White Paper
Do More With Less–NOT !
how to solve the problem of
finite resources and infinite demands
BY N. DEAN MEYER
D o people expect more of your organization than it has resources to
deliver?
"Hey, we gave you all that money.... Now it's your job to deliver the serv-
ices we need."
So what do you do?
Rob Peter to pay Paul, so everything comes in late and you get blamed for
being unreliable?
Cut corners on quality and take unadvisable risks, and gain a reputation for
shoddy work?
Dean Meyer is one of the original proponents of running Demand more of your staff–more hours, more productivity, more rou-
tinization–and your best people leave? organizations within companies as a business, and has
implemented it in corporate, government, and non-profit
organizations through culture, organizational structure, and
resource-governance processes based on market economics.Divert time from training, innovation, and internal process improvements,
He's the author of six books, numerous monographs, andand find that your skills, infrastructure, and product line are no longer com-
countless articles. petitive?
Despite your best efforts, you can't satisfy all clients' demands. Then, to
rub salt into your wounds, a mid-year unfunded mandate comes along and
you're told to "take it out of hide."
>And as the final insult, in the next budget cycle, you're enterprise in order to buy your organization's products
told to "do more with less" as if you've been wasting and services throughout the coming year.
time and money in the past or not bothering to improve
productivity until pressured to do so. That pre-paid account creates a "checkbook" owned by
clients, and clients decide what checks to write.
What's Going On?
In this new paradigm, clients are empowered to buy
These unrealistic demands and stressed client relation- whatever they wish from your organization, but they
ships are rooted in the way you treat your budget. must live within their means. When their checkbook
runs out, clients can't expect
you to deliver more.
It's your fault if you can't satisfy
This does not mean that
all their demands you're inflexible. If there's a
need for something more in
with your limited resources the middle of a fiscal year,
clients can either reprioritize
their checkbook (not buy
The traditional paradigm is this: You get a budget–typi- something else) or they can find more money (redirect-
cally less than you requested–at the beginning of each ing their own budgets or making a case to the executive
year. Funding may flow directly to your organization, or team for incremental funding).
it may be given to business units who then pay you an
allocation (a tax) based on some high-level parameters
Similarly, the notorious "unfunded mandate" is not your
such as their headcount or a consumption metric of problem; it simply forces clients to buy something other
one of your major services. than what they'd planned.
In any case, it's your budget. And it's your job to man- Note that this new paradigm shifts to clients the respon-
age that budget as you see fit to best satisfy the needs of sibility for constraining demand to available resources;
the enterprise. you never have to say no. It's not your job to judge
clients' requests, the opposite of customer focus. In-
In this traditional paradigm, clients feel they have the stead, you simply ask how they plan to pay for their re-
right to demand anything they want; and they feel it's quests.
your fault if you can't satisfy all their demands with your
limited resources. Since you don't have to constrain clients to a budget,
your staff can be entrepreneurial and suggest new ways
You may seek input from clients
to help you set priorities, perhaps
through a steering committee or
a "portfolio management" Consider your budget
process in which clients rank-
order major new projects. But a pre-paid account
priorities are not enough; unless
clients know how much budget
is available and how much things
cost, they'll go on expecting more than your organiza- in which they can serve the business–creative new op-
tion can deliver. portunities that may offer higher returns than tradi-
tional products and services. Through innovation, your
The Solution staff enhance both shareholder value and their own ca-
reer opportunities.
A new way to think about your budget, inspired by mar-
ket economics, explains what it takes to make client-dri- Some small portion of your budget remains yours to pri-
ven portfolio-management processes work. oritize, specifically funding for enterprise-good services
(such as policy formulation) and for investments in your
Consider your budget a pre-paid account–not yours to organization (akin to venture capital).
spend, but rather money put on deposit with you by the
2But by treating most of your budget as a pre-paid ac-
count that belongs to clients, resource governance Treating your budget as a pre-paid
processes are customer focused and entrepreneurial,
supply and demand are balanced, and your organization account solves problems like:
is automatically and continually aligned with clients'
strategies and perceived needs.
