Saturday, August 23, 2003
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C is for:
Computers
The origins of the computer lie with Charles Babbage’s attempts in the 1820s and 1830s to build a large ‘difference engine’ for the UK government.
This was a project that took years, went wildly over budget [1], cost the client huge amounts of money, and was eventually abandoned as a failure.
Nearly two centuries later, surprisingly little has changed.
Major computing projects – and, for that matter, all projects involving cutting-edge technology – are still prone to cost overruns, and the new software products that are supposed to bring about step changes for the better are always hard to implement and ultimately disappointing.
Of course, modern computers are a fantastic tool for improving productivity. But incompetent and ingenious managers have found ways to turn almost every advantage of the computer into a problem.
Here are nine reasons why Babbage is spinning in his grave:
· Computers improve productivity across most business functions – so managers ignore contingency planning and leave their companies exposed to disastrous system failures.
· Computers can hold enormous amounts of information – so data is inadequately backed up, and confidential information is routinely held on insecure systems.
· Computers allow documents to be refined and designed – so people get sucked into endless revisions and unnecessary prettification.
· Computers mean reports are easily generated – so reams of superfluous paperwork are produced.
· Computer software is available for every task under the sun – so PCs are loaded with unnecessary and conflicting programs, slowing performance and reducing reliability.
· Computers transfer data efficiently – so managers fail to link systems, or else bombard staff with detail they must read through, before they can tell it doesn’t apply to them.
· Computer software has become simpler to program – so managers forget that computer ‘experts’ no longer need a fundamental understanding of how systems operate, and in many cases are barely competent.
· Computers can provide global reach, via the Internet – so companies rush to invest in web sites, without considering customer needs and preferences, at home or abroad.
· Computers rarely make mistakes – so managers assume the output is correct, even when the input and operation are in the hands of idiots.
Over the last 20 years, computers’ capabilities have multiplied a thousand-fold.
Unfortunately, levels of managerial competence have remained completely unchanged.
[1] The British government invested about £17,000, equivalent to the cost of two battleships. Babbage’s own personal investment was at least half a battleship more. Babbage successfully completed a small difference engine in 1822. Work on the government’s large difference engine was started in 1823, suspended in 1834, and finally abandoned in 1842.
C is for:
Computers
The origins of the computer lie with Charles Babbage’s attempts in the 1820s and 1830s to build a large ‘difference engine’ for the UK government.
This was a project that took years, went wildly over budget [1], cost the client huge amounts of money, and was eventually abandoned as a failure.
Nearly two centuries later, surprisingly little has changed.
Major computing projects – and, for that matter, all projects involving cutting-edge technology – are still prone to cost overruns, and the new software products that are supposed to bring about step changes for the better are always hard to implement and ultimately disappointing.
Of course, modern computers are a fantastic tool for improving productivity. But incompetent and ingenious managers have found ways to turn almost every advantage of the computer into a problem.
Here are nine reasons why Babbage is spinning in his grave:
· Computers improve productivity across most business functions – so managers ignore contingency planning and leave their companies exposed to disastrous system failures.
· Computers can hold enormous amounts of information – so data is inadequately backed up, and confidential information is routinely held on insecure systems.
· Computers allow documents to be refined and designed – so people get sucked into endless revisions and unnecessary prettification.
· Computers mean reports are easily generated – so reams of superfluous paperwork are produced.
· Computer software is available for every task under the sun – so PCs are loaded with unnecessary and conflicting programs, slowing performance and reducing reliability.
· Computers transfer data efficiently – so managers fail to link systems, or else bombard staff with detail they must read through, before they can tell it doesn’t apply to them.
· Computer software has become simpler to program – so managers forget that computer ‘experts’ no longer need a fundamental understanding of how systems operate, and in many cases are barely competent.
· Computers can provide global reach, via the Internet – so companies rush to invest in web sites, without considering customer needs and preferences, at home or abroad.
