There are probably as many different philosophies of creating an annual budget as there are companies. When I came to Thomas Nelson initially, the philosophy was the push-up, pull-down philosophy. Management would try to get the individual units to push up their revenues budget as high as they could and push down their expenses as low as they could go.<\/p>\n\n
This inevitably became a sort of dance. The business unit leaders would propose a low revenue budget and a high expense budget, knowing that they would go through several rounds of negotiations with management. The biggest problem, though, was that once people agreed to a higher revenue budget, it would have the effect of pulling expenses up, too. Then, if the revenues didn\u2019t materialize, the unit had already compromised its margins.<\/p>\n
<\/p>\n
When I first became President & COO, I decided to try a different approach. I wanted to create a more realistic revenue budget and then give people incentives to stretch beyond that. I wanted to control our expenses and protect our margins. But, after working with this approach for several years, I think it is time to change our vocabulary and the way we approach the budget.<\/p>\n
First of all, I don\u2019t like the term \u201cStretch Budget.\u201d The word \u201cstretch\u201d implies that we are reaching toward something that we know we won\u2019t hit. By definition, it is always something just out of reach. As a result, I think we are inadvertently planning to fail.<\/p>\n
Often in Business Review meetings, we hear someone say that they will \u201ctry\u201d to do something we request. Maybe they will try to hit their revenue goal, try to sign a new author, or try to hit a specific expense goal. As James Ray says, \u201ctrying\u201d is simply \u201cfailure with honor.\u201d We don\u2019t really plan to accomplish what we are trying<\/em> to do.<\/p>\n But on the other hand, we don\u2019t want to admit to ourselves or others that we are really not committed to the goal. So, instead, we promise to try. And then, when we fail, no one is surprised. In fact, we pat ourselves on the back and say, \u201cWell, at least we tried.\u201d In other words, we failed with honor.<\/em><\/p>\n I think language is more important than we sometimes think. It shapes our reality\u2014or at least our perception of reality. The thing that both the words \u201cstretch\u201d and \u201ctry\u201d lack is commitment<\/em>. When someone says they will try to hit the stretch budget, they are playing it safe. They are not really taking a stand. They are not publicly going on record. They are planning to fail\u2014with honor.<\/p>\n On April 28, I ran the Country Music Half Marathon with more than 65 of my fellow employees. We didn\u2019t try<\/em> to run it. We didn\u2019t stretch toward it. We did it. We made a commitment to finish the race when we began the training process. We took a stand.<\/em> We made a promise to ourselves. Failure was not an option.<\/p>\n I stated publicly that I was going to finish the race on my blog. Before the race began on Saturday, Lisa Lehr (one of my heros) told me, \u201cI will finish this race if I have to do it on bloody stumps.\u201d And, I believed her. I could tell by the look in her eyes. She had that resolve. She wasn\u2019t using the language of \u201ctry\u201d or \u201cstretch.\u201d She had taken a stand.<\/p>\n When I got married almost 28 years ago, I didn\u2019t say, \u201cI will try to make this marriage work.\u201d No, I made an unconditional commitment. I took a stand. I said to Gail, before God and five hundred people, \u201cI will love you till death do us part.\u201d I then enumerated specific obstacles, \u201cin sickness and in health,\u201d \u201cin poverty and in wealth,\u201d etc. I made a promise to her, to God, and to myself. And she did the same with me.<\/p>\n And\u2014I am happy to report\u2014I am still happily married to this very day. Divorce is not an option. It never has been. I am as committed to her today, as I was the day we became husband and wife.<\/p>\n In my view, this is what is wrong with our culture today. We have a whole lot of people trying<\/em> but very few committing.<\/em> Those that try, often fail. Those that commit, usually succeed. The difference is our relationship\u2014our attitude\u2014to the thing we want to achieve.<\/p>\n So, in that spirit, in this fiscal year, I have asked the Executive Leadership Team to take a stand with me. I am committed to achieving the number we used to call the \u201cstretch budget.\u201d I am making a promise to myself and my fellow leaders that we will achieve that number this year. This is my stand.<\/em> Failure is not an option. With God\u2019s help, we will hit this number no matter what obstacles we face. We will overcome them and succeed.<\/p>\n As a practical matter, I want to completely eliminate the words \u201cstretch\u201d and \u201ctry\u201d from our internal vocabulary. I want us to adopt the stretch budget as our \u201ctarget budget.\u201d This is what we are going to do, and this is what we are going to measure our performance against. This is where our attention is focused. We are aiming for the target, and we are going to hit it.<\/p>\n Throughout the year, we will keep forecasting as we have always done (i.e., this month, this quarter, this fiscal year). But I want us to do this with a very different purpose in mind. Instead of the forecast being indicative of where we think we will end up, I want us to use it as a means of revealing how big a gap we need to fill in order to hit our target. Then, I want us to stay focused on filling the gap.<\/p>\n If we are going to take a stand to hit our target, it means we refuse to give up on it until we cross the finish line on March 31, 2008 (the end of our fiscal year). We must maintain belief in ourselves, the team, and the commitment. We must eradicate cynicism in our hearts and in our words. We must avoid anything that casts doubt on the target. We must learn to use the language of belief and commitment.<\/p>\n Can we do this? Yes! But it\u2019s going to take a conscious, focused effort on all of our parts. We cannot change the outcome, until we change our thinking and our actions.<\/p>\n Every business problem we face\u2014every single one!\u2014is between our ears. The problem is not the problem. The problem is the way we think about the problem.<\/em> We have to be willing to change ourselves if we are going to produce an extraordinary outcome. This is the essence of leadership. It begins by leading ourselves.<\/p>\n There are probably as many different philosophies of creating an annual budget as there are companies. When I came to Thomas Nelson initially, the philosophy was the push-up, pull-down philosophy. Management would try to get the individual units to push up their revenues budget as high as they could and push down their expenses as low as they could go.<\/p>\n","protected":false},"author":8,"featured_media":30886,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[34],"tags":[1681],"acf":[],"yoast_head":"\n