Budget as a Trigger for TOP Management: Examples from Eugene Lee of Socialtext
Eugene Lee is CEO of collaboration/Enterprise 2.0 platform provider Socialtext. His resume includes leadership roles at Adobe, Cisco, and the co-founding of Beyond, Inc. He was kind enough to provide me with several examples of how he's been able to develop Systems Savvy and how this plays out as TOP Management at Socialtext. I'm going to start with an example from earlier in his career that may be the easiest for all of us to apply. (I look forward to sharing his "Getting to Know You 2.0" story in the next week or so.) Eugene had just joined Cisco as VP of marketing for a new business line focused on SMEs [small and medium sized enterprises] and was in one of his first staff meetings with the finance director and other leaders. The presentation went into great detail around financial goals, drill-down goals and the like. Eugene turned to the controller who was helping him through this on-boarding process and asked for more explanation:
The controller was going through the mechanics of headcount, revenue, degrees of freedom, budget, variable marketing spend, allocation stuff... took me through all the lines of a vast spreadsheet. I asked "where's my IT [information technology] allocation?" "Well, we don't do that," says the controller. "Everything is client funded, you decide what you're going to spend on IT." At first I didn't understand.The major "a ah" was when Eugene realized what it meant in this context that "everything is client funded." It meant that he had a budget and it was up to him to make choices -- across technology, organizations, and people -- regarding how he was going to spend the money. This approach created a commitment well beyond that he would expect if there were just an "IT allocation." It was all about getting the most from your dollar, and getting the most from your dollar doesn't come from spending on IT independent of the rest of your organizational actions. It has to be a systems approach. It has to be an integration of the technology, the organization, and the people. The budgeting system was a trigger for TOP Management. If you separate out your budget allocations, people will think about the components independently. If instead you budget for a system -- you get people to think and design in an integrative way.
I made systems thinking a major part of anything my team did. Raised the bar on what qualified as a fundable program. [Systems thinking] became a theme -- and then how we could teach small business to do it at their scale.The budgeting system also pushed groups across Cisco to collaborate:
Nobody had enough to make a nirvana system on their own, so people would pool resources and you would get alignment across stakeholders. Where the budget comes from plays into creating the conditions, part and parcel, of how the business gets driven.Eugene said he saw these systems ideas further solidified in how Cisco handled his IT support. The IT Vice President came over to see how he could help. IT: "We need to hire somebody to support your group." Eugene: "Cool. Who do you have in mind...." IT: "No, you're going to hire somebody." The budget money came from IT, but the decisions came from Eugene's group and the new IT staffer sat (and ate lunch) with Eugene's team. This "made such a difference. She sat in my building, came to our staff meetings. She could efficiently do the research around what would work and what wouldn't because she understood the work that needed to get done." As a management professor who teaches systems thinking (and hopefully, savvy) in the context of organizational design, these examples sparkled. Cisco had built a budgeting system that clearly supported frugal and effective innovation. Eugene saw it as a way to leverage his resources and this insight served as an effective trigger in his development of systems savvy. We can all do this -- from high corporate finance to departmental budgets -- we can use the power of the purse to encourage people to take a systems approach. Managing technology, organizations, and people as a system is likely to be a much more efficient, and effective!, use of limited funds.