Learning, Training, and Listening in August

Welcome to the newsletter “PACE News”.?Click “Subscribe” to receive a notification and an email when we publish new articles on this channel monthly.

Become a basic member of PACE at no charge to get access to many articles, podcasts, webcasts, case studies, and eBooks. Visit www.Profitability-Analytics.org

The PACE Profitability Analytics MasterClass is now available.

Want to become proficient with Profitability Analytics (PA) from the comfort of your home? The Profitability Analytics Center of Excellence has launched The PACE Profitability Analytics MasterClass.

Successfully complete the first module by August 31st (it's free) and win a chance to take the rest of the course for free (a US$99 value).

The Profitability Analytics Center of Excellence has launched their FIRST self-paced, online, 8-module MasterClass and the first module is FREE!

We have teamed up with CostPerform to provide this training to you. This online MasterClass provides a structured, comprehensive approach to becoming proficient with profitability analytics, equipping you with the skills to drive organizational success through informed decision-making and strategic insights.

A certificate is issued upon successful completion.

Here are the 8 modules:

Module 1: Introduction to Profitability Analytics and the PACE Profitability Analytics Framework.

Module 2: Fundamentals of Causal Modeling

Module 3: Strategy Formulation Essentials

Module 4: Mastering Strategy Validation

Module 5: From Planning to Results: Effective Strategy Execution

Module 6: Revenue Management Analytics

Module 7: Effective Managerial Costing

Module 8: Managing Investment Strategy Using the PA Framework

Check it out today on CostPerform Academy! https://lnkd.in/gqdthZ-3

Webinar

September 19th, 2024: How to Leverage AI to Increase Profits and Productivity with Lawrence Maisel and Robert J. Zwerling, P.E.

In the evolving landscape of business analytics, the integration of Artificial Intelligence (AI) has marked a significant paradigm shift, particularly in increasing profits and productivity. Join us as we explain how to make this transformation, emphasizing the transition from traditional (and often biased) forecasting to AI enabled probabilistic models that grows business performance.

Learn too how AI and analytics transcend traditional methods of monitoring Key Performance Indicators (KPIs) with a new performance scorecard that actively drives improvements in company strategy execution. This Analytics Scorecard ? reveals and tracks impactful KPIs that will support your performance goals, as it enables unbiased measurement and prediction that inform critical decision-making to achieve targeted results.

This webinar highlights the importance of recognizing biases and the impact on organizational performance, which too often misjudge the cause-and-effect relationships that drive success, as well as leads to inefficient/ineffective decisions that waste capital and frustrate achievement of goals. By leveraging AI and analytics, managers gain unbiased and accurate insights into relationships that ensure the right capital in the right place at the right time.

We will explore two use cases; (1) an actual example of AI-enabled probabilistic forecasting of demand that produces longer-range forecast accuracy from the high to detailed level, from which business can elevate planning and navigate uncertainties and variabilities in market demand. Increased accuracy cascades across supply-chain planning, inventory optimization, and fulfillment to achieve measurable improvements in operational efficiency and financial performance, and (2) a KPI Analytics Scorecard ? that demonstrates How To drive improved performance and increased profits.

Don't miss this opportunity to learn how to harness the power of AI and analytics for profits and productivity. Register now to secure your spot!

Link to register: https://tinyurl.com/yc3732hp

Article:

Are You Playing Offense or Defense for Your Organization? by Larry White

In the article, Larry White argues that while traditional accounting focuses on control and accountability (Defense), it should shift towards contributing more to the Offensive functions of an organization. Offense in business involves driving growth by finding new markets, customers, products, and services. The author suggests that management accounting should play a more active role in:

• Revenue Management: Enhancing profits by growing revenue, differentiating pricing, and identifying new opportunities.
• Managerial Costing: Ensuring costs accurately reflect operational realities and support strategic decision-making.
• Investment View: Taking a comprehensive view of both tangible and intangible investments for long-term success.

While Defense is crucial, overemphasizing it can lead to failure or mediocrity. The goal is to empower management accountants as key Offensive players in their organizations.

