“I am putting together a budget.”
“It’s just not in my budget.”
“We really need to budget for that.”
Like many people in the world today, I, too had to sit down and put together a budget for my family. I had been putting this off for quite some time as I believed it to be a very unpleasant process. Plus, and I did not want to be held to a set of rules that would determine what I could and could not purchase on a daily basis. I also knew deep down that this was going to force me to take a long look in the mirror and face some of the financial mistakes I had made in the past. What could be more uncomfortable than that?
Turns out, I was looking at this process entirely the wrong way. A budget is not put in place to limit our happiness or prevent us from doing the things we enjoy. A budget is put in place to assist you in analyzing your wants and needs – the things that are most important to you in your life – so you can prioritize them and make sound decisions.
This concept is no different in business. Far too often I speak to individuals who make decisions solely based on a budget that was created 8-10 months earlier. Now, I am not saying a budget isn’t necessary – remember I have implemented one myself. However, I am realistic and understand my needs may change over time. Just like any successful business today, I need to be able to adapt to my surroundings and changes in the marketplace. My needs will more than likely change as will those of your customers. If you do not have your finger on the pulse of your clients today – you are falling behind and it may be too late to catch up. This is what the technological revolution has brought to the market – a faster paced world where only the most informed survives.
One of my favorite scenes in the movie Moneyball is near the end when Boston Red Sox owner John Henry is speaking to Billy Beane and about to offer to hand over the keys to run the team. The conversation revolves around Beane’s approach to running the A’s and making them a successful franchise with the lowest payroll in the Major Leagues. Talk about a challenging budget! Henry tells Beane that if teams are not taking his blueprint for success and implementing it immediately, they are dinosaurs.
Like most organizations, the A’s worked from a very small budget with no room for error, so each and every decision had to be the right one. Thus, Beane instituted a process of looking at his roster analytically to put together a team that would produce runs and victories. He did not worry about traditional statistics like batting average, home runs or runs batted in. He was looking for players whose production matched or exceeded their cost. His success has been well documented and the Oakland A’s continue to be one of the winningest franchises in baseball.
As an organization, how do you prevent yourself from becoming a dinosaur? Very few organizations are have the resources the Yankees do and cannot afford to just throw money at problems. We still have to deal with our budgets – and, let’s be honest, it is always limited. We must do what Billy Beane has done. We must work smarter and we must focus on what is most important. For Beane it was runs; for companies it is customers.
Thus, the focus must always be on what the customer wants, needs and expects. Companies must invest in tools that will not only collect the voice of their customers but provide the analysis to truly understand what is most important to them. Then, and only then, can you put a budget in place that will focus on what is most important to your success – your customers.