Source: 曹扬GeoffreyCao (ID: gh_50d441955f44) Author: 曹扬

Budget season is here again. Some colleagues find budgeting a headache—massive amounts of data, analyzing causes, and seeking opportunities. How high should the target be? Set it too high, and you fear you won't achieve it; set it too low, and you worry the boss will be unhappy. Is budgeting really that difficult? Can't we enjoy making budgets with our team? I must admit that budget targets are about challenging yourself and your team—don't think about anything else! Frankly, budgeting is a challenge for everyone, but the process and results vary. Today, the general manager talks about a different kind of budgeting—one where the GM can enjoy making budgets with the team! You may already be using the GM's methods, or you may not have tried them yet. I hope they prove useful to you! Without further ado, let's have the GM share with us! I always make budgets together with my team. That sounds like a no-brainer—which GM doesn't work with their team? But my approach is to give the team deep involvement, letting everyone's initiative shine, and especially making the final outcome enjoyable for all. This approach has five benefits: 1. Team involvement, skill development, and growth 2. Encouraging honesty, facing challenges, and solving them together 3. Pooling wisdom, finding opportunities, and forming synergy 4. Owning the numbers, owning the decisions, and owning the responsibility 5. Rewarding overachievement, boosting morale, and making everyone happy

The logic isn't complicated—you'll get it at a glance. But knowing the theory and being able to do it are two different things. Let me share the details.

Team Involvement, Skill Development, and Growth The team knows my style and way of thinking well, and I know what they're thinking. This is the prerequisite for a good budget—it's crucial! The budgeting process is about mastering market trends, deeply understanding the team, and improving comprehensive planning skills. I believe it greatly benefits their future development. If you're always alone in your office, racking your brains and slapping your forehead, how can your subordinates grow? So, let the team get training. They'll eventually need to lead independently in the company or group, and budgeting is a great opportunity. Our frontline teams are usually busy executing and meeting clients, with little time to pause, summarize periodically, and think about the problems the team faces. Whether it's the sales director and their regional managers, or the marketing director and their brand and channel managers, budgeting helps them improve their summarizing and planning abilities. They can turn planning, implementation, and review into a closed loop—that's PDCA (Plan-Do-Check-Act). In essence, annual budgeting can enhance everyone's PDCA skills. What do bad budgets look like? 1. One type is where the boss just hands down a number without providing resources to achieve it. Everyone thinks it's unattainable but has to do it anyway. In the following year's execution, everyone suffers, finds no joy in the work, and results are hard to guarantee. 2. Another type is budgeting just to make the numbers look good. The budget isn't aligned with actual conditions, doesn't consider various opportunities and problems, and is just splitting numbers. It provides no guidance for monthly execution in the coming year. 3. Another type is budgeting to bargain with headquarters and the boss, using data to prove that your market really can't achieve such a high target. For example, if HQ demands 20% growth, I can only use data to show I can achieve 10%. This is usually to get more resources, since the success rate of bargaining is low under normal circumstances. 4. Another type is where each department focuses only on its own goals and targets, ignoring other departments. For example, the marketing department makes a very aggressive new product plan without considering whether sales can achieve it or whether supply chain has the production capacity. The final result is unknown, and departments are at odds... To avoid these issues, I encourage active participation, have all departments join in, communicate openly and fully, reach consensus, and align everyone's efforts toward the company's overall goals.

Encouraging Honesty, Facing Challenges, and Solving Together I'm transparent with my team, and the atmosphere is harmonious. People are willing to work—that's important. If they feel their boss isn't hiding anything, subordinates are less likely to deceive you and more willing to tell the truth. I can't guarantee I hear 100% truth, but I think I hear more truth than others because I have a great team, and they think this boss is okay (laughs). For example, for a quarterly plan, I gather key members from marketing, sales, and supply chain. I speak the least. The marketing director arranges for their people to present—these are the key people who actually write the quarterly budget. The brand manager talks about what they'll do, the channel manager about what they'll do, the sales control manager about what they need and what support they require... While they present, I pay close attention to the data in the reports. I listen to their opinions, watch them discuss or even argue, and analyze the logic and actual situation. Then I look at capacity planning, asking supply chain and D&OP (Demand & Operations Planning) to estimate if they can meet the requirements. If they say yes, we set the big numbers and framework, and hand it to finance for calculation. You see, each department is responsible for their part. In details, everyone knows their job better than the GM. I trust most people are responsible. The quarterly plan and annual budget follow the same model, just with more data, departments, and people.

