Tag Archives: planning

Why Management is Like Dribbling a Ball

This is interesting: Stanford Business School professor Charles O’Reilly on Why Some Companies Seem to Last Forever:

women soccer dribbling

What explains this longevity? Stanford Graduate School of Business Professor Charles O’Reilly calls it ‘organizational ambidexterity’: the ability of a company to manage its current business while simultaneously preparing for changing conditions. ‘You often see successful organizations failing, and it’s not obvious why they should fail,’ O’Reilly says. The reason, he says, is that a strategy that had been successful within the context of a particular time and place may suddenly be all wrong once the world changes.

So running a business right requires minding the details but also watching the horizon. Eyes down, eyes up. At the same time. 

Which reminds me that dribbling is one of my favorite analogies for business planning. In soccer or basketball, dribbling means managing the hand-eye or foot-eye coordination of the immediate detail while simultaneously looking up and watching opponents and teammates and plays developing. When I was coaching kids in soccer, I’d try to help them remember to also look up and not just down at the ball. The best players did this naturally. 

It’s a cycle. Plan, with metrics and milestones. Review once a month. Revise. Do it again next month. That’s the way to last forever, according to O’Reilly. It’s the right way to manage the details and the long term simultaneously. 

(Image: bigstockphoto.com)

Accountability Is Going to Whack Us Good

Here’s an interesting quote, from an email:

Did you know that within the next five years it is expected that 63 million employed Americans will telecommute either regularly or occasionally?

accountabilityI got this in a press release from AVG Technologies, the anti-virus software, about the dangers of people working offsite. It came with a link to AVG Technologies’ Community Powered Threat Report.

To AVG, with good reason, this is about threats and hackers. To me, however, this is a reminder that the thing we’ll be watching, worrying about, and working on, in the foreseeable future, is accountability.

And it’s not just the boss keeping track of us. It’s just as much us, workers, having away to stand proud with measurement of what we’re really accomplishing. It goes both ways.

We’re all going to need a new way to track progress, measure performance, motivate team members, and work together. My biased view is that accountability comes through business planning, which, when done right, sets goals and measurements for the team and individual team members.

Part of good planning is getting each member of the team to agree on the objective, measurable numbers to track for his or her area. That might be dollars, delivieries, units, trips, presentations, leads, page views, unique visitors, subscribers, Klout score, posts, comments, phone calls, or whatever; but it’s a number that’s objective and trackable. And then the planning process means tracking those numbers, sharing results, and talking about it. That becomes management by collaboration, and it generates accountability via teamwork and regular process. That’s the best way to do it, in my opinion.

Planning vs. Accounting: 2 Different Dimensions. And Why You Care.

Just as the stargate in the picture was a gate between two different dimensions (from the 1994 movie), today is also the stargate between planning and accounting. Accounting starts today and goes backwards in time in ever-increasing detail. Planning, on the other hand, starts today and goes forward in time in ever increasing summary and aggregation.Stargate Movie Poster

The catch that causes many misunderstandings is that the tables look very similar.  Your accounting system produces an Income statement (alias Profit or Loss), a Balance Sheet, and a Cash Flow statement.  A good business plan has at least the same three statements as “pro-forma” (meaning projected) statements. The form, presentation, and order of appearance of these financial statements are almost identical, but their information content is quite different.

Why do you care? Because the two concepts don’t mix well. And people who approach planning from an accounting point of view suffer. Accounting is reporting off of a database of transactions. Each transaction is recorded and kept, and the accounting sorts and selects and reports. Instead of guessing future monthly totals, they want to figure out an imaginary database of imaginary transactions, and then report results from them. They sweat, the suffer, they get digestion problems, and it doesn’t work.

Planning is to help steer the business. It helps with decisions, tracking progress, and managing change. Accounting is also for information and management, of course, but there are legal obligations related to taxes. Accounting must necessarily go very deep into detail. Planning requires a balance between detail and concept, because there are times when too much detail is not productive.

Accounting can never be wrong. It’s about taxes and governments and actual money transactions. Business plans, however, are always wrong, which is fine, because they’re about setting down assumptions so you can manage and track results, and steer the company. Steering is a matter of constant corrections. So is planning.

Keeping Budgets vs. The Good Spend

So you’re moving along in your business, planning ahead and following up to stick to your budgets, and suddenly a great opportunity appears. You’ve spent the budget already. Do you overspend to chase that new opportunity?

Hint: I’m sure there’s no good general answer to that question. I think you have to answer it by looking at the specific case.

Much as I believe in business planning, I’ve never believed in the plan as constraint or chain and padlock to keep you from moving the budget suddenly to jump quick for a special opportunity.

It’s that contradiction between planning and opportunism that led me to develop the concept of “a good spend.” In the years I’ve been running a business, I always had budgets, and I always tried to manage with budgets; but I also completely understood that sometimes the opportunity is more important than sticking to the budget.

Is it a good spend? Does this project offer attractive odds of good results? Is it likely to be worth it? Are we going to regret not doing it? Can we find the money somewhere, like taking it out of some other budget, saving it from somewhere else, or even borrowing it? Then it’s a good spend.  Do it.

Budgets are plans, and plans are about planning, which is about management, steering the company, and controlling your destiny. The goal is better business. The budget serves the business, and not vice-versa.

(Image credit: Nata-Lia/Shutterstock)