The high season for corporate fluff and sandbagging
We are in Q4 of the calendar year. Tomorrow is December.
For most people this is the time for completing the plans and budgets for 2013.
As a management consultant I get to see a lot of plans and budgets. My primary job this time of year is to help my clients identify the fluff, the platitudes and the conjectures and turn the plans and budgets into something with substance. I also act as the detective revealing sandbagging behavior.
I use a very simple approach that I will share with you.
The budget first?
Most business people want to go straight to the budget. Show me the numbers!
Start with the [slider title=”plan.”] If you are dealing with a startup, you must start with the business model. Startups shouldn’t do plans and budgets. They should do business models and talk to customers about what it will take to send an invoice in return for the product/service they will deliver. This post is not a about startups.[/slider]
The plan should answer the following questions:
- What is your Customer Value Proposition?
- What is your market position in 3-5 years?
- How is your 2013 plan a step to reach your “long term” position?
- Are you growing faster than the market you are in? Prove it!
- What are your main challenges for 2013?
Now show me your budget!
The fluff test
The first thing you will be looking for in the plans is “fluff”. These are examples of genuine fluff:
- We want to become the leading supplier in our market
- We want to offer excellent customer service
- By having the best product…
- We will hire only the best people
- By doing the right things at the right time we will…
- By exercising due diligence we will
You can test fluff by negating the sentence. The negation should be meaningful for a company with another strategy than yours. If the negation represents something that no company would ever say or do, then it is pure fluff:
- We do not want to become the leading supplier in our market
- We do not want to offer excellent customer service
- By having the worst product…
- We will not hire the best people
- By doing the wrong things at the wrong time we will…
- By being careless we will…
These are examples of non-fluff statements:
- We want to become the leading supplier of management consulting services to software-driven companies with international ambitions (measured by consulting revenue)
- We want to keep the customer satisfaction level over index 95
- We will hire people according to the profiles specified in appendix 3
- By doing this [list of actions] we will achieve these [measurable objectives]
- By applying [specific procedures] we will achieve these [measurable objectives]
Fluff is dangerous. It sounds great, but it is worthless. You can’t execute on it and you can’t measure your performance against it.
Sandbagging is mainly a sport in larger organizations. In larger organizations you are not rewarded for your performance compared to the reality. You are measured on your performance compared to your budget.
Thus, anybody with experience from the corporate world will know that success has got nothing to do with performance on the market, but is exclusively determined by your ability to negotiate a low budget and then over perform. You will try getting away with the lowest revenue possible and the highest cost possible.
We can always test sandbaggers by pushing them to the limit. Dictate a cut in cost. Dictate an increase in revenue. Tell them that these are executive targets and we believe they can make it. If they accept the new targets, keep pushing. Push them until they (almost) hand in their resignation. But don’t push them into something you don’t believe in yourself. If you could get away with that, then you have another issue.
Happy planning and budgeting!