As you wrap up 2018, and start thinking about your business's budget for the next year, the toughest single task is always the allocation of inevitably scarce resources among competing ideas, opportunities and commitments. The hardest single word to say is "No" -- and also the most important. Because smart strategy in times like these is all about what you don't do.
Saying "Yes" is so much easier and a relatively painless way, at least in the short run, to keep poor projects alive or to try to do things cheaply. Things that you shouldn't do at all. And saying "Maybe" when you should just say "No" isn't doing anyone a service; it merely postpones the inevitable.
Get used to the idea that there's never enough to go around and you can never make everyone happy or please all of the people even some of the time. Don't even start down that path. Absolutely the most important thing not to do is to try to treat everyone "fairly" - by which I mean equally - because nothing about business is fair.
Business is all about frankness, not fairness. Telling your people the truth is the greatest favor you can do for them. Splitting the baby or trying to give everyone a little something dilutes the overall enterprise and diminishes everything you're trying to accomplish. It's a proven formula for stagnation, mediocrity and eventual demise.
This kind of equitable treatment, where every department gets a similar budget, or every department head gets the same raise and bonus, feels good in the moment. But it's a stupid plan to try to placate everyone instead of making the hard choices to assure the survival of your firm. And it's a lazy and cowardly way out. I understand that no one wants to be the bad guy in someone else's day and that these messages are always difficult to deliver, but not only is it a part of every leader's job, if you're not personally up to the task, then you shouldn't be in the position in the first place. The buck really does stop with you.
And believe me, survival isn't too strong a term these days; it's exactly the level of significance and severity that these choices and decisions deserve. I see businesses every day where the management is treading water, waiting to retire, and/or afraid to bite the bullet, shoulder their responsibilities, and take the necessary actions. As a result, time quickly passes, momentum and opportunities are lost, investors, donors and partners lose interest, funding disappears, and one day they turn around and there's nothing left to pursue.
The market for talent, as just one example, is fierce and unforgiving. If you aren't smart enough to understand that you've got to pay your best people better than the rest of the team and, if you still think that it makes sense to be equitable based simply on longevity or titles or job descriptions, you're living in the past. Those peak performers, who are the only ones that matter to your future, will soon be hired away. Not because they're ungrateful or disloyal; because they're not stupid.
It's the same with (1) businesses you're in that are going sideways, (2) products you're producing that are getting tired and losing market share, or (3) departments where there's no longer the same demand for or the value attributed to the services that they're providing.
Spending money or other resources to prop these losers up, to keep failing operations afloat until they become someone else's problems, or because you're afraid to shrink them, sell them or shut them down means you're not doing your job, that you're kidding yourself and a lot of other people as well. Things only move all by themselves in one direction: downhill. Face the facts and fix the problems so that you have the funds to invest and bolster the businesses that are healthy and growing. Facts are stubborn things. They don't go away or change because you ignore them - they fester.
You've got to have a strict set of metrics (rank 'em or yank 'em), a clear view of where the future of the firm is likely to be (winners and losers), and some idea of the path(s) that will get you there. Every good venture investor will tell you the same thing: you starve your losers and feed or double down on your winners. This isn't rocket science. Most of the time, an outsider with even a fraction of the information you have can tell you which of your people are winners and what parts of the business are destined to grow dramatically and which ones are already the walking dead. Of course, if you were being honest with yourself, you'd admit that you also know who and what has to go. You just need to screw up your courage and get the job down.
And it's at budget time that things really come to a boil because the choices couldn't be clearer or more immediate. Are you really going to fund a flailing business for another year when every metric is headed in the wrong direction because things might get better? Are you really gonna lose a couple of your superstars just because you were afraid to pay them what the market made clear they're worth in order to keep the rest of the team happy? And, worst of all, are the people who once bet on you tiring of the same sad stories and mediocre results and getting ready to put their money and their attention to better and more productive uses elsewhere?