> MANAGEMENT AND INTEGRATED PLANNING SYSTEMS  
Putting the Horse Before the Cart  

One of the most difficult ideas to convey is the difference between an Integrated Planning Model and all the other types of models used by managers to improve their effectiveness. The clearest contrast can be shown by defining the role that information and logic play in models. If we consider the horse as the logical truth of a situation and the cart as information that is a reflection of that truth, then ideally we would like to put the horse before the cart. Define the logical connections and then get the data.

In a data-rich society that is deeply entrenched in the Information Age, however, those who build and use models assume that the model must be driven by objective data. If that data cannot be obtained, either "proxy" data is substituted that is assumed to act like the data desired, or the model is restructured in such a way that real data can be used. Economists and scientists make important contributions by using this approach to explain our world.

Management, on the other hand, has an entirely different set of objectives that turn wholly on effectiveness. Reducing costs, increasing revenues, and maximizing profits form the basis of their reason for being. In this context, management must be concerned about what is true. This means that a manager must begin with understanding. In an ideal world the availability of data would follow the need. But the world is not ideal, and many things that are important, even critical, are not easily quantifiable. The outcome of an event will be determined not by the available data but by the truth. It is therefore incumbent upon the manager to use every means at his or her disposal to enhance that understanding.

IMS Quantum Corporation (IQ) begins with a tight, logical, and integrated understanding of the factors that influence markets, operations, and the business environment, to build the Integrated Planning Model as if all necessary data were available. This understanding becomes the horse that pulls the information cart. The IPM is used to determine the important data. If it is available, it is used. If it is not, then subjective estimates are made until the determination is made as to the importance of the information and/or its future availability. In any case, the process tells the manager what is important, what he has, and what he needs. Finally, the IPM is a way for management to expose current understanding to scrutiny, focus dialogue, and thereby improve that understanding. IQ is committed to a paradigm shift in the use of models by management. A model changes from being an objective instrument to yield answers, to a more subjective instrument to reflect what management believes is true. Garbage in, garbage out no longer has the same meaning with regard to an Integrated Planning Model. Because of the model's transparency, management takes responsibility for all the numbers in the model. What management seeks through shared understanding and dialogue is better understanding, better decisions, better plans, better strategies, and higher levels of profitability.

 
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