Enjoy the full article here: https://tinyurl.com/yc6a84mr

Podcasts:

What's More Important? Operational or Financial Metrics

Larry White discusses the importance of operational versus financial metrics. Initially, it may seem that both are equally important, but he explores this further. In manufacturing, traditional methods of inventory valuation and product costing have led to distorted information, which operations personnel have often disregarded. Despite this, manufacturing efficiency, quality, and performance have dramatically improved due to a focus on operational metrics rather than financial data. These operational improvements have led to better financial outcomes, not the other way around. From Larry's experience, only a small percentage of manufacturing professionals find accounting and finance information useful. To address this, the PACE model ensures that operational models form the basis for financial modeling, emphasizing causality and a broader view of costs, including customer and sales-related expenses. Effective decision-making should consider various costing dimensions and focus on long-term success. So, which metrics do you think are more important: operational or ?

Spotify:? https://tinyurl.com/4wm2ncy3??

Apple:? https://tinyurl.com/567dpp2f

YouTube: https://youtu.be/XN3ds1V43xo

Management Accounting Insights from 1923

In this podcast, Doug Hicks, CPA , a director at PACE, discusses a significant gap in accounting education: the lack of historical context for the ideas being taught. Hicks argues that without understanding the history and reasoning behind accounting practices, students may end up just memorizing rules without grasping their true purpose.

?Hicks concludes that management accounting, unlike financial accounting, should focus on understanding economic realities and adapting to specific situations rather than just following set rules. He calls for a new approach to teaching management accounting to better prepare accountants for modern economic challenges. He invites listeners to share their thoughts on this topic.

Spotify: https://tinyurl.com/28ehzp95

Apple: https://tinyurl.com/2bfe9jcm

YouTube: https://youtu.be/C3C_EfAjVDA

?Observations on Pricing

Doug Hicks shares his observations from over five decades of working with small and mid-sized businesses on pricing strategies. Pricing remains a top 10 business topic, but many organizations still treat it simplistically, merely adding a markup to estimated costs. This often leads to unrealistic expectations and financial disappointments, as market conditions, not costs, determine the price. Many businesses also rely on outdated cost accounting systems that don't reflect true economic conditions, leading to flawed pricing decisions.

?By developing causality-based cost models, companies can more accurately assess costs and make strategic pricing decisions that optimize overall profitability. These models are particularly crucial for strategic pricing, enabling organizations to allocate fixed resources effectively and measure true value by considering investments. Furthermore, basing sales commissions on profitability or value added, rather than sales percentages, can prevent value erosion.

Spotify: https://tinyurl.com/y9c2jhdk

Apple: https://tinyurl.com/mryw85j8

YouTube: https://youtu.be/Rq1c7oP2exM

More from PACE

?If you want to see more PACE content, please check out our LinkedIn PACE Channel , website , and Podcasts on Spotify, Apple Podcasts and YouTube.?To learn even more, read our eBooks on:

• The Profitability Analytics Framework
• Managerial Costing: Why it's important and how to do it?
• 6 Steps to Assessing and Improving Revenue Management Practices
• Why Causality is Essential for Effective Performance Management Systems
• Customer Profitability: How to measure it and why it matters
• Managing Customer Profitability - Should you love them or leave them?
• How to Better Manage Strategic Investment
• How to Better Manage Investment Costs
• Causal-Based Budgeting: A Better Approach to FP&A
• How to Implement a Customer Profitability Management System
• Unleashing the power of Strategy Formulation
• Implementing the Profitability Analytics Framework for Enhanced Internal Decision Support

The Profitability Analytics Center of Excellence (PACE) is a?non-profit community of volunteer professionals?dedicated to helping organizations make better, more informed business decisions through the use of data analytics employing integrated, causal models.?Focusing exclusively on how to enable better managerial decision-making within organizations through the use of such models, PACE is the go-to source for people looking for independent and impartial (vendor and methodology neutral) information in this area. Find many more articles at www.profitability-analytics.org . Become a member today (no cost to join).