CFO Summit Spotlight: MIT's Michael Schrage on the Future of Performance Measurement

He will explore and explain how and why CFOs can use KPIs as quotorganizing principlesquot to better define and design how capital allocation delivers measurable value Schrage will also discuss the impact of digitalization instrumentation nextgen algorithms and analytics on how enterprise performance gets monitored measured and managedSchrage is a Research Fellow at the Massachusetts Institute of Technology Sloan School of Management and a Visiting Fellow at Imperial College39s Innovation and Entrepreneurship program He has written several books on the role of collaborative tools and technologies in enabling innovation and has done consulting and advisory work for a variety of Fortune 500 corporations including several in the media and entertainment industryRecently MFM President and CEO Joe Annotti conducted an email exchange with Schrage to ask a few questions related to his CFO Summit sessionJoe Annotti Three years from now the media and entertainment business might look much different than it does today Will KPIs still be relevant thenMichael Schrage KPIs have a terrific future that39s why I spend so much time with them Given the ongoing explosion of instrumentation digitalization data capture and algorithmic innovation KPIs will become far more important insightful predictive and strategic for serious organizationsWith tongue only slightly in cheek I39d argue that KPIs in some media organizations will do a better job of learning than the CFOs and CMOs who ostensibly oversee them I don39t think anyone can look at the rise of programmatic advertising and the streaming wars and not immediately recognize that prepandemic KPIs are not fit for media purpose come 2025To be sure there will always always be hardy perennial KPIs ie revenue subscribers etc But people are kidding themselves if they don39t believe that having 10X to 100X more data won39t force them to revisit and revise KPIs like churn and CLV customer lifetime valueAnnotti What will CFO Summit attendees walk away with from your presentation How will it help them become better leaders and performance managersSchrage That39s a trick question The CFOs I know have a mix of strategic operational and organizational priorities Some are obsessed with cost cutting others are doubling down on more strategic capitalallocation issues and still others want to better collaborate with their Csuite colleagues and SBU strategic business unit leadership What they all have in common is a need to better measure both quotinputsquot and desired quotoutmodesquot Their existing measures and methodologies are no longer good enough and they know it My brief talk should suggest actionable insights about getting greater value from better defining and measuring performanceAnnotti How will advanced technology and artificial intelligence affect financial forecasting That is one of the most important functions of the financial executives attending the CFO Summit Is it possible to use KPIs to measure AISchrage That horse has left the barn AI both narrowly and broadly defined already informs and influences financial forecasts for many of the firms participating in my executive education classes and workshopsI already know financial analysts using ChatGPT3 to manage their Excel spreadsheets I already see churnprediction algorithms being mashed up with performancemarketing campaigns to see what kind of retention offers make sense and which ones don39t So this is going on The big catch Most of it is on an ad hoc opportunistic basis A strategy is not the sum of your five best quotpoint solutionsquot I see this as a real challenge for CFOs and the Csuite alikeAs for using KPIs to measure AI I think that39s a superb example of the wrong question What you really want to measure is AI39s contributionattribution to the value you wish to create or the costs you wish to saveThe CFO Summit is attended by the most senior members of the media financial community This year39s event will be held at the JW Marriott Grande Lakes Resort in Orlando FL To register visit this linkClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNet

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CFO Summit Spotlight: MIT's Michael Schrage on the Future of Performance Measurement

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Joe Annotti

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CFO Summit Spotlight: MIT's Michael Schrage on the Future of Performance Measurement

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