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Blow Up Your Budgeting Process

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If you work in a large organization – This Blog’s for You.

You know what season is coming soon – you dread it. ‘Tis the season of Planning & Budgeting; the annual ritual of much time, many iterations, and little meaning – full of sound and fury, signifying not much.

What if you could radically revolutionize that process? Almost blow it up? All in a socially and politically acceptable manner, of course.

Resource Allocation is So Last Millennium

Planning and budgeting processes are about resource allocation. Partly that’s to coordinate plans. But partly it’s about predicting the future – of markets, the economy, technology – so we can intelligently place resource bets. So that we can plan on having umbrellas in case it rains.

We have built processes to worry about the future so that we can place resource bets in advance. But what if we didn’t have to place those bets in advance? Who cares about predicting rain for tomorrow if I know there will be an umbrella within arm’s reach when I need it?

What if you always had access to an umbrella? What if you did not have to make capital investments, hire and train people, develop new products – until the day before you needed to? And you were then able to do so with the snap of a finger?

You wouldn’t waste time predicting the future – you’d just deal with it on arrival. And increasingly, that’s what the world looks like.

The umbrellas, it turns out, are right within our grasp, right when we need them – if we just know to look for them. And there are three places to look.

The Three Sources of Umbrellas When You Want Them

Old style planning and budgeting assumes scarcity of resources – few umbrellas. We need to re-think; to recognize the umbrellas are already there, and we’re just facing a sourcing or distribution problem.

The three keys to changing that problem definition are speed, collaboration, and transparency.

Speed. You probably budget for headcount. If so, you assume a certain elapsed time for a category of employee – let’s say, a three-month cycle.

What if you could cut that to three weeks? To three days?  Think contracting, outsourcing, working virtually, across time zones, modularizing work. It’s the way software and movies and consulting and projects get done now, why not extend it to “core” hiring?

Speed attacks the need to plan for umbrellas, because it reduces your exposure to time-spent-without-umbrella.

Collaboration. You probably budget for facilities and equipment – because you assume you must own or have first call on assets. But what if you could get all the access you need just by sharing with others? And save tons of money at the same time?

After all, you rent a room at the Marriott in Chicago instead of owning a condo there. Push that thinking further; it’s like doubling your proven resource reserves without spending a penny on exploration.

Why own a car when you can use Zipcar? Why are you paying Microsoft for software to sit on your PC getting old when you can access cloud software, always updated, for less? Why are you buying books instead of renting them? Why are you spending money on dedicated office space when you could share it out with other tenants? Why are you driving alone?

Collaboration attacks the need to plan for umbrellas, because it changes a resource scarcity problem to a capacity utilization problem, while expanding perceived capacity.

Transparency. You probably budget for knowledge management and IP development – because you think your organization must carefully nurture its precious wisdom. But what if you could generate more knowledge, and more know-how, by openly sharing what you have with everyone else?

This is the logic behind meet-ups, networks, communities of interest, affiliate marketing, tribes, wikis, webinars, curating, mash-ups, and Spindows.

Transparency attacks the need to plan for umbrellas, because it sensitizes everyone to the presence of more umbrellas, to the availability of umbrella substitutes, and to rain-control initiatives.  

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Help free your organization from the tyranny of old-think resource-constrained planning and budgeting processes. Ask yourself how to get your group’s work done faster, more collaboratively, and more transparently.

This is how to be a socially and politically acceptable business revolutionary.

(Props to my mastermind group of @StewartMHirsch, Scott Parker and John Malitoris for this post) 

Are You a Trusted Twitterer?

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Measuring instrumentThose of you who love new social media and are measurement mavens, this blog’s for you.

Ever wonder how you’re doing on Twitter? Of course, you can’t miss the “followers” count at the top of your and everyone else’s twitter page. But, as you tell your fellow-twitterers, it’s not about the numbers. (Not that you’d turn down a doubling of your followership, of course…)

The urge to emulate former New York Mayor Ed Koch runs deep: “How’m I doin’?”

Well, courtesy of the Edelman PR agency  you can now measure your, well, your Tweetlevel. An interesting choice of words, because, well it’s hard to say just what’s being measured.

Measuring TweetLevel

Mechanically, you get a blended score of four attributes: Influence, Popularity, Engagement, and Trust. You can also get not only your own score, but the score of anyone else as well.

They tell you exactly how they compute each factor, and the total Tweetlevel. They also let you look under the hood, and and invite users to help improve the survey.

So let’s start by giving props. I’m no psychographic or statistics expert, but I’ve seen a few surveys, and this looks good. Note too that Edelman is perhaps the world’s leader in commercial trust measurement, authoring the Edelman Trust Barometer  for a decade now. CEO Richard Edelman builds conferences and speaking engagements around it. There are questions about any measurement of trust, but these guys are pros at doing trust surveys. It is a solid piece of work, and at the very least will raise good discussion questions.

Now for the fun.

Measuring Trust

Somebody hands you a ruler, the first thing you do is measure yourself. I clocked in at a TweetLevel of 43 (on a scale of 100). Higher than some, lower than others.

This blog is about trust, so that’s the one component on which I focused. My trust score was 39.9.

Now, just because I write about trust doesn’t mean I’m trusted. Oprah beats me. Her trust score is 64.5. OK, I can get with that.

Yet Oprah is surpassed by–Britney Spears! Spears sports a trust score of 68.7 Riddle me that one!

Now hold on to your hats; clocking in at third place, with a trust score of 95.7 is—Perez Hilton!  Of course. I should’ve seen it coming.

