Book review of The 7 habits of highly effective people by Stephen R. Covey: Winning (Chapter 12) Budgeting

Every company would like to set budget process to carry out the new implementation program. Setting the right budgeting process can change how a company functions. The right budget will be distribute in correct department in order to make winning easier. Bad budgeting can establish itself as an institutionalized process. Usually, two common killing dynamics of bad budgeting are negotiated settlement and phony smile.

The negotiated settlement occurs after the big budgeting meeting, the director would like to allocate the budget in each department as low as possible. He would like to reward for those senior mangers which can hit the budget. However, most of the implementation program can take up to 1 - 3 years in order to gain a good turnover. Once the director estimates the outlook of sales won’t be good next year. He will cut the budget immediately. Thus this will destroy the whole implementation plan in the earlier days.

The second killing dynamic is phony smile. It occurs when the director allocates the budget without a budgeting meeting or the headquarter carries out secret mission which doesn’t explain the entirely plan with the branch officers. Despite the employees have their passion, opportunity and great vision. They won’t have a chance to report the needs of the budget to the headquarter. As a result, the branch offices are lacking in budget and they cannot fully implement their great mission to achieve the goal.

Tourism Queensland launched a new brand, the Islands of Great Barrier Reef to Global Experience Seekers across eight key international markets. They created “The Best Job in the World” in the January 2009, which was after the financial crises in 2008. The tourism campaign was giving job seekers the chance to get $150,000 to live six months rent-free on the Great Barrier Reef. This strategy was to promote the islands of the Great Barrier Reef internationally. The candidates would have to go through a genuine recruitment process. Only 1 successful candidate could be selected in this process. The main duty was to upload the video clips of Great Barrier Reef and writing blog on the official web page.

This recruitment announced was released on official web site, press, Youtube, facebook, online recruitment web site, myspace.com, banner message and twitter. Over 34,000 applications were received from over 200 counties and whittled down to 16 finalists within 5 months. The Australian marketing institute president Roger James reported to the public that it was an interesting idea. Everyone would concentrate on the winner’s blog. Thus it is an effective advertising than the traditional advertising. Roger James used the social web to communicate to the worldwide rather than using the traditional channel such as TV, radio, press and news report. He allocated the budget on the new innovation broadcast channel with an interesting idea. The new strategy brought 1,100 TV placements in the U.S, 400,000 new visitors in 30 hours to its official web site. One million hits on the second day. Approximately 34,684 people from more than 200 countries applied for the job. Global news coverage from CNN, BBC and Time magazine articles, the estimated media coverage is valued at over AUD$400 million. Actually, the 3 year marketing strategy by Tourism Queensland was AUD$1.7 million.

Jack Welch indicates that the right budgeting process can help the company grow. Make sure the headquarters and the field can clearly understand the goal and identify the real obstacles in the environment. Facing the global competitions, the headquarters should use new innovation way in production and advertisement to inspire the audience.