· Computers rarely make mistakes – so managers assume the output is correct, even when the input and operation are in the hands of idiots.
Over the last 20 years, computers’ capabilities have multiplied a thousand-fold.
Unfortunately, levels of managerial competence have remained completely unchanged.
[1] The British government invested about £17,000, equivalent to the cost of two battleships. Babbage’s own personal investment was at least half a battleship more. Babbage successfully completed a small difference engine in 1822. Work on the government’s large difference engine was started in 1823, suspended in 1834, and finally abandoned in 1842.
Sunday, August 17, 2003
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B is for:
Buzzwords and clichés
Buzzwords and clichés are an excuse to switch your brain off.
In business, this is seldom a good idea.
‘Dotcom’ was the best recent example. For a couple of years, managers and investors approached anything labelled dotcom as if the label itself justified investment, without the need for a sound business plan.
After a string of highly publicised disasters, the buzzword’s meaning was reversed. It came to mean ‘Do not touch, regardless of any business case you may be presented with.’
Only now has ‘dotcom’ come to be treated as it should have been all along – as a shorthand way of noting involvement with the Internet, with no bearing either way on the need to assess the strengths and weaknesses of the business.
‘Our employees are our most important asset’ is a prime example of the way a tired cliché advertises its insincerity. Its frequent inclusion in annual reports – usually attributed to a chairman who wouldn’t recognise, let alone acknowledge, 99 out of 100 employees – is blatantly manipulative (and incidentally suggests a rather confused approach to accounting).
Don’t forget, these are the same employees who call in sick whenever the sun shines, gripe about working conditions, produce faulty products, annoy customers, and jump at any chance to desert the company for a few extra pieces of silver.
Get real. Say what you mean and mean what you say. If you want to take a stab at some odd business idea, but can’t justify it, say so. Only please don’t call it a new paradigm.
And if someone else starts dishing up buzzwords and clichés, just ask them to explain what the hell they are talking about.
B is for:
Buzzwords and clichés
Buzzwords and clichés are an excuse to switch your brain off.
In business, this is seldom a good idea.
‘Dotcom’ was the best recent example. For a couple of years, managers and investors approached anything labelled dotcom as if the label itself justified investment, without the need for a sound business plan.
After a string of highly publicised disasters, the buzzword’s meaning was reversed. It came to mean ‘Do not touch, regardless of any business case you may be presented with.’
Only now has ‘dotcom’ come to be treated as it should have been all along – as a shorthand way of noting involvement with the Internet, with no bearing either way on the need to assess the strengths and weaknesses of the business.
‘Our employees are our most important asset’ is a prime example of the way a tired cliché advertises its insincerity. Its frequent inclusion in annual reports – usually attributed to a chairman who wouldn’t recognise, let alone acknowledge, 99 out of 100 employees – is blatantly manipulative (and incidentally suggests a rather confused approach to accounting).
Don’t forget, these are the same employees who call in sick whenever the sun shines, gripe about working conditions, produce faulty products, annoy customers, and jump at any chance to desert the company for a few extra pieces of silver.
Get real. Say what you mean and mean what you say. If you want to take a stab at some odd business idea, but can’t justify it, say so. Only please don’t call it a new paradigm.
And if someone else starts dishing up buzzwords and clichés, just ask them to explain what the hell they are talking about.
Friday, August 01, 2003
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B is for:
Budgeting
Some managers do not budget. They claim it's a waste of time, or that the future is simply too uncertain to allow any realistic judgement of the likely outcome.
You can certainly make budgeting a waste of time, spending hours costing out insignificant details and fiddling about to make your spreadsheet look just right. Some managers find that a most satisfactory way of avoiding other work.
But basic budgeting – establishing your key assumptions, and working out their financial implications – is essential. Without a budget, you have no way of knowing what the outcome of your business activity might be, and unpleasant surprises are all too likely.
