projects and business processes. The weight of responsibility is pulling you down. There is too much information to store and process in your head, yet you lack the kind of information needed to make good decisions. You avoid delegating tasks to your team because it is "easier" to do it yourself. You begin to lose control. Customer service deteriorates. Productivity falls. Quality slips. Business growth slows. Profits stagnate.
What's your solution?
You are the patriarch of an established and well respected business. You led your company from its birth. You watched it grow. You nurtured it through its terrible twos and awful teen years. You were happy when it was happy. You suffered when it suffered. You loved it. Your business is like your child and now it is all grown up and ready for the next generation to lead it through middle age.
How do you let go and yet maintain the watchful eye of a grandfather?
You’re an angel investor yet you are treated like the devil. The company’s management team presented you with their business plan although, for them, it was just a carefully crafted sales document designed to get your money. You came to their rescue when they were out of options. You sat around their conference table quarter after quarter and you trusted them. They fed you the information you requested and told you what you wanted to hear. Unfortunately, they lied just like their reports and projections lied. If only you had an independent means to corroborate their rosy assessment.
Your transparent solution?
These three scenarios might seem unique but they are simply a variation on the same theme. Every business, regardless of industry, size or stage of development shares a common denominator. After all, every business has customers, competitors, regulators, employees, finances, strategies, projects and operational processes. Every business requires the same basic set of management systems to function efficiently and communicate qualitative results accurately. I believe that it is this common denominator that should be represented by GAMP.
What is GAMP?
GAMP stands for Generally Accepted Management Principles.
What vs. How
Current management theory is filled with ubiquitous terms that are casually discussed with the expectation that leaders put theory into practice. For example:
The list goes on and on.
The business sections of every library and bookstore are filled with texts advising leaders "what" they need to do. However, very few demonstrate "how" to practically implement their recommendations. The remaining solutions are often so complex, narrow-focused and overweight, that they are impractical except for the most sophisticated management teams.
What’s needed is a standardized set of integrated leadership tools that prescribe specific, intuitive methods for establishing a company’s foundation of best management practices.
GAMP Would "Fill the GAAP"
Business leaders have long recognized the benefits of employing standardized systems to regulate the flow of information to stakeholders.
For example, Generally Accepted Accounting Principles (GAAP) standardizes a system of accounting which is used to communicate financial results. Anyone with a basic understanding of a balance sheet and income statement can easily assess the financial standing of virtually any business. In terms of communicating quantitative results, GAAP is a powerful shared business language — but, is quantitative reporting enough?
Recently, great attention has centered on the limitation of GAAP. Regulators and stakeholders are demanding greater transparency. They want to understand the story behind the numbers. For example, Sarbanes-Oxley is the reaction of an angry nation to a system of financial reporting that is easily manipulated by management.
The limitations of GAAP are easy to understand because financial reporting relates a single perspective that cannot easily communicate qualitative results. Extensive footnotes and carefully worded executive summaries attempt to fill the gap but they often fail to provide the level of transparency desired by concerned regulators, investors and other stakeholders.
GAMP would provide a parallel system of qualitative reporting to balance the quantitative information governed by GAAP. Together, GAAP and GAMP, would provide a more complete indication of a company’s current results and a more accurate predictor of future performance.
Imagine, for example, the benefit that would accrue to venture capitalists, investors, executive teams and CEO's if all interested parties had access to the same standardized reporting system:
- Overwhelmed leaders would have the means to order their chaos and regulate all the moving parts of their business. They would have a highly organized framework to focus their efforts and achieve a decisive competitive advantage.
- A company’s "parents" would have sophisticated methods to pass the baton of responsibility to succeeding generations.
- Angel investors would have transparent mean to manage their investments.
- Business leaders and their management teams would synchronize to a common strategic vision. Their efforts would be coordinated by a common management "language."
It is this "grand idea" of creating a universally applicable leadership strategy and reporting model that motivated me to spend nearly two years developing www.OnTheSystem.com. It is a web-based performance-management system that creates the kind of best-practices framework that is required by GAMP.
I am eager to hear your ideas and thought concerning the development and promotion of GAMP. If you would like to help me promote this idea please let me know.
Mike Kramer, CPA