Exercising Control over the Future
Overview No one can control the past, it can only be explained. The main value from explaining the past is if any ‘learning’ from the past can be applied to make the future better; thus historical analysis should be used as a learning process to indicate how things should be done differently in the future. The performance measures used by a business must therefore be tailored to the key strategic thrust of that business and should highlight the potential future impact on the key assets of the business of any new strategic move. The control process must be completely integrated in the planning process
(I try to avoid using the term ‘planning’ without attaching the words ‘and control’ to it). Therefore businesses should not regard ‘planning marketing’ and then ‘controlling their marketing plans’ as distinct roles or sequential processes. Marketing finance must be totally involved in both planning and controlling marketing activities. Analysis of the past can be very useful if it is applied to improve decision-
making in the future; all feedback loops should be treated as a learning process. Unfortunately many management accounting processes overemphasise the purely historical reconciliation aspect of reporting. Where internal business units are created and transfer pricing systems are
implemented, there needs to be a service level agreement (SLA) between the supplier and the internal customers. SLAs facilitate the allocation of responsibility within the business and thus make good control much easier. There are a number of critical success factors that can be identified for
sound control to be achieved by a marketing finance system. The marketing finance system must focus on strategic decisions that should have been predicted in advance by the linkages between the system and the objectives and strategy of the business. The relevant decision support information should be communicated to the strategic decision-makers in a user friendly (i.e. immediately usable) format. Marketing finance must measure the intangible assets of the business, and this is facilitated by splitting marketing expenditure into development and maintenance categories. As control can only be exercised over the future, marketing finance should control the commitment process
rather than focusing on the actual physical payment for, or expensing of, the marketing activity. Control requires a degree of choice to be possible and thus ‘engineered’ cost relationships should be identified; particular emphasis should be placed on the truly discretionary activities that marketing managers can undertake prior to any commitment being made.