Sigurd Rinde finished last year with a brilliant ode to ridding business of the tyranny of budgeting:
It comes in the form of a tug-of-war between those who crave high income figures and low cost estimates so they look good and can keep up the pressure on their underlings – and the forces who fight for more leeway and less pressure so they can have an easier life next year.
And often takes many tedious months. Sometimes it never gets finished. It is, in essence, a work of fiction. Some software vendors make a living out of budgeting so surely it can’t be that bad? Well actually it’s worse. As Sig says:
Real life corrective measures using a fictitious map [budget] – what value does that have? None whatsoever of course.
Worse, it becomes a pacifier, an ersatz reality, naivety embodied.
I can imagine plenty of people thinking: ‘It’s a bit early in the year but Den’s lost it this time.’ The reason it takes so long to get these things done and why so much resource is poured into them is because people spend too much time trying to prove to others they are God. In reality they’re magicians demonstrating their fortune telling capabilities where the smallest loser wins. In other words, they’re doing the whole thing wrong.
When was the last time you heard anyone, and I mean ANYONE, kick off a budget meeting by saying something like: ‘Where are we delivering the most value to our customers?’ Why? Because professionals and others have never thought about how you might go about building those measures. And yet every day of every week I guarantee you’ll hear companies talk about ‘delivering customer value.’
If you agree 70% of your real business value is tied up in your people then it behooves anyone to protect and nurture that. We instinctively do so but from a position that emphasises our fear of losing control. Instead of letting people define value we allow ourselves to be deluded into believing that budgeting is about cost control where finite resources are presumed to deliver finite results. It’s one of the reasons it is so easy to determine next year’s fees yet gives no clue as to how that translates into value.
Sig proposes an alternative approach – extreme business planning. We’d call it real-time forecasting. But there, the similarity would stop.
Hugh MacLeod wants to know what I think. heh. Now you know.
Scott Adams gives us Dilbert’s perspective.
Update: Lean Six Sigma provides yet another perspective on how process gets intertwined in this specious waste of time.
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