I began appreciating the benefits of cash flow when I started delivering newspapers for the Tulsa (Oklahoma) World at age 11. I came from modest means so if you wanted anything you needed to get a job and earn some money.
Paper boys were contractors running their own business and getting a taste of what it’s like to be an entrepreneur. You had to have the discipline to drag yourself out of bed at 5 a.m. to go deliver papers in the dark on cold January mornings. You had the responsibility to get the paper on the porch without breaking anything (risk management). You got experience with collections, and after you settled up with your route manager at the end of each month, you kept what was left but often had to reinvest in repairs to continue operations.
Most important, that paper route taught me there’s value in driving performance through sales growth and superior customer service. And each day, it reinforced how critical it is to have a plan and execute it as effectively as possible.
I’ve never stopped working and I’ve been focused on revenue generation ever since. I’m totally passionate about producing growth, but I’ve also learned, “Gross is for Vanity and Net is for Sanity.” That makes me an advocate for fiscal responsibility and managing expenses to yield profit and grow book/market value.
In my last column, we visited the intimidating Budgeting Culture with its inherent capacity to impose restrictions and suffocate planning. It was my position that if you want to maximize success, planning needs to inform and guide budgeting instead of being shackled by it.
Installment 2: The Planning Culture.
For me, the Planning Culture is a much more positive and inspirational environment. I think it tends to attract the best people and offers a great opportunity for professional achievement and gratification.
My career, and philosophy about planning, have been dramatically influenced by a series of important epiphanies triggered by mentors.
The Budgeting Culture by nature is cautious, safe, protective … the classic “glass is half empty” approach.
So, as a young Luke Skywalker, I’m in an annual budgeting meeting one day when my Yoda looks across the table at the client and says, “You need to stop being afraid of what could go wrong and start being excited about what could go right.” Wow! The force was strong in that room.
The Planning Culture may not be right for everyone; however, when a strong CEO stands up and says planning is important, then starts expressing enthusiasm about the value that smart strategic thinking can bring to the organization, you begin to feel things getting ready to take off.
I love it when an organization gets intentional about becoming a supremely functional and sharply focused enterprise with exceptional operating discipline. And it’s exciting when the leadership team embraces the opportunity to view planning and budgeting in a fresh new way and gets committed to spawning a productive new planning psychology.
Suddenly, everyone begins challenging the status quo and good things begin to happen.
The Planning Culture knows that the six most expensive words in business are, “We’ve always done it that way;” and the words of Einstein remind planners, “We cannot solve our problems with the same thinking we used when we created them.”
This environment values and rewards creativity, innovating, disrupting, breaking rules, taking calculated risks, making mistakes, achieving and having fun.
It says let’s drive organizational evolution and change, get ready for the future, and remain relevant. Let’s build opportunity into the budget and create space for pursuing some reasonable stretch goals that make sense.
What changes in this culture?
Planning is no longer periodic or temporary. It becomes a dynamic, continuous, never-ending process that is constantly being tracked, measured, tweaked and changed.
The organization begins to think and act horizontally and not just vertically.
Outcomes are rooted in careful data-driven analysis, and decisions are fact-based and anchored in intelligence versus bravado and power.
The entrepreneurial spirit is encouraged, nurtured, cultivated and rewarded.
Problems are addressed through the lens of the microscope while opportunities are being identified through the telescope.
Planning drives budgeting and income is budgeted before expense.
The process involves individuals in all areas and levels of the organization and it engages them in identifying issues and opportunities and in defining priorities. Management responsible for actual performance actively participates in finalizing objectives and setting strategies and tactics.
Accountants become compilers of the budget, not preparers. They are a vital part of the planning team, presenting and explaining significant financial data. They identify the relevant numbers that enable objectives to be quantified in dollars. They’re responsible for designing meaningful financial reports and work to make the accounting system more responsive to managerial needs.
And finally, the door is always open to a big idea. As Bill Ford said about the automotive giant founded by his great-grandfather Henry Ford, “Lots of stuff that made this company great started off as something that wasn’t in the budget.”
Think about it. What could a shift to the Planning Culture do for you? More next week.
Bruce Anderson is president and CEO of Anderson Consulting. Contact him at email@example.com and @bruceadfw.