I love running and been doing it for decades. Marathons are not my thing – “my” distance is 10k and my pace is usually just under 60 minutes.
Unlike other types of sport, running only takes a pair of trainers so there’s very little useful paraphernalia but one piece of equipment I did buy years ago – a heartrate monitor. I figured that if I knew my heartbeat, pace and calorie burn I will make the most out of my training.
And there were the races – an exhilarating experience, a lot of fun and a medal to show for it.
But then I started hurting myself. First it was a damaged meniscus which cost me 6 months of norunning and a lot of physiotherapy. Then a painful bursitis that took months to heal, followed by an unrelenting lower back pain.
It was probably the increased pain after the races that prompted me to realise that it was all the heartrate monitor’s fault. Not that there was anything wrong with the equipment itself – it was the timing, heartbeat rate and calorie burn measuring that pushed me beyond my limits and caused all the injuries. I stopped using the meter and miraculously no more injuries.
In my many years in management I have encountered a similar phenomenon – destructive metering. In most companies, just as the birds start migrating to a warmer climate, the midnight oil starts burning.
It’s Budget Season.
The folly in this is that there is just no way to know in September or October of any year what’s going to happen in November or December, let alone in the next year. In February 2015 I heard a presentation on oil prices where the speaker said that a couple of weeks before the price projected to the summer by the best-known consultants in in the industry had been $80/barrel. At the time of the presentation their prediction was down to $60. Two months later the prices was already $40 and falling fast.
The common wisdom is that you can’t make progress unless you have goals, and I don’t dispute that. But by setting goals in the dark seems futile.
What usually happens in real life is that companies prepare budgets that are a bit better than the current year's projected results (the shareholders would not accept anything else) and at the end of Q2 there are 3 options:
1. The results are much better than expected due to unforeseen circumstances, so the management is under pressure to underperform in July and August (blame it on the holidays...) in order not to supersede the budget by too much. If they do, they will be blamed for underbudgeting the year before and the targets for the next year would be much higher. And as stated before no one knows what's going to happen next year.
2. The results are more or less in line with the budget.
3. The results are much worse than expected and excuses start to be made.
All these options are the result of the same problem the inability to foresee the future but the first one, which is just as likely as the others stresses out the folly in this entire exercise.
So what does work? In my experience, budgeting is a good drill as long as it is not used as a measuring tool but as a business review one. Looking only at your budget and trying to fit the reality to it is a bit like sailing while looking at the compass alone. Ignoring what’s on the horizon, the winds and currents, your boat’s performance and your crew needs will end you on a reef. And your business in administration.