Why do businesses manage to outcomes?
To get a result!
Is managing to a number the best way to get results?
Visa, one of the largest organization in the world, had no employees, no leaders or managers, it was a self organizing system that grew based on the world’s interest in it growing. It has since become like everyone else but not until it scaled the heights of a massive worldwide business.
Ricardo Semler, CEO of Semco Partners, has been speaking to ivy league MBA students for decades about his business. And his business model is one of a kind. Yet no one is buying his offer to help them create their version of his business model.
Sugata Mitra proved that a Child Driven Education, was a better way to get results. He went to the poorest, least educated areas of the world and over time proved his theory. Being an academic, he went through the long and arduous process of proving his assumptions in a unique and compelling way. Once he had all the data to show the world another way, he offered his services to help anyone interested. My friend is one of the precious few taking him up on this offer.
Unlearning Leadership By Guy Pierce Bell
Why not adopt innovative ideas that are proven to work for everyone! Why not be open to learning from outside your school of thought, or your industries norms?
I have no idea. Mediocrity has never appealed to me so I can’t see through the lens of people who are stuck in this cycle of hitting numbers and creating perceptions without any clue how this impacts their short term upside and long term survival.
For starters, stop using budget as a template to running your business.
Budgets are primarily useful for getting a handle on future cash flow for investments considerations. This takes away all the games of putting cushion into the budget and sandbagging growth potential. Both odd and neither is a useful exercises. I’m laughing right now as I think about a specific process one large company went through to build in their cushion and ensure the executives “earned” their bonuses. Then the next layer did the same and so on. The thousands of hours and months of iterations was a waste. In my less than humble opinion.
Every turnaround relating to revenue decline is linked to using budgets as goals. And using goals as the day to day management tool.
Managers, know your minimum expectation, know your potential, and manage by maximizing the impact every person has every day.
The most important number is the number that you think is possible. So how do you get to this number?
Use current and recent performance. To avoid trying to cover every sectors lifetime value and other factors, I’ll stick with simple math. Say your business has seasonality trends that stay consistent. Marketing has generated 50,000 inquiries that bend, to some extent, seasonally with a vitally important exception. The bend has more to do with customer decision-making, determined by math, than with potential volume. Determining this with some certainty isn’t easy but necessary.
Then the study of conversions. Beyond the debate of whether the inquiry is good or bad, marketing versus sales, there is a way to get close to the truth beyond beliefs. Get there! This will take beliefs out of the facts. Still not perfect though.
This is the starting point. Decide if the market is ready for growth, maintenance, or at risk of decline. Studying the future by knowing the past is a good second filter. If you understand how longer cycles work and then understand the factors that influence your cycles, you are doing well. Now you choose which direction you plan to go.
Let’s say, based on your research, you choose growth. It’s a math game. You take the actual math, add in factors that influenced false positives or factors that hurt performance, and then you build a model or add the assumptions into the model. The model says what you need to spend for growth, how many people you need to hire to meet the growth goal, and you now play with the most amazing part of life in business.
You study what you know to then play with what is possible. Now the stretch goal is about human potential and not about “driving people to hit a number”.
I’ve yet to see when the old way of “driving business” through a budgeting game is more successful than working from math, then potential to plan each day to reach for your best.
It sounds like I’m saying the same thing two different ways. I’m not. There is a difference in practice, beliefs, behaviors, happiness and ultimately, results.
I’ve watched CEO’s drive growth through aggressive management and with the pressure of a stretch budget that is difficult if not impossible to hit. They are all out of business. Short term gains built on ego never last.
Doing it the right way pays off!
Better for the customer because they don’t feel pressured or lied to by a desperate salesperson.
Better for the employee because she is not compromising her ethics to lie for a sale.
Better for the manager because she now in passionate about meeting potential.
Better for the company because the risk of bad press “60 minute rule” is no longer as much of a risk.
Better for everyone!
In this approach, everyone is about the moment. Everyone is about doing the right thing. And the right thing is listening, educating, caring, gifting time regardless of the outcome. The right thing is about the customer learning and choosing what is good for them.
The input is what matters. Showing up is what matters. Everyone counts is what matters. Everyone. The right thing is following the process and adapting when necessary to meet the person where they are.
Now the manager is all about staying focused on the moment to moment investment. She is keenly aware of how the data rolls up and shares it, but not as a threat. She shares the data to celebrate making a difference in every single persons life. Because she’s working from a mindset of excellence. She believes in their potential. And she is working to make a difference!!!!!!!!!!!!!!!!!!
The point is, performance is not earned by continuously looking at the expected outcome. Performance is earned by showing up and staying with every person every day. And from the person doing the job, it’s earned minute by minute. The difference between complete presence and rushing to get through the process is profound.
What you measure is more a reflection of who you are than what it is. And, Liars figure, figures lie. These ideas are formed by top economists. I wish I’d coined them.
Why do businesses manage to outcomes? They don’t know any better or they stick with what they know at any cost. They stay in the lane of mediocrity to avoid risk.
Time to take a risk!