'So much of what we call management today, consists of making it difficult for people to work.' Peter Drucker
In a recent Performance Improvement Programme Susan (one of the senior managers - not her real name - to protect those insane enough to challenge prevailing insanities) revealed ...
‘The problem we have is that Finance Department are setting budgets on historical data and Strategy Department are setting plans based on future trends - and the two never talk...Our Budgets have no relationship to our Strategy.' It's a classic scenario.
The hierarchy demands you must have a Strategic Planning Unit. You must have a Strategic Plan. You must have a glossy document to show shareholders, Board Members and staff that you are organised, professional, heading somewhere.
The problem in this organisation was that the budgeting for each year was set based on the previous year. Add 10% here cut 5 % there. Balance the budget. Now go and make it work.
In parallel but not in unison was the Strategic Planning unit. They are looking at future trends, emerging markets, and dying markets. Where money and people should be directed to maximise returns and profits.
Theoretically the budgeting cycle and the strategic plan should fit together like hand in glove. Budgets should support strategy. But in this case it was almost polar opposites. The budget and the strategic plan were two completely separate processes; two completely separate documents, two key drivers of the business that never spoke to each other.
Susan (not her real name as previously mentioned) had identified Innovation Insanity at its best.
When Susan raised the insanity at Board level there was a lot of coughing.
The good news is that the Board are now following a new 6-step process based on our recommendations.
Susan had the courage to speak up but in doing so had helped the CEO set the organisation on a whole new, far more powerful course of innovation.
SIX STEPS TO PROFITABLE PLANNINGGather data on future trends, customer needs, market opportunities Get both your finance people and your strategic planning people to gather this information. Share it with managers, team leaders and team members. Bring everyone in on the big picture.
Gather data on past financial performance Get your managers, team leaders and team members to work with your finance people to collate information on past financial performance. Where is the money coming from? Where is it going? What is it being spent on? What are the patterns? What story are the numbers telling you?
Set plans to get from where you are to where you want to be Now that you have that information you can set strategy. Bring as many people as possible into the planning process. Your strategic team should set strategic goals and targets based on the data. Your strategic team should not just consist of senior managers. Make sure you have a multi level, multi functional strategic team. Your strategic team should be diverse but at the same time highly business literate.
Then involve your team leaders and team members in how they can achieve those goals.
Set budgets to allocate resources to make the plans a reality Make sure the budgets support your plans. Make sure the budgets are shaped by the plans, not the other way around.
Set a schedule to review progress Once you have set plans, set up as part of the plan to review the progress at least quarterly if not monthly.
Celebrate progress Celebrate progress. Success breeds success.
By celebrating you are not only acknowledging people (which most people need) but you are sharing how the progress was made. You are cross-pollenating ideas to others when you celebrate. You are catalysing others to also make progress when you celebrate.
Why do Richard Branson of Virgin or Herb Kelleher of Southwest Airlines find hundreds of reasons each year to celebrate with their teams? Because they know it pays big dividends.
<>Celebration is not just frivolous fun. Celebration of progress promotes more progress.
If you want more progress, celebrate progress.
You can stop the Innovation Insanity in your company by:
- Firstly identifying it,
- Calling it, speaking up about it and suggesting the 6 Step Solution, then
- Putting the 6 steps into action.