Chapter 6
Don't Sign Up for the Impossible
What If They Tell You to “Do It Anyway”?
In some cases, the approach I described in the last chapter to outline the choices between okay, good, and great and to share the problem of choosing the investment level does not work. You've articulated the choices and investment levels, and then the powers that be say, “You are not getting the funding, but do the whole thing anyway.”
In your heart you know it can't be done, but they are being unwaveringly insistent; and you are afraid that you will get fired if you tell the truth and say, “This can't be done without additional resources.”
Caveat: Generally, It's Really Important to Be Self-Funding
There is a little bit of a slippery slope here because executives do look for leaders who can do things that others say are impossible—leaders that can do great things without demanding more resources all the time. The best business leaders (at every level) do not rely on getting more money every year to do new things. It's great if you can get new money, but if you can't, that doesn't mean you can't do new things.
What I'm talking about is not just piling more work on your team. It means conducting your business in such a way that you choose to stop doing some things each year, and that you find ways to get the same stuff done for less cost next year. You should always be looking for ways to increase your efficiency and reduce your expenses, so that you can re-invest the savings in where the business needs to go. You should be reducing costs every year on the current work and freeing up resources for new things and improvements—without being asked to do so.
But…You Still Can't Do the Impossible
There is a vital difference between an aggressive stretch plan and a total impossibility.
I'm all for stretching. I'm all for proactively finding resources to do things from within your own budget, so you don't always ask for new resources to do new things. But when you know, because you have studied every angle and squeezed every last bit of cost out already, that what you are being asked to do is totally impossible, then you need to make a choice. Tell the truth, or proceed on a plan you don't believe in.
What Everyone Is Thinking
This is impossible. This is so screwed up!
Never underestimate the ability of the people doing the work to know if a strategy is sound or not. When a strategy is realistic and supported by resources, people can feel that. When a strategy is an exciting mission to take a new hill and everyone has to stretch, people can get motivated by that. But when a strategy is impossible, and the resources and timelines do not match the delivery goals and revenue expectations at all, you are never hiding that from the people doing the work. They can see it (maybe even more clearly than you).
If you embark on this path, the credibility of the management will plummet and morale will be terrible—because no one has the resources to do anything well, and the goals simply can't be met. You are asking people to continue working aboard a sinking ship. They will be looking for a lifeboat or an island to hop onto.
This Can't Be Done
Sometimes you will be asked to deliver the impossible, and you will need a strategy to push back with credibility.
A common version of this happens when a business leader is given “a number” they need to make. It doesn't matter what the actual realistic, achievable revenue number is, the conversation starts and ends with, “We need the revenue to be this number.” I have seen months of planning be thrown out and literally overwritten in a moment, when someone with the power of the pen changes a single cell on the spreadsheet for “revenue target” with no explanation.
This might happen because:
- The CEO promised that amount of revenue to the board and investors, and he will lose his job if it is not achieved.
- This number needs to be plugged into the plan of a bigger business unit who has made a non-negotiable commitment to the company or board.
- Because (this is the most common reason for this false revenue number) the revenue is required to support the current expenses of the business.
I can tell you that in my own career, I have never succumbed to this pressure. I could never sign up for a plan that I knew I could not deliver. I have led several turnarounds and transformations, and there was always a moment when I told the truth about what the new thing could be, when I knew that what I was telling the executive committee was something they did not want to hear:
The business you want does not exist.
What I am offering is to give you a smaller, good business that functions and that is profitable.
It is not as big as you want it to be, but at least it is real.
I won't sign up for a bigger number that is not doable.
At this point I have experienced one of two reactions. One was, “Thank you, you are the first one to tell us the truth. We don't like it but your plan is doable, please proceed.” The other one was, “This is not good enough. If you can't deliver what we need, we'll get someone else who can.”
Any time the latter happened I said, “I'm okay with that. I'm sure you can find someone who will commit to whatever you want, but I doubt they will deliver it. It's your choice. If you'd like me to lead this, I will actually deliver this smaller plan.”
I've never lost a job over this. I see no upside to making a commitment that is not real.
Turtles All the Way Down
Whenever I see this tendency to build a plan on a false number, or a false premise, I always think about a story I have heard that has been attributed to many different sources all over the world. Here is one version I got on Wikipedia:
After a lecture on cosmology and the structure of the solar system, William James* was accosted by a little old lady.
“Your theory that the sun is the center of the solar system, and the earth is a ball which rotates around it, has a very convincing ring to it, Mr. James, but it's wrong. I've got a better theory," said the little old lady.
“And what is that, madam?” inquired James politely.
“That we live on a crust of earth which is on the back of a giant turtle.”
Not wishing to demolish this absurd little theory by bringing to bear the masses of scientific evidence he had at his command, James decided to gently dissuade his opponent by making her see some of the inadequacies of her position.
“If your theory is correct, madam,” he asked, “what does this turtle stand on?”
“You're a very clever man, Mr. James, and that's a very good question,” replied the little old lady, “but I have an answer to it. And it is this: The first turtle stands on the back of a second, far larger, turtle, who stands directly under him.”
“But what does this second turtle stand on?” persisted James patiently.
To this the little old lady crowed triumphantly. “It's no use, Mr. James—it's turtles all the way down.”
I see this play out in business over and over again. But it's not turtles that are providing the support for holding up the business; it's the false revenue number.
