Corina was puzzled. Her simple Cap Ex budget exercise that took her a week to prepare, now knowing it was a 15 month Time Span task, had caused her to think. That’s the point. Defining the Time Span of the task communicates the “real” complexity of the task. This was not a simple exercise. The Cap Ex budget is a complicated task and will require some deep thought, some research, some data gathering.
“Where do I start?” she asked.
“Do you remember my golf analogy?” I replied.
“You mean PAR?”
I nodded.
“P stands for Purpose, A stands for Action, R stands for Results. First I have to define the Purpose?”
I nodded again. “We cannot go any further until we define the purpose. What is the purpose of the organization?”
“The organization?” she leaned back. “But I just run the plant floor?”
“But if you just think about the plant floor, you will make wrong decisions. What is the purpose of the organization?” -TF
What is a Cap Ex Budget?
A Cap Ex budget stands for Capital Expenditures budget. Capital Expenditures are generally for expensive pieces of equipment which must be carried on the Balance Sheet of the company and depreciated over a period of years. Cap Ex budgets require some long Time Span thinking.
This example of thinking beyond your immediate span of operation when considering budgets, of course, can and should be applied to a wide range of decision making scenarios. How many organisations enable all their employees to gain a truly global understanding of the organisation, its place in the wider community and its role? I suspect the answer would be very few.
Of course, once you start down the track of raising people’s understanding and awareness you risk them knowing more than they do at present. The more people know, the greater their understanding, the more they want to contribute to the decision making process and the less likely they are to believe the bullshit that inefficient managers traditionally feed down the line. Now there is a really scary concept, actually utilising the combined knowledge and understanding of the workplace. Geez I can see middle managers, and many executives, mobilising to coordinate and create barriers to such a process. The fear that they might be found wanting, maybe not even needed would be sufficient to keep them awake at night.
It may seem a problem, everyone beginning to understand the business. It might reveal weaknesses in some managers. Unfortunately, those weaknesses will eventually be revealed and the results may be even more disastrous. Look at Bears-Stearns.