October 6

Shooting ourselves in the foot: Can the bad economy keep us from buying more bullets?

for mysiteby Ioana Justus

My career has now spanned almost 12 years, and it still amazes me how so many managers and executives consistently make bad decisions and then are surprised by the results.  As the economy has gone bad, you’d think that people would be a little more judicious about how they spend the small budget they have remaining, but that’s turning out not to be the case.  Surprisingly, I think the vehemence with which we’re shooting ourselves in the foot has increased as the budgets have shrunk.  Now that the economy has bottomed out and is (supposedly) on the rebound, is there any chance of changing some of the behaviors before the upswing takes hold?

Let me ask you a different question: If you lived in Chicago and your house needed a new roof, would you just go out and buy the one recommended by your buddy out in San Francisco, because he’s thrilled with his new roof?  Hopefully, the answer to this is no.  You may take a look at it, but I’d hope that you would confirm that the structural integrity is insufficient for the added wind, cold, and snow weight that Chicago roofs experience.  Once selected, would you allow the contractor to cut corners on your roof installation just to make a specific deadline?  Is a permanently leaky roof worth a couple of weeks?

If you wouldn’t blindly purchase something for your own home based solely on the recommendation of a friend, why would you purchase a product for your company based on the recommendation from a vendor, a colleague in another industry, or a conversation on the golf course?  How can you justify the potential risk?  What happens to your reputation when the product in question doesn’t perform as expected?  Where does the budget come from if you end up having to replace the entire thing?

When budgets are tight, there are better things to purchase with what little you have than bullets for your foot, and there are three very simple rules that can keep your munitions purchases at bay:

  1. Don’t ‘ decide’ on a due date, calculate it.  Implementations take time and resources.  As much as you might want something in production by the end of the quarter, it might not be possible to do in a reasonable way.  Before committing to a date that’s just not feasible, spend a little time to determine the effort involved and lead-times for any purchases/installations that may need to be made, and to assess the availability of the resources required.  Then calculate a plausible due date based on the reality of the work effort and be sure to document the consequences of cutting corners, should that still be desired.  Sure, there will be instances when time is of the essence, but those are not as frequent as most people think.  When you consider long-term support costs and the massive adjustments that are usually needed to make a quickly installed product work, the calculated ROI is rarely met, and the costs to reputation and morale are higher than many would like to admit.
  2. Don’t ‘make up’ budget numbers, calculate them.  We all instinctively have assumptions about how much something should cost.  Some of us are better than others at guesstimating accurately.  Most of us underestimate – significantly!  So before publishing a number that just doesn’t make sense, do the math.  There’s truly nothing to be gained by setting the expectation that the desired work can be done for half the actual cost.  If the true cost is prohibitive, then the negotiations need to start, and the consequences should be documented and accepted for each item cut.  But if you’ve dug yourself a hole before the negotiations have even started, you’re in for a world of hurt.
  3. Don’t fit your problems to a pre-determined solution, pick a solution that fits your problem.  No matter how nice the vendor is or how much you value your golf buddy’s opinion, the product they’re pushing may not be the right one for your company.  The only way to know for sure is to gather requirements first, based on the actual needs, desires, and roadblocks currently being faced by your company.  Then you can assess whether the desired product fits the bill.  If it doesn’t, don’t buy it!  If nothing fits the bill, pick the best option, or consider waiting for future developments.  In any case, be sure to document the trade-offs, and get agreement that they’re acceptable.

Simple, right? :)  But if we were all doing this, I wouldn’t be writing about it.  The problem is that it has become acceptable to ignore the rules, and anyone who doesn’t follow suit is viewed negatively.  The real challenge is for each of us to take the personal responsibility to follow the rules, regardless of our position in the company.  Only then will we change the expectation and make it unacceptable to ignore the rules.


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policy


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