New Program Can Analyze Problems

Good management depends on good information. If your profits don’t meet your goals, is it because your sales have dropped or because your prices are too low or because your production costs are too high. Or is it all three?

If your sales have dropped, is that because product quality has slipped or because prices are too high or because orders are going unfilled?

Actually, it’s never so simple as that. Every business turn is a result of many factors. Good management depends on keeping track of all those factors and understanding their effect.

Now, with your personal computer and a new $495 program called Trigger, you can watch over and analyze such factors.

Trigger--published by Thoughtware Inc., 2699 S. Bayshore Drive, Coconut Grove, Fla. 33133--is based on Thoughtware’s Management by Exception training series, which is packaged with the new program. It runs on the IBM PC and compatible computers.

The concept underlying both Trigger and Management by Exception is that you worry only when a performance aspect of your business falls outside accepted bounds. That works, of course, only for measures of performance that can be stated numerically and can be assigned a normal range of variation. For instance, daily sales volume might vary from 10% below normal to 15% above normal and still fall within acceptable limits for achieving desired monthly or annual sales.

However, if daily sales fall to 11% below normal, action might be required. At the very least, a manager should be alerted to the possibility that something is awry. That is where Trigger comes in.

Trigger provides the framework in which causes of aberrations in business performance can be assessed and can prescribe and assess corrective actions. Over time, the computer even “learns” which underlying causes are most important and which corrective measures have the greatest effect.

The first step in its use is to determine which performance factors will be measured and with what frequency. The program can accommodate daily, weekly or monthly measurements, including normal variations that are the pattern in many businesses, such as Sunday newspaper circulation that exceeds that of other days of the week.

Trigger allows you to track performance of up to 50 organizational units, to which a maximum of 200 management controls can be assigned. For a computer store, organizational units might include administration, personnel and sales. Within the organizational unit for sales, management controls might include computers, printers and software.

When setting up the program, you have to decide how frequently to measure each management control and with what units--dollars, units, percentages, etc. You also can create “derived controls” that are based on up to 25 separate performance measures. A simple example would be total sales derived from adding sales of computers, printers and software.

Then you begin to put your accumulated management experience to work by deciding on the acceptable range of variation for each control. Trigger alerts you only when that acceptable range is exceeded. If you set the range too narrowly, you’ll be inundated with Trigger reports and they’ll lose their value. But if you set the range too high, Trigger will ignore changes that you ought to be monitoring.

Next, you must tell the program what the probable causes of any exception are, based on your experience. For instance, a drop in sales could have resulted because your prices are too high, or your advertising has lost effectiveness, or your best salesman has quit, or your products are no longer competitive or a combination of all those factors. You may establish as many as 700 separate causes.

Each cause must be weighted, based on how much effect it is likely to have on the problem. That factor is stated as a percentage in even units of 10, as in 10%, 20% or 50%.

What Trigger is supposed to trigger is action--and you have to describe actions to the program as well, again up to a limit of 700. Actions must be weighted for effectiveness in the same way that causes are weighted.

Obviously, your skill in identifying real causes and effective actions and assigning them valid weighting factors will determine the true value of using Trigger. You may want to leave day-to-day operation of the program to clerical workers, but describing causes and actions and their effects is a job that only a knowledgeable manager can perform.

If all Trigger did was spew out your preconceived notions about what caused problems for your business and how best to solve them, it would be little more than an alarm clock ticking off the performance units until a preset alert point was reached.

No doubt that would be a valuable enough function, but Trigger is able to do much more. It issues reports to the responsible parties whenever an aberration is detected. (You tell it who should get the reports for each organizational unit.) Those managers are then requested to determine the actual cause of the problem and report that along with the action taken. Later, the managers are asked to use Trigger to assess the effectiveness of that action.

Trigger keeps a record of all those responses and actually “learns” over time to distinguish between real and false assumptions of causes, what the actual weight of a cause is and how effective the recommended action is. Thus, the more you use Trigger, the more information it stores about your business and the better its analysis and recommendations can be.

The program itself comes on three floppy disks and can be used on computers equipped either with two floppy disk drives or one floppy drive and a hard disk. It needs only 128K of RAM to run, and, although a color monitor is recommended to see the program at its best advantage, it works beautifully on a monochrome display, even displaying the graphs it makes from report data. The program disks are protected from copying but allow you to install the program on as many computers as you wish. Only one computer at a time can run it, however. A duplicate set of program disks can be purchased for $25 by registered owners of the program.

An excellent tutorial disk also comes with the program, as does a separate instruction manual and two disks containing Thoughtware’s Managing by Exception training course.

Trigger is a well-designed and easily used tool. Its effectiveness will depend on how easily the performance of your company can be measured quantitatively and how well you can identify the factors that affect that performance.

To be really valuable, Trigger has to call your attention to factors that aren’t obvious. If you already know that your sales are off because your best salesperson went to work for your competitor who sells the same product for 5% less than you do, maybe the reason you need Trigger is to figure out how to cut your prices and keep the rest of your sales force.

The Computer File welcomes readers’ comments but regrets that the authors cannot respond individually to letters. Write to Richard O’Reilly, Los Angeles Times, Times Mirror Square, Los Angeles 90053.