 Unrealistic client expectations
How to Get Started
 Unfunded mandates
To treat your budget as a pre-paid account, the first step
is to define your catalog of products and services and
assign all costs to those products and services.  Accusations that you cost too much
Costs must represent both direct costs and a fair share
of indirect costs–that is, the fullcost of products and  Claims that allocations are unfair
services. Thus, no indirect costs are funded separately;
all funding is tied to products and services that clients
or the enterprise choose to buy.  Ineffective portfolio management
processes
Managing internal costs internally allows you to build in
the proper level of reinvestment in critical sustenance
activities like training, infrastructure development, prod-  Arbitrary budget decisions
uct innovation, and process improvements, as long as
your costs remain competitive.
from the same cost data as the budget to ensure
You'll need to produce two views of product/service consistency.
cost data:
Once the annual budget and rates are calculated, the
1. A budgetthat describes the total cost of planned next step is to establish an ongoing checkbook-manage-
products and services (as well as the traditional ment process. The checkbook may be managed by a
forecasted expenditures
such as compensation,
travel, and training).
This improves the qual-
ity of budget decisions, The first step is
with funding decided defining your products and services
based on the investment
opportunities at hand. and the full cost of each
Beyond that, and key to
addressing the "do more
with less" syndrome,
you'll leave the budget process with a clear defini- steering committee or divided among the business
tion of what's expected for a given level of fund- units. But the key is that clients decide what checks to
ing. write.
2. Rates, i.e., unit costs, such as the cost per billable The checkbook must be decremented throughout the
hour. year based on what your organization delivers, so that
Rates are used to decrement the checkbook as clients always understand where their money has gone
products and services are delivered throughout and what they have left to spend.
the year. They also provide a consistent basis for
costing new projects that arise mid-year, and a fair At first, maintaining the balance in the checkbook does-
basis for comparisons with external benchmarks n't require detailed tracking mechanisms such as time-
such as outsourcing. Rates should be extracted cards and infrastructure utilization metrics. In a
3simplified resource governance system, the checkbook
can be "invoiced" based on planned costs. Later, as
tracking mechanisms evolve, invoices become more ac-
curate.
Other refinements can be introduced after the basic
Planning and
checkbook process is working. For example, methods
of estimating benefits (including strategic value) and
calculating the total cost of ownership of the products
Costing Tool-kit:
you sell can improve clients' checkbook decision mak-
ing.
®
FullCost is a business planning method and
Note that most of the benefits of market economics can
®
Excel -based software that produces:
be gained without going all the way to chargebacks.
 A budget for your products and services
Conclusion
(as well as for traditional expense
codes).
Treating your budget as a pre-paid account is a straight-
forward, businesslike answer to the "do more with less"
 Rates (service costing).
syndrome.
The FullCost software incorporates a unique
Given transparent cost data that represents the true, full
second-generation costing model that
cost of your products and services, you'll have the confi-
amortizes indirect costs, eliminating the
dence to defend your organization.
distortions produced by simplistic cascade
and activity-based costing calculations. It's
fully compliant with all levels of the Full-
Clients are empowered
cost Maturity Model.
to buy whatever they wish
The FullCost planning process is participa-
from your organization,
tive, engaging your leadership team in defin-
but they must live within their ing their products and services and
planning their respective businesses within
means
the business.
For more information on FullCost, including
If the business demands more than you have resources
to deliver, you can simply ask, "How do you plan to case studies and steps in the planning
pay?" process, contact us at 203-431-0029 or
ndma@ndma.com.
If economic conditions necessitate a reduction in your
budget, you can simply ask, "What do you want to not
buy from us?"
This market-based paradigm empowers clients, aligns
your organization with their needs, encourages your
staff to be entrepreneurial, and links expectations to re-
sources.
641 Danbury Road, Suite D
The first step in establishing this new paradigm is a
Ridgefield, CT 06877 USA
business and budget planning process that defines
203-431-0029
your products and services and the full cost of each.
ndma@ndma.com www.ndma.com
Then, by giving clients control of the checkbook cre-
ated by your budget, you can regain control of your
business. Q
© 2008 N. Dean Meyer and Associates Inc. 4