And hold on, in second place is—wait for it—John Mayer!  (In fairness, the NYTimes is number 5).

Why Measurement Mania is Death on Trust

It’s easy to lampoon surveys like this, but that’s only partly fair. The metrics for trust rely heavily on retweets, and on “via’s” (think of them as retweet derivatives, if you’re financially inclined). That’s not so crazy: number of citations is a decent metric for being ‘trusted’ in academia, for example.

I’ve written before  about measurement mania, the tendency in business these days to literally define management in terms of measurement (e.g. the silly phrase “if you can’t measure it you can’t manage it”). And I’ve written about the hazards of measuring trust in particular. 

The biggest problem comes not in the measurement, but in the subject matter.  So it is with trust. In the TweetLevel tool, trust is largely a function of how many people cite you. That’s perfectly reasonable. People definitely hang on Perez Hilton’s words a lot more than on mine.

But it does beg a huge trust question: trust Perez Hilton to do what? To say what? To behave how?  What is it that we trust about John Mayer–and is it the same thing as for which we’re trusting Oprah?

I trust my dog with my life–but not my ham sandwich. I trust Perez Hilton to tell me the straight poop in Hollywood–but not to show my daughter a night on the town. What is the object, the referent point, of the trust being measured?

Comparing trust metrics without defining the trust object is like comparing love metrics between a monastery and a brothel. By a perfectly obvious definition, the brothel gets a whole lotta lovin’ more than does the monastery.

In a sense, that’s right. And in another, ridiculous. Do we say a man with 5 marriages is ‘more loved’ than a man with one?  Is a parent with 5 kids more loved than a parent with one?  What is it that we’re measuring by using such metrics?

At this point, the numbers inevitably end up kind of looking like a popularity contest. There seems to be no referent point beyond the counting of incidents. Quality is overwhelmed by an onslaught of quantity. TweetLevel’s advice to increase trust scores is to get people to retweet you more. If everyone took this advice, Twitter would drown in derivative re-tweets. We’ve seen that movie before, on Wall Street.  It ends badly. 

On twitter, the mania to measure drives more empty-calorie retweets, which decreases original content, which ends in more retweet inflation as people try to game the game. 

It’s not that trust is ineffable, it’s just that it’s so contextual. Trust is a bit like obscenity; we know it when we see it, but that doesn’t mean we can easily define it, much less measure it. This is tail wagging the dog stuff.  The measurement system has a bad feedback loop to the content system; the mania for measurement ends up destroying the content it purports to measure.

Do You Want Meaning?  Or Measurement?

We can have meaning, or we can have precision. This is exactly the case in sub-atomic physics, where (as per Heisenberg) the act of measurement itself alters the thing being measured. It’s a perfect metaphor.

• You can say that you trust Perez Hilton to dish dirt, and Oprah to get real with you
• Or, you can say that Perez Hilton is 48.3% more trusted than Oprah
• But you can’t say one without rendering the other silly.

In accounting, there’s an age-old debate about how to define ‘profit.’ My finance prof Pearson Hunt said it the best: “Profit is–the bottom line of the income statement.” In other words: give it up; there is no one answer.

All you metrics mavens out there: when you get into the soft stuff, ask yourself: what is it you’re measuring? Is it the thing itself? Or is it some reflection of metrics in an infinite mirror? 
 

The Trouble with Buying Processes

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Big companies have a process for buying things. They define the specs, they shop the vendors, they use specialized purchasing departments to define procedures and processes.

They have similar processes for recruiting human capital (aka human beings). Define the specs, shop the vendors, use special processes.

And ditto for selling. Define targets, channels, measure hit rates, etc.

What these processes all have in common is a focus on the efficiency of the process—and not so much on the effectiveness of the result.

Purchasing managers, HR recruiters and sales managers alike would benefit from Malcolm Gladwell’s recent New Yorker piece title Most Likely to Succeed: How Do We Hire When We Can’t Tell Who’s Right for the Job?

Gladwell’s opening metaphor is about predicting the success of a college football quarterback in the pro game. Despite extraordinary efforts at analytical and statistical rigor—you just never quite seem to know.

His target subject is teaching—how difficult it is to predict the success of a teacher by focusing on any available statistical predictor.

Yet the value of getting it right is huge. Gladwell points to research that says a good teacher dwarfs the effect of any other factor on a child’s education. The US could overcome its middle-of-the-road global relative performance simply by substituting the bottom 6% of teachers for average teachers.

The problem is, you can’t predict success in teachers, anymore than you can in quarterbacks.

The solution, he says, is to stop focusing on accreditation and criteria. Instead, have the equivalent of apprenticeships, open admissions, tryouts open to all. The good ones prove themselves quickly, as do the bad ones. Find out who they are not by controlling input metrics, but by letting people jump into the water and seeing who can swim.

I suggest that the same problem exists in evaluating suppliers, recruits, and sales funnels. These are all deeply complex, human, messy relationship issues. Good customer, employee and supplier relationships make a huge difference.

But the prevailing business wisdom is that we can analyze and measure our way into defining the right relationships. Think of RFPs (requests for proposal) or recruiting specs.

The motivation behind select-by-spec and hire-by-numbers is complex. It’s part blind faith in “science.” It’s part fear-driven cover-your-butt desire to appear blameless. It’s part fear of interaction with other people.

But whatever, it’s hurting us. In the name of efficiency, many business processes have been employed to bring human relationships to a least common denominator level. The result has been low effectiveness.

Let people mix it up. Inefficiencies can be dwarfed by effectiveness. It’s as true in work as it is in the NFL and the classroom.