Hope is Not a Management Strategy
Last week, we talked about how run rate and momentum are the two most important factors that impact performance early in the new year and that unless significant investment and effort has been applied to turning the new initiatives in 2023 budgets into reality, to imagine that a turn of the calendar page from 2022 to 2023 will generate big returns is one of the biggest pipe dreams a leader can succumb to.
I’m sure you’ve heard many times that “hope is not a management strategy,” but why do leaders hold out hope that their plans will come to fruition? There’s certainly a set of cognitive biases and behavioral challenges that come into play like optimism bias, and conflict avoidance, but what I’d like to point out today is the organizational health and trust ramifications for not adopting a pragmatic stance to the relationship between planning, forecasting, and the actual operations of your organization across all levels of the business.
Put plainly, you can end up on the bottom rung of the trust ladder by not taking a pragmatic approach that’s based in the reality of how fast your company can move and change.
This is why measurement and transparency are key components of any effective management operating system. If everyone has access to the same information and that information is shared consistently through time, then the gap, dare I say gulf, that can exist between the information that makes its way up to the C-suite and the reality of operations at ground level can be closed.
I’ve seen it far too many times, line and departmental managers want to play CYA and take a more pessimistic view of what is possible—at the same time senior management puts on their rose colored glasses and ignores the calls of doom and gloom that their subordinates are shouting into the wind. The result is a painful collision later in the year–typically much later than necessary–when it’s become obvious to everyone that economic goals are not going to be met. This collision leads to painful conversations at precisely the same time that budgets and forecasts are being crafted for the following year. Engagement slips and trust erodes. The negative cycle continues.
The bottom line is that operating a business by wading through the mud of obfuscation is so much more difficult than operating in the bright lights of clarity and transparency.
We’re entering 2023 in an environment of high inflation, rising interest rates, labor market imbalances, and continuing challenges with supply chains as a result of the pandemic. Therefore, economic pundits are forecasting headwinds in many sectors of the economy in 2023. To minimize or avoid the anxiety that comes from management not listening to subordinates regarding the actual performance of the business and the wishful thinking that is a natural offshoot of cognitive biases that lurk under the surface, make measurement and transparency a priority now.
Recommendation to leaders: In addition to building more robust financial models that we recommended last week, go to the gemba more often. Get as close to where the work actually happens without getting in the way.
