Don't Spend, Invest

January 29, 2009 by
Filed under: Leadership, Project management 

There is no shortage of indicators that we are in for in for a rough stretch ahead. While there are some that are still debating whether to call what we are going through a recession or a depression, it is clear to everyone that this is no time for frivolous spending. I would argue that we should always be aware of where we spend our money, and always spend with an understanding of the return we expect.

Unfortunately, most places we look these days, the focus is on slashing costs, rather than considering all of our expenditures and understanding what we get back. It may mean we need to be creative about looking for value in terms other than monetary, but that’s an exercise we should be doing anyways. More than ever, we need to be accountable for every dollar spent, and we need to do it by protecting value, not protecting budget.

Training for many organizations is seen either as a perk, something provided as a reward for good behavior, or there is a chunk of money set aside (a training budget) with a ‘use it or lose it’ mentality. For clients with this approach, I’m happy to help them spend their budget, but I have no illusions that there will be lasting organizational impact from the training. In these cases, my focus tends to be identification of the little victories, those new practices that individuals can bring in: things that they don’t need permission to do, things that don’t show up on the Gantt chart. There are plenty of these things to go around. In some instances, the effort has managed to turn a group around to think more strategically, and we have moved on to far higher value-added efforts, with great results. But it requires a shift in thinking, making a connection between training and overall productivity.

These organizations are easy to see. An organization is in this boat when training budget dries up in times like these, or when organizations do what they can to lowball on price (I spoke with one group yesterday that was perfectly happy to go with training, provided I could run a 2-day course below my cost – um…no thanks).

The same principle applies when organizations look at bringing in outside consultants. Companies can easily release some funds to bring someone in early in a project or when times are lush, but when money is tight (and this situation is going to get far worse), there is a strong tendency to try to make do with the resources you have. People will have to wear multiple hats, will have to contribute in areas where they don’t have the requisite depth. Things will get done, to be sure, but not as efficiently, and often not with the desired results.

The way to look at any expenditure should be the same in good times or in bad. If we follow that philosophy, we gain from the fact that we can move forward with a consistent approach that does not have to react to environmental factors. These days, this approach is becoming an imperative.

Know where your money is best spent: understand your weak spots, understand how an investment in this area will provide a return. Everyone needs to be accountable for the value they bring to the table, whether internal or external. If you cannot measure the value of training or consulting support, to your bottom line, you should always question it. If there is a budget allocation that needs to be spent or is dropped at the first sign of trouble, you need to rethink your whole rationale behind that budget allocation to begin with, whether it is training, consulting, or some internal expenditure. If your external support can’t work with you to identify a value model that makes the engagement attractive, drop it.

More than ever these days (though it is going to get even worse), you need to understand the value of every bit of your budget that you spend, every bit of time that you invest. For a precious few, this will mean business as usual, and they are likely to do well in this economy. For the remaining majority, this will mean a change in behavior, and we all know how easily we manage change. It is indeed the case that the things that do not kill us will make us stronger. – JB


Feel free to leave a comment...

  • What’s Happening

  • On The Road Again

    Jim frequently travels across Western Canada for engagements, and welcomes opportunities to meet, run a workshop, Diagnostic or Lunch and Learn session.

    Contact Jim if you would like to connect around any of the upcoming dates:

    • Blissfully at home in Vancouver, BC over the summer!
  • What People are Saying

    In our brief one day session with Clarrus, we identified the key areas to focus on, and drilled down to discuss the best approach to take in each area. Rather than a sanitary discussion of best practices, we arrived at a practical, specific set of items to implement – I think we made significant progress as a development group.

    — Daniel Miller, CEO, Miller Software