Managers think their job is to manage the resources and processes they've been given, rather than please customers and run a business within a business.

Challenge

In traditional organizations, managers think their job is simply to manage the resources and processes they've been given.

They may do a good job of that, such that the current business runs well. But they may not see themselves as entrepreneurs running small businesses within a business.

As a result, they don't take accountability for pleasing their customers; and indeed, there may be confusion about who is accountable for end-results. In some cases, they may not even know what their end-results are, i.e., their catalog of products and servcices.

They may not know it's their job to be aware of their competition (decentralization and outsourcing), and to ensure that their offerings are competitive. And they may not think in terms of expanding their supply (through vendors and contractors) when their customers demand more and are willing to supply incremental funding.

And in the long term, they may not plan the future of their lines of business: new services, new technologies, new markets, and better sourcing strategies.

How can you get every manager thinking like a customer-focused enterpreneur?

Solution

An annual business planning process can do a lot to transform an organization into an entrepreneurial culture.

In the process of planning an investment-based budget, managers are engaged in defining the lines of business under them, and defining the catalogs within each. They learn to be accountable for those end-results, and for evolving their catalogs over time.

They must also forecast "sales" (demand) for each of their customers, which clearly defines whom their customers are (both peers within your organizations, and clients).

And as they plan how they'll fulfill those sales, they learn to be accountable for managing costs so as to produce competitive rates.

They also must think about how they'll fulfill new demands, perhaps using vendors and contractors. Thus, instead of resisting customers who want more, or being reluctant to suggest creative new ideas, they become open to new-business opportunities with the comfort of knowing that additional work comes with additional funding.

"We continue to find ways of using FullCost to better understand and manage our business. It's made us more efficient and more effective."

Matt Frymire CIO, Riverside County, CA

Comprehensive solution....

Other Resources

Chapter: Transformational impacts of investment-based budgeting....

Case Study: From Adversaries to Advocates
case study describing the entrepreneurial effects of investment-based budgeting