As for the future being too uncertain, if that really is true, you have failed to do enough market research. More likely, you are using this as an excuse to avoid the truth: that you are afraid of having to live up to your budget targets.
On the other side of the coin, most managers who do budget do it badly.
What’s more, bad budgeting practices often help feed the fears and resentments of managers and staff who did not want to get involved in budgeting in the first place.
The first mistake is to prepare the budget without involving the employees who must deliver the results. This has just two effects: minimising the chance that your budget assumptions reflect the realities that your employees understand (but you do not), and maximising the resentment of employees faced with unachievable (or, occasionally, laughably pessimistic) targets.
The next step is to make up the wrong figures.
Habit dictates that most managers make up budgets on the last-year-plus-a-bit principle, without any reference to how circumstances have changed. A more sinister technique is to set targets based on what they need to be – for example, in order to cover your interest payments – regardless of what they are likely to be. Making up unreal numbers almost completely destroys the purpose of budgeting. [1]
The next milestone on the road to ruin is to set the budget in concrete, as if the guesses you made a few hours ago have now become the only reality. A more sensible manager identifies the greatest areas of uncertainty in advance, prepares a range of budget forecasts [2], and is ready to update the budget as the situation alters.
Having prepared his unreal Budget of the Vanities, the incompetent manager then imposes it, without debate, on his subordinates.
Everything has been done, from the outset, to avoid any chance of people committing to the budget, and this is no time to spoil it by listening to any comments or suggestions they may have.
Lay it on the line, tell them you don’t want to hear any whingeing, and insist that the targets are there to be met. In its purest form, this kind of imposed budget can have a powerful motivational effect, encouraging employees to put in great effort and ingenuity to ensure that budget targets are missed.
Avoid making any effort to compare actual outcomes with the budget, or to analyse the causes of any variances. Only by being firm can you ensure that the whole exercise remains untarnished by the possibility of learning.
If, despite all this, you find that budgets are unaccountably beginning to correlate with reality, or even inspire employees, there are a few optional extras to try:
· Link the budget process to incentive schemes, so everyone aims for targets that are set as low as possible.
· Encourage managers to see the size of their budgets as a status symbol, creating relentless upwards pressure on spending.
· Claw back any budget allocations your managers foolishly neglect to waste. [3]
· Work to a fixed annual budget cycle, so all spending decisions are based on where you are in the budget cycle, rather than business needs. (Alongside the clawback option, this also ensures that willing suppliers are primed with a range of pointless, overpriced purchasing options to offer you as the end of the budget year approaches. [4])
[1] Be strong. Disciplined budgeting could take all the excitement out of life. Ignore the siren voices suggesting that you try establishing the standard costs others in your industry are paying, or benchmarking your operations against other companies. If you must dabble in benchmarking, choose poorly managed companies, or other parts of your own organisation, as the comparison, to guarantee that any figures you come up with represent a suitably unambitious level of achievement.
[2] This should not be confused with the extraordinary practice of setting ‘stretch’ targets, which can only be achieved if you are blessed with a string of lucky breaks. When these targets are comprehensively missed, they are airily dismissed on the basis that they never were realistic.
[3] Sophisticated companies sometimes tie themselves in knots by abruptly clawing back unspent budget at the end of the third quarter, to avoid the absurd distortions caused by the rush to spend at the end of the year. This can yield impressive savings in the first year. The next year, however, they invariably find there is no funding left for any activity whatsoever after the six-month mark. Managers, like lab rats, can learn fast.
[4] This was the thinking behind our plan to launch Fourth-Quarter Training Ltd, alongside our other businesses, such as December Retailing plc and February Flowers.
B is for:
Budgeting
Some managers do not budget. They claim it's a waste of time, or that the future is simply too uncertain to allow any realistic judgement of the likely outcome.
You can certainly make budgeting a waste of time, spending hours costing out insignificant details and fiddling about to make your spreadsheet look just right. Some managers find that a most satisfactory way of avoiding other work.
