Winning - Jack Welch [70]
In three years, 3M’s business in Greater China has grown from $520 million to $1.3 billion, with ambitious plans for the future.
This does not mean, of course, that stretch has totally taken hold at 3M. Jim says people are still getting used to the change, but they have definitely come to see that the company now celebrates and rewards people who think big. Today, “budgeting” at 3M is not about delivering good-enough plans and beating them. It’s about having the courage and zeal to reach for what can be done.
Doesn’t that sound like more fun than budgeting? And it works better too.
A WORD OF CAUTION
Before we finish up this chapter, I just want to make sure that I am not making this change sound too easy. Experience has shown me that while most people take to reinvented budgeting with enthusiasm, there are always a few diehards who do not and with their actions try to undermine it. Usually, these people are too steeped in tradition to let go of the old link between targets and bonuses. Sometimes they are just jerks. But whatever the reason, I would be a Pollyanna if I did not acknowledge that these types of managers haunt every company that switches over to the stretch approach. At GE, we never found or converted them all, but we never stopped trying.*
Here’s the modus operandi of these types: At the outset of the financial planning cycle, they appear to heartily buy into the new program and ask their people for big stretch goals. Then, without openly admitting it, they take the team’s stretch goal and use it as a commitment number—an old-fashioned budget target. When the end of the year rolls around, these managers take terrible advantage of their people. They identify the stretch number as the target, and they nail the team for not hitting it.
This behavior stinks, and it sets the whole process back by demonstrating to the people in the trenches that they can’t trust it. Next time when they’re asked to dream, you can be sure their dreams will be very small.
Part of the transformation process to a nonbudgeting company is to find the managers who pull this bait and switch. Call them on it, and take whatever action you need to make sure it doesn’t happen again.
When I talk to business audiences about the right way to budget, regardless of industry or country. I often get the same question: “The budgeting process in my company is too entrenched to change the way you describe. What can I do?”
My answer is not to give up. It’s too important.
It may be awkward at first, but change begins when you start talking, and one conversation leads to another and then another. Everyone knows about the Negotiated Settlement and Phony Smile dynamics, they’ve lived them, and they know that they take the energy and reality out of budgeting. So when you bring them up, people may not know how to deal with it—but they can’t just walk away.
The subject will resonate.
The fact is, there is a way to approach budgeting that blows it up and puts something much better in its place. It’s a system that can take a Chinese industrial business with modest annual growth and transform it into an enterprise growing 40-plus percent a year. It can inspire people to keep innovating and becoming more productive every day, even when global competition seems insurmountable. It can take people who once sat across the table from one another during debates about nothing less than the company’s direction and future and put them on the same side.
Very simply, the right “budget” process can change the way companies compete.
People usually groan when you mention budgeting—it’s a necessary evil.
It doesn’t have to be. It shouldn’t be. But the change to a better way has to start somewhere—how about with you?
13
Organic Growth
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SO YOU WANT TO START