Free the Z-word !

Maybe my vocabulary is too salty but I can think of nominees for *-words in a whole lot of slots in the alphabet, but today we have a new one for you.

Let's meet our friend the Z-word.    Zero-sum.  This is the basis for all of our "management" disciplines.  About the time that "win-win" became trendy, zero-sum got dismissed as the relic of antiquated thinking.  I am not so sure that this is a binary choice (there's some geek-speak for you), and even if they are mutually exclusive, there are times in the life of every leader (well, every manager anyway) when there just is not enough pixie dust to go around.

Zero-sum does not mean forcing an artificial conflict.  We really do have a finite amount of time and money. Failing to illuminate the constraints simply sets us up for even more destructive conflicts later on when the resources really are inadequate and we have already made a lot of promises about (and spent a lot of money on) a half-dozen initiatives that are all now stalled.

How does this work?

• Everything that is to be decided must start from a level at which everything is included.  Everything you approve for execution must fit within the grand total.  No special cases, no players to be named later.  It is OK to maintain a global reserve as long as it is specifically called out as such.  If there are special cases that will not be considered, fine, but then they need to be supported with their own resources rather than dipping into the common pool later on after bypassing all due diligence reviews.
• Break the total down into subordinate buckets using whatever word your organization will accept ("program" is the idea, but it may already be taken) from the perspective of capability, not organizationally, unless those are the same. Appoint managers for each bucket and let them propose what they need to accomplish their missions.  At this point it is often wise to provide rough guidance on appropriate size ranges for those buckets.
• Allow the managers to devise and explain the detailed trade-offs within their programs to achieve the desired capabilities (or as much as possible) with the available resources.  Everything at a more detailed level must conform to the constraints imposed at the next higher level.
• Each program must specify the (more or less stable) operating costs to keep doing what you are doing now.  These are usually 60-75% of the total.  Benchmark those costs against other organizations to identify fat.  Now the program has money left over for enhancements and new initiatives
• Make largely subjective decisions as to how to allocate total resources against these different desired capabilities
• Continue this process down through the programs, allowing the program managers to drive allocation decisions internally, as long as they remain accountable to deliver what was approved.

Notice that this approach provides an incentive to pull down the cost of operations since it is through those actual reductions that the "cool stuff" can be funded.  I have seen this simple approach yield substantial (15-20%) reductions in previously sacrosanct steady-state funds.

What this approach really accomplishes is to force those difficult conversations up to the appropriate level. Anything is possible as long as [almost] everything else is given up to accommodate it.  Several times I have seen an organization's leaders agree to give one initiative the lions's share of the funding for a year or so - and the sacrificing leaders exert a great deal of pressure to make sure that the initiative delivers!  It is the zero-sum concept that makes it work.