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Excel Can Implement Peter Drucker's Parting Advice to CEOs, Here's How

Peter Drucker made a career of telling CEOs what to do. One of his last essays gave your CEO an assignment that only Excel users can complete.

by Charley Kyd, MBA
Microsoft Excel MVP, 2005-2014
The Father of Spreadsheet Dashboard Reports

Writing in the Wall Street Journal's Opinion page in December, 2004—eleven months before his death—management guru Peter Drucker assigned several tasks to your CEO. These tasks, he said, are ones that only CEOs can do, and that CEOs must do.

Drucker didn't mention Excel. But the tasks he assigned are ones that only Excel users can support, and that Excel users must support.

These tasks, however, pose high risks for Excel users.

The CEO's Critical Tasks

The CEO, Drucker said, is the link between the Inside—your firm—and the Outside: society, the economy, technology, markets, customers, the media, public opinion, etc.

Your CEO's first task, he wrote, is to define the meaningful Outside.

At a bank, for example, does the meaningful Outside include the local market for commercial loans? The national market for mutual funds? Or the major industrial companies and their short-term credit needs? These all are likely markets, but one bank can't concentrate on them all.

Toy makers, he said, tend to define their Outside as their toy-maker competitors. "But the most meaningful competitors for the toy maker are not other toy makers but other claimants on potential customers' disposable dollars."

Your CEO's second task is to think through what information regarding the Outside is meaningful and needed in your organization, and then to work on getting it in a usable form.

Inside information is readily available. "But few CEOs," he wrote, "whether in business, in nonprofits, or in government agencies have yet organized [external] data into systematic information for their own work."

Defining the meaningful Outside, and the Outside information a company needs, makes it possible to answer the key questions: "What is our business? What should it be? What should it not be?"

This information enables the CEO to decide what results are meaningful for the organization...

...And that's a high-risk exercise.

Drucker points out that in the '50s and '60s, executives decided that what was going on in Japan was largely irrelevant to their companies. This explains why the Japanese export push caught CEOs so unprepared.

Similarly, until recently, retailers had decided that the web was largely irrelevant to their companies. But by the spring of 2017, Amazon was worth more than Walmart, Costco, and Target combined, and mall investors now expect to lose billions of dollars on vacant malls.

The Critical Role of Excel

When the CEO chooses a meaningful Outside from among many alternatives, she likely does so with the help of analyses prepared in Excel. When the CEO evaluates the success of a decision, he likely does so using Excel reports and analyses.

In large companies, these analytical reports use data from many sources, summarized and evaluated in many ways by many analysts. Source data must be updated regularly because the initial analyses can take months to develop. And after a decision has been made, senior managers and their staff must monitor Outside conditions, from points of view that can change frequently.

Excel is critical to this effort because no other program has the power to adapt quickly to the unique and changing requirements defined by the CEO and other senior managers.

The Excel Challenge

However, the Excel solution can mean chaos for the support staff. This is because these analyses require many external sources of unstructured data. 

The analyses can have frequent updates. Many spreadsheet databases. Competing versions of similar data. Constant changes in the reports and analyses. High probability of error. Few reconciliation methods. And intense Board-level attention.

These conditions virtually guarantee Spreadsheet Hell.

Worse yet, from Drucker's perspective, a random collection of Excel spreadsheet databases is a far cry from satisfying his second task for your CEO. Few people would claim that spreadsheet databases sprinkled across your Excel users' hard drives represent a meaningful collection of information in a strategically useable form.

The Critical Role of Excel-Friendly OLAP

Excel-friendly OLAP databases bring order to massive amounts of chaotic data.

Like Excel databases, Excel users can create OLAP databases quickly, with little or no help from IT. But unlike spreadsheets in a big company, OLAP databases are maintained centrally, and their data can be shared with managers and Excel users throughout the company.

Excel-friendly OLAPs have three important characteristics.

First, any amount of data can be contained in any number of "cubes"...which are like multi-dimensional spreadsheets with a massive capacity.

For example, Inside data could include a General Ledger cube, a headcounts cube, a planning cube, a sales cube, and so on.

Outside data could include a cube with foreign exchange rates, a cube with the financials of publicly traded customers and competitors, a cube with key economic trends, a cube with search histories from Google Trends, and so on.

Second, users with the proper credentials can write to cubes directly from their formula or by manual entry. And the OLAP database can translate and consolidate the data in real time.

These features allow managers and other Excel users to collaborate easily during planning cycles. And and they allow Excel users to publish updated forecasts company-wide by merely recalculating an Excel workbook.

Third, worksheet formulas can return values from Big Data in any number of cubes into one worksheet, even into one cell of a worksheet. Because formulas return the data, you could update a monthly report by changing text from "June" to "July" in some cell and then recalculating your workbook.

Excel-friendly OLAP simplifies reporting, because it turns every "one-time" Excel analysis into a periodic report.

Less obvious, however, is the power that the technology brings to company-critical analyses. It allows all analysts to work with the same version of the data. When new data is added, all analysts with the appropriate security can update their spreadsheets merely by recalculating them. The reporting structure makes Excel dashboards easy to create. And using one source of data simplifies the task of finding errors in both the data and the Excel reports.

These features give Excel users throughout the company tremendous power to combine Inside and Outside data in their reports and analyses. And they provide the technical means to satisfy Drucker's two tasks that he assigned to your CEO.

The Bottom Line

Management gurus, like Peter Drucker, tell managers what they should do. Typically, a guru's job isn't to tell managers how to get the job done. After all, Drucker advised on strategy, not technology. Often, therefore, Excel users must invent ways to provide the reports and analyses that management gurus recommend.

I've found only one practical way to help your CEO to turn Drucker's assignment into a strategic advantage:  Store Inside and Outside data in Excel-friendly OLAP cubes, and then report and analyze that data with Excel.


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