Stop budgeting, start teams

By Dave Rogers, Partner at PD. 


As covid-19 continues its profound impact on organisations across the world, most of them have had to adapt quickly to survive, let alone thrive.

IT teams cancelled projects, and focused on supporting remote working. Digital teams changed direction—sometimes creating entirely new products or services to meet changing needs. Few waited for the business plan to be updated. Budgets were being pulled apart. Roadmaps were thrown out and replaced.

These changes didn’t follow the rules—organisations found ways to get things done which took new risks, bent processes to fit the need, and were less tolerant of delay.

But the pace and flexibility shown in this crisis is simply how organisations should always operate. The extent to which corporate norms have been subverted shows they’re increasingly unfit for purpose.

The norm in large organisations is to trudge through the annual cycle of business planning and budgets, assemble bland risk logs, set targets, and command ‘aggressive’ deadlines. This corporate sci-fi helps create the illusion of control in stable times. But organisations become trapped inside their own speculative fiction—the authors are often determined the corporate story must end as they intended, whatever the cost. Add digital technology, and things get worse. It’s an unpredictable medium which ages quickly, creating the conditions to upturn even the best-laid plans.

There is an alternative. Focus on teams. Specifically, reasonably long-lived, multidisciplinary teams.

Individual teams can switch focus to more important things, at a moment’s notice. They can learn from new information, and be curious, sceptical and open-minded. With the right leadership and culture, teams can do incredible things—especially in a crisis. 

By being long-lived and multidisciplinary, teams can hone their ability to solve complex problems with a range of skills. Leaders can still be bold, think big and long term. Instead of doing this through grand projects proposals or budget allocations, they do this by creating brilliant teams.

The benefits of long-lived multidisciplinary teams

It’s hard for some to see the benefits of working this way. To the traditional accountant, the multidisciplinary team feels uncomfortable, and appears to muddle the foundations of their practice. These teams don’t fit the established models and abstractions by:

1. Mixing the idea of a capital asset and an operational expenditure. An individual software developer might move casually between these concepts several times in a day, for example, fixing a bug, then adding a feature.

2. Mixing the idea of change and ‘business as usual’—they simply do both, and balance priorities.

3. Making it impossible to discern where supposed administrative overhead starts and ends (and so questioning the idea of administrative overhead).

4. Changing the backlog when new information is received. They might reject a planned feature, or create an entirely new product and in effect, change the business plan.

5. Accumulating technical debt, a critical risk where no best practice exists to represent it on the balance sheet.

6. Dynamically changing estimates of cost when new information is received and, in effect changing the financial forecast and questioning the annual budget allocation. This is particularly dynamic for consumption of cloud services like infrastructureas-a-service and software-as-a-service.

7. Creating reusable tools or platforms which reduce time and cost from other teams’ products (which are in other cost centres or legal entities). The most effective organisations have a complex network of benefits and efficiencies shared between distributed teams.

8. Not existing by default in common tools like Enterprise Resource Planning systems which assume organisations are simple hierarchies of line managers, or ‘resources’ allocated to temporary projects.

9. Responding to deadlines or budget-caps with options to change scope, asking what can be left out of delivery within constraints. If deadlines are imposed without discussion, the outcome is unintended consequences: excessive risk, burn-out pace and the erosion of a positive work culture.

Building this culture of teams isn’t impossible. It does happen. But it requires leaders to do new, disruptive things, like shielding teams from established financial processes—something which requires continuous effort and negotiation.

It’s hard, but important, to reduce this friction between internet-era ways of working and corporate financial norms. Reforming financial control isn’t enough on its own. Most large organisations also need new ways to manage multiple teams at scale. Again, this is hard, but not impossible. One of the most profitable companies during the pandemic was Amazon—a global company that attributes its success to teams. Specifically, teams that you can feed with 2 large pizzas.

The pandemic has exposed shortcomings in the ways organisations operate. Too often, getting stuff done means working around the system. Rigid systems don’t respond quickly enough to new information—and covid-19, and its impact on society, economy and government, brings a lot of new information.

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