The Future Budget
The budget for the future remains stable throughout good times and bad.
In most enterprises—and again not just in business —there is only one budget, and it is adjusted to the business cycle. In good times expenditures are increased across the board. In bad times expenditures are cut across the board. This, however, practically guarantees missing out on the future. The change leader’s first budget is an operating budget that shows operating and capital outlays to maintain the present business. That budget should always be approached with the question: “What is the minimum we need to spend to keep operations going?” And in poor times it should, indeed, be adjusted downward.
And then the change leader has a second, separate budget for the future. The future budget should be approached with the question: “What is the maximum funding these new activities require to produce optimal results.” That amount should be maintained in good times or bad — unless times are so catastrophic that maintaining expenditures threatens the survival of the enterprise.
Winning Strategies
“One prays for miracles but works for results,” Saint Augustine said.
There is an old saying that good intentions don’t move mountains, bulldozers do. In nonprofit management, the mission and the plan—if that is all there is —are the good intentions. Strategies are the bulldozers. They convert what you want to do into accomplishment. They are particularly important in nonprofit organizations. Strategies lead you to work for results. They convert what you want to do into accomplishment. They also tell you what you need to have by way of resources and people to get the results.
I was once opposed to the term “strategy.” I thought it smacked too much of the military. But I have slowly become a convert. That is because in many businesses and nonprofit organizations, planning is an intellectual exercise. You put it in a nicely bound volume on your shelf and leave it there. Everybody feels virtuous; we have done the planning. But until it becomes actual work, you have done nothing. Strategies, on the other hand, are action-focused. So I have reluctantly accepted the word because it’s clear that strategies are not something you hope for; strategies are something you work for.
Organize Dissent
The effective decision-maker organizes dissent.
Decisions of the kind the executive has to make are not made well by acclamation. They are made well only if based on the clash of conflicting views, the dialogue between different points of view, the choice between different judgments. The first rule in decision making is that one does not make a decision unless there is disagreement. • Alfred P. Sloan, Jr., is reported to have said at a meeting of one of the GM top committees, “Gentlemen, I take it we are all in complete agreement on the decision here.” Everyone around the table nodded assent. “Then,” continued Mr. Sloan, “I propose we postpone further discussion of this matter until our next meeting to give ourselves time to develop disagreement and perhaps gain some understanding of what the decision is all about.” There are three reasons why dissent is needed. It first safeguards the decision maker against becoming the prisoner of the organization. Everybody is a special pleader, trying—often in perfectly good faith—to obtain the decision he favors. Second, disagreement alone can provide alternatives to a decision. And a decision without an alternative is a desperate gambler’s throw, no matter how carefully thought through it might be. Above all, disagreement is needed to stimulate the imagination.
Elements of the Decision Process
Ignore a single element in the process and the decision will tumble down like a badly built wall in an earthquake.
Good decision makers know that decision making has its own process and its own clearly defined elements and steps. Every decision is risky: it is a commitment of present resources to an uncertain and unknown future. But if the process is faithfully observed and if the necessary steps are taken, the risk will be minimized and the decision will have a good chance of turning out successful. Good decision makers
• Know when a decision is necessary
• Know that the most important part of decision making is to make sure that the decision is about the right problem
• Know how to define the problem
• Don’t even think about what is acceptable until they have thought through what the right decision is
• Know that, in all likelihood, they will have to make compromises in the end
• Know that they haven’t made a decision until they build its implementation and effectiveness into it