But basic budgeting – establishing your key assumptions, and working out their financial implications – is essential. Without a budget, you have no way of knowing what the outcome of your business activity might be, and unpleasant surprises are all too likely.
As for the future being too uncertain, if that really is true, you have failed to do enough market research. More likely, you are using this as an excuse to avoid the truth: that you are afraid of having to live up to your budget targets.
On the other side of the coin, most managers who do budget do it badly.
What’s more, bad budgeting practices often help feed the fears and resentments of managers and staff who did not want to get involved in budgeting in the first place.
The first mistake is to prepare the budget without involving the employees who must deliver the results. This has just two effects: minimising the chance that your budget assumptions reflect the realities that your employees understand (but you do not), and maximising the resentment of employees faced with unachievable (or, occasionally, laughably pessimistic) targets.
The next step is to make up the wrong figures.
Habit dictates that most managers make up budgets on the last-year-plus-a-bit principle, without any reference to how circumstances have changed. A more sinister technique is to set targets based on what they need to be – for example, in order to cover your interest payments – regardless of what they are likely to be. Making up unreal numbers almost completely destroys the purpose of budgeting. [1]
The next milestone on the road to ruin is to set the budget in concrete, as if the guesses you made a few hours ago have now become the only reality. A more sensible manager identifies the greatest areas of uncertainty in advance, prepares a range of budget forecasts [2], and is ready to update the budget as the situation alters.
Having prepared his unreal Budget of the Vanities, the incompetent manager then imposes it, without debate, on his subordinates.
Everything has been done, from the outset, to avoid any chance of people committing to the budget, and this is no time to spoil it by listening to any comments or suggestions they may have.
Lay it on the line, tell them you don’t want to hear any whingeing, and insist that the targets are there to be met. In its purest form, this kind of imposed budget can have a powerful motivational effect, encouraging employees to put in great effort and ingenuity to ensure that budget targets are missed.
Avoid making any effort to compare actual outcomes with the budget, or to analyse the causes of any variances. Only by being firm can you ensure that the whole exercise remains untarnished by the possibility of learning.
If, despite all this, you find that budgets are unaccountably beginning to correlate with reality, or even inspire employees, there are a few optional extras to try:
· Link the budget process to incentive schemes, so everyone aims for targets that are set as low as possible.
· Encourage managers to see the size of their budgets as a status symbol, creating relentless upwards pressure on spending.
· Claw back any budget allocations your managers foolishly neglect to waste. [3]
· Work to a fixed annual budget cycle, so all spending decisions are based on where you are in the budget cycle, rather than business needs. (Alongside the clawback option, this also ensures that willing suppliers are primed with a range of pointless, overpriced purchasing options to offer you as the end of the budget year approaches. [4])
[1] Be strong. Disciplined budgeting could take all the excitement out of life. Ignore the siren voices suggesting that you try establishing the standard costs others in your industry are paying, or benchmarking your operations against other companies. If you must dabble in benchmarking, choose poorly managed companies, or other parts of your own organisation, as the comparison, to guarantee that any figures you come up with represent a suitably unambitious level of achievement.
[2] This should not be confused with the extraordinary practice of setting ‘stretch’ targets, which can only be achieved if you are blessed with a string of lucky breaks. When these targets are comprehensively missed, they are airily dismissed on the basis that they never were realistic.
[3] Sophisticated companies sometimes tie themselves in knots by abruptly clawing back unspent budget at the end of the third quarter, to avoid the absurd distortions caused by the rush to spend at the end of the year. This can yield impressive savings in the first year. The next year, however, they invariably find there is no funding left for any activity whatsoever after the six-month mark. Managers, like lab rats, can learn fast.
[4] This was the thinking behind our plan to launch Fourth-Quarter Training Ltd, alongside our other businesses, such as December Retailing plc and February Flowers.