The whole plan—the strategy, the staff, the investments—are all based on a false revenue number. I think of this story every time I see a business leader or team sign up for a plan for which there is no factual basis to support that revenue target. But they have a crumb of a reason to create this story, so they stick to it. And then they build bigger and bigger business cases on top of the unsubstantiated premise—it's turtles all the way down.
Sure you can base the number on the something, and come up with some story why that number is a good number, but if you dig too much and look for the real support, you're not going to find it. You're only going to find hopeful distractions to make everyone feel like the number is real even though it isn't. (It's just the next turtle.)
I simply couldn't live with the “turtles all the way down” method of planning. So I refused to put myself in that position. But what that also implied was that to pursue a realistic revenue number, I had to follow through on getting the expense plan in shape, which was always painful.
Pick the Right Revenue and Expense Target
As I mentioned previously, the most common reason for having a revenue target that is too high is to support the current, too-high expense base.
The most pivotal decisions you can make in the business are based on this: What are your revenue and expense targets? If you are building a company and are in investment mode, there is a little more play here, based on the appetite of the market and the patience of your investors. But in a going business, if you get this wrong, you can get it really wrong.
When companies try to support an artificially high, unsupportable expense target, they can't do anything well.
When the expenses are too high, and the revenue is not supporting that level of expense, then budgets get squeezed and no one has enough resources for anything. You can't make any investments. You are always doing a lesser job than you want because no one can afford to do anything the right way.
Every single day, every single person comes to work feeling like they are failing and that you are all collectively failing. Every week there is another “no” to a request for needed resources. Every month there is a panic when you don't make the numbers, and then there are hours of soul-destroying meetings to analyze what happened, and why the revenue was not higher.
So then to be responsible, more programs are squeezed, more projects are delayed. Either directly or as a byproduct, more talented people go away, and the people who remain continue to suffer, fighting their battles with too few resources and knowing in their hearts that you won't make the revenue plan next month either (because it's turtles all the way down).
The answer here is structurally very simple: Cut the expenses to a level that the actual revenue plan will support. Get healthy, then grow from there.
It may seem that I have a pretty harsh view of this. But it's because I have been through it so many times, and each and every time everything was better afterwards. Everyone comes to work feeling like they can succeed. The projects that remain are well funded—they can succeed. You hit the revenue plan for the month. Then instead of spending half your time agonizing over why you didn't meet the revenue plan, everyone spends that time moving the business even further forward—because they can. People are motivated.
The pain of sizing the expenses correctly is a one-time thing that affects some of the people. The pain of having expenses too high for the actual, achievable revenue goal is painful for every single person, every single day forever after—and puts the whole business at risk. Everyone suffers. I'm not a fan of layoffs. It should always be the very last resort. It's a great thing to create and keep jobs and it's a terrible thing to lay people off. But—it doesn't help anyone to be in a failing business, whose effective business model is “turtles all the way down.” It's unsustainable. If you maintain this, at some point instead of some people losing their jobs, everyone loses their jobs.
Do What You Can
When I was running a global marketing organization for a computer business, the new management team of which I was a part inherited a turnaround situation to run a business whose realistic revenue plan was less than half of the committed revenue plan. The current expenses matched the high revenue number, of course. I was responsible for creating a winning strategy, but as part of that strategy we needed to reduce the revenue plan by more than a factor of two. And we needed to reduce expenses to be inline. To implement the new plan, I needed to cut my annual budget from $140M to $60M. This was not a small change! It required a total reinvention. It was very painful. But we got around the corner.
Within the first year we took that business from losing $50M every quarter to making $50M in the first year. The pain was gone. It was replaced by focused action, and pride and hope.
One of the things I see so many companies struggle with is the thinking that if you cut too deep, the business will stop and fail—that it will be impossible to be in business with so many fewer people and resources. It feels like there is absolutely no way to be successful after so deep a cut.
I was grateful to have learned this lesson very early in my career when I was in a start-up company that had at its peak about 60 people. I was the product marketing manager in a group of five marketing people reporting to a vice president of marketing. One week I left on a business trip, and by the time I got back the company had been downsized to 30 people and I had a new job—as the marketing department! It was just me. I did not think I could succeed, but more importantly than that, I didn't think the company could succeed with this deep of a cut. After the layoff, we lost about five more of our top engineers. It really felt impossible. What could we do with so few people and without so many of our core product development people?
What Could We Do? We Did What We Could
What happened? We did what we could. We picked a smaller strategy and we did it well. We made it to break even.
That experience gave me the confidence that reducing expenses not only doesn't kill the company, but when you size the expenses for the realistic revenue, and fund the few things that you can do well, you can succeed. This same dynamic played out in my work with transformations of large organizations too. Get your organization and expenses sized to reflect a realistic, doable plan—plot your course through the Middle based on what you can actually do, and then do it.
This lesson of finding the new, smaller, successful plan was the inspiration of a phrase I coined and used many times over: “Do Less with Less.” I hate the adage of “Do More with Less.” It doesn't work, and it makes everyone feel worse. But “Do Less with Less”—people can really get behind that!
Something Must Get More Money
Here is one more big lesson on resources.
If you have a strategy that involves cutting costs, the simple, first test of “is this a good strategy or not?” is to make sure that while you are cutting, no matter how deep, that there are some things that are getting more money than before.
If in a cut nothing is getting more money than before (at least proportionally), you are just running a smaller version of the same struggling business that is trying to do too many things.
Everyone can know it and can feel it if the plan makes sense, and if it is doable. And they also know it and can feel it when the plan is based on “turtles all the way down.”