For years managers have methodically set target numbers or budgets and worked tirelessly in a mire of key performance indicators, performance plans, forecasts and motivational speeches in the company wide drive to ‘make the numbers’. Now I am not about to say the numbers are not important or that being financially responsible is not something we should all be but I do believe that fiscal responsibility is being lost in translation as it permeates down the chain of command.
I have lost count of the number of proverbial ‘deep dives’ I have witnessed in corporations this year where hoards of people bury themselves in spreadsheets looking for that elusive silver bullet as to why the forecasts are tracking above plan. Or to try and solve where and how are going to cut back in order to make a number that is clearly too low to cover the cost of the work we are being asked to do. (innovation is the answer to that by the way, or stop some of the work). Amazing how many events can happen in a single company over 6 months that trigger questions about the numbers that can only be answered by a deep dive…… of the same data….. in the same way… trying to find a different answer.
Should the answers not be visible always, weak signals giving leading indicators of the decisions and trade offs to be made in order to be fiscally responsible?
Ironically it is the very nature of ‘make the numbers’ that causes this visibility to go away. The pressure and associated bonus attachment leads to deliberate muddying of the water, or at least a hesitancy to clear the mud that already exists, as muddy water creates an opportunity to explain away or make last minute changes in order to make it appear like we will make the numbers. In fact muddy water comes in handy at the end of the financial year and allows creativity to kick in in order to produce the right result.
So how does making the numbers kill the company. Well as you may be getting a feeling for in the above paragraphs the first sign of death is the cultural degradation that is created by the focus being on ‘make the number’ . The decision we make, our behaviours, how we spend our time all bias toward the number making goal and then when we attach a bonus structure to it we start to forego collaboration and ‘doing the greater good’ in preference for making ‘my’ number.
The second sign is the way the work disappears or should I say the focus on the work disappears. Spending becomes more important than finishing, slowing more important than stopping. Principles change too. We start everything and finish nothing, we keep everyone utilised as a sign of efficiency and we inflate the value of ‘our’ work so it is looked at more favourably. All of the measures are about our progress toward the number rather than about whether or not we are delivering more value, more often.
We seem to have truly lost the meaning of the numbers. A company creates a strategy to deliver value to its customers and then identifies a fiscally responsible way to do so. But instead, these days we seem to hedge our bets as if strategy and numbers are two different things. We want to execute against a strategy but rather than back that the strategy is right and will deliver the results we need we set a ‘make the number’ target and manage to that as if “if the strategy doesn’t work at least we made the number”. Then everyone gets their bonus.
I know we have a long way to go as a society until we can focus purely on the collective benefit, where companies operate based on value delivered to the customer, but we must take steps forward. To me one small thing, in a very long list, I would like to see changed immediately is to measure the impact on the work of a decision made in order to make the number. It could be as simple as making visible the work that wont be started as a result of the decisions or look at the change in the date that value from the work will be made available as a result of decisions. True cost of delay!!