Pooling Wisdom, Finding Opportunities, and Forming Synergy In the meeting room, discussions are open. Sometimes opinions are adopted, sometimes rebutted—I accept both. The key is that they're seriously engaged in the whole process. Because I believe that before proposing a plan, they've communicated with regional managers and branch managers, at least on the general idea. They might not share cost details with regional managers, but they must communicate the operational approach with the frontline to have a clear picture. The team knows I won't micromanage details; I trust them. So they're careful when making plans and don't just scribble anything down, because I always demand results. The more you do that, the more cautious and responsible they become with their proposals. You might ask: What if they can't achieve it? There might be a gap between targets and actual results, but I encounter two situations: First, the chance of not achieving is not high. Second, they won't tell me at the last minute that they can't do it. They'll come to me proactively when they spot problems about one-third or halfway through the process. I also monitor progress and trends. If I see something not ideal, I'll ask them: "What problems are you facing?" Then we look together, identify the cause, find ways to remedy it—maybe adjust the order of activities or change the pace. They'll propose solutions, and overall, results are still decent.

Owning the Numbers, Owning the Decisions, and Owning the Responsibility If the team can come up with a target, don't question them. Why would you say they can't achieve it? When I was a sales director, if I proposed a plan and the boss replied, "That won't work; you can't achieve it," I'd get upset immediately, thinking: "What makes you think I can't? Then you do it yourself." Putting myself in their shoes, as GM I generally don't reject the team's plans. I only listen, observe, suggest, and demand results. I remember when I was sales director, for one year's annual budget, I said: "Here are several sets of data—population, brand, channel, product data, etc." These are all public. Based on your understanding and analysis of your respective markets, you set next year's targets for your own regions. I had the sales control team create a template for everyone to fill in their numbers. When the sales control team collected and summarized the data, they came running excitedly: "Boss, the combined numbers are even higher than what HQ gave us!" (For example, I asked them for 100, and their combined targets came to 115.) This was beyond expectations. I said: "See? Don't think too poorly of your employees. Don't assume the team is always bargaining. They're actually pretty good." When the team sets their own targets, they naturally take more initiative to find ways to achieve them. Their focus is on ensuring execution, using resources effectively, and fighting for more resources to finally hit the target.

Rewarding Overachievement, Boosting Morale, and Making Everyone Happy I remember the day I announced the budget targets. I told them their own target was 115, but I was allocating 100. When they saw that the actual mandatory target was only 100, you can imagine the scene (laughs). Then I said honestly: "This 100 is the budget for this year. But the 115 you submitted makes me very happy. You can treat 115 as your challenge target. I won't assess you on 115—only reward. The extra 15 will be heavily rewarded." That way, everyone was happy, and the situation was revitalized. If it were the opposite—HQ gives you 100, but the team only submits 50, and I allocate 50—the sky would darken, and even 50 would be hard to achieve. Achieving this requires certain conditions, three points: 1. The team has the capability. For capable teams, fully trust and empower them. 2. The team can keep up with my thinking. As mentioned, I know the team, and the team knows me. 3. Provide relevant ideas, tools, and data to the team. You can't just have them brainstorm out of thin air.

Final Thoughts For targets from HQ, I always accept them without bargaining. Don't be intimidated by the target. It's just a number. Break it down into quarters, then months. If it still seems like a lot, break it into weeks, then days, then channels, even customers. There's always a way. First, dispel everyone's fear. I often tell my team that in my many years of experience, when I break down annual budgets by month, those astronomical numbers always make it feel like only 2-3 months are achievable, and the rest are just numbers. But by year-end, when we sit down and review, we find that each month was actually doable. Otherwise, we wouldn't have "survived well within the system." That's how I enjoy making budgets with my team. Through the five aspects above, we truly find opportunities, unleash the team's initiative, and then work together to achieve the goals!

Are you "watching" me?