253 - How Zero-Based Budgeting Can Make You A Better Leader - John Laurito

253 – How Zero-Based Budgeting Can Make You A Better Leader

In this episode, host John Laurito talks about why a leader must challenge norms to get new ideas for projects or systems within the company. An organization’s success often lies within the processes that are put in place, and making it efficient is one sure-fire way to get ahead of the game. Tune in as he also shares the advantages of zero-based budgeting and how it can help your organization lower the costs for new projects.

[0:00] Intro

[0:44] Storytime!

[2:46] We are creatures of habit

[4:21] Leaders should always challenge the norms

[8:17] Why are we doing this?

[8:51] Is it working?

[9:22] What is the cost?

[10:03] Is it worth the cost?

[10:56] Is there a different way for us to do this?

[11:42] If it’s not possible anymore, what would be the alternative?

[12:17] Zero-based budget

[18:57] Outro

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John Over the last two decades, I’ve been in an insatiable quest to learn everything I can about leadership, what makes the best leaders so good after running companies small and large over the last 20 years. Today, I speak on stages all across the world to audiences who are interested in that same question. My name’s John Laurito. I’m your host, and I invite you to join me on this journey as we explore this very topic and what makes the best leader so good. Welcome to tomorrow’s leader! All right. Welcome to today’s episode of Tomorrow’s Leader, where we dive deep on all things leader-related and related to leading yourself and leading others, I’m John Laurito your host. 

John Yes, that was a, I don’t know, tongue twister there. You know what happens to be honest with you, I go through clumps where I film a whole bunch of these and then I go up here of time a week or whatever, even that I don’t and I get out of practice. So in any event, I’m not going to rerecord that. This is just live studio action brought to you by John Laurito. So today I want to start with this story. 

John I thought this was kind of a funny, cool story. A guy was sharing that it was holiday time and off as Christmas or Thanksgiving, and his wife had was putting cooking to him and had cut the back off of the ham. And he had asked her, he said, Why do you cook? I mean, I know we always do this, but why? Why do we take the hand out of the back of the ham off? And her answer was, Well, it’s a tradition. It’s always been done that way, am I? And he said, Well, why? Why? I mean, who’s done it that way? Said My mom and grandma and everybody. And it just so happened that her mom was coming over there, her mom. And so he asked her, he said, You know, hey, I noticed that you know, we’ve always cut the back of the ham. 

John What’s the story like? How come you did that? She said. Same thing. She said, Well, it’s always been a tradition. We’ve always done it that way. And because it was a holiday, his grandmother actually came in and her mom came in the door soon after and he took it upon himself to ask her that question Do he said, Hey, I’ve noticed that, you know, for multiple generations, everybody’s cut off the back of the ham. But what’s the purpose like? Why? Why do you do it that way? And she said, Well, we started doing it that way because the pan that we had, the ham just wouldn’t fit into it. So we cut the back of the ham off in order to fit it in the pan. And it was interesting, right? It was kind of funny because here, you know, this tradition that had gone on for decades and decades and decades, nobody understood the reason what the tradition was about. Why were they coming off the back of the ham? 

John And it all came down to the fact that the pan was too small. Obviously a problem back then, but not a problem now. But we still do the things now that we did for years and years and years, just because it’s tradition, we keep doing it. Well, that actually ties really well into today’s topic because we are creatures of habit, right? We love to just do things. We love patterns. We love just things that we just create a habit around because it’s easy, right? It’s it’s thoughtless. We don’t have to rethink anything. We don’t have to go out of our comfort zone. We know how to do it. We know what to expect. We just like routine human nature as we just like routine, which is good if we have good habits. It’s bad when we have bad habits, right? 

John We get into bad tendencies because we just get into this routine and we just follow this pattern of doing this bad behavior or whatever it is or unhealthy habits over and over and over again. And the same thing can be true for very, very positive things. But as a business leader, it’s more than just the impact on yourself, it’s the impact on the entire organization. I’m not talking about habits per se, but I’m talking about the concept of doing things because we’ve just always done them that way. And I’ll tell you, I see this a lot. I talk to a lot of individuals, a lot of leaders in all different industries that struggle with that, that at some point they come to this realization with something. Maybe it’s a part of their process. 

John Maybe it’s something that their clients or customers are the part of their interaction that they’re facing with the client. Or maybe it’s behind the scenes, something that they how they process something, they just do it because they’ve always done it that way. They’re not really rethinking and challenging themselves to say, OK, is this really the best way? So I want to bring this up because I think it’s a really key thing. A great leader has got to continue to challenge themselves and a lot of times the best new ideas. It really just comes from a conversation. I don’t care if it’s you have it with yourself or you have with your team or somebody else, but just the conversation and the questions that you start asking yourself sometimes will prompt really amazing changes. Think about the pandemic. 

John What’s happened is this pandemic over the last couple of years has forced businesses to change whether they want to or not. It’s forced leaders out of their comfort zone. And because of that, there are many companies and many leaders that did significantly better. For the simple reason they had to go away, they had to reinvent new ways of doing things. Think about the whole concept of a conference. We actually. Figured out as a society how to run a business meeting pretty effectively, virtually. Now granted, everybody loves getting together personally in person. Me included by far, I love the in-person visits, but we have actually made it very doable to run an effective meeting and sometimes a conference virtually where two years ago, we never would have thought that we never would have even entertained the concept. 

John It was either for many companies in many industries, it was either we do the expense of a and incur the expense of a major conference or get together in person, fly everybody in and do all this thing, or we just don’t have it. The concept of doing it virtually wasn’t in many cases thought of or at least thought of, in the way of it being truly a viable option. And now it is. But think about all the different ways of doing businesses, how different companies have formed and started, how companies have just challenged the norm and said, you know, Hey, do we need to rely on a cab driver who’s going to come and or we get to see them somewhere and hail a cab or call up a company and wait 45 minutes from a come up. 

John Now we can actually redesign the system. We don’t have to always do it that way. That’s the way it’s always been done fine. You know we can we. That doesn’t mean that’s the way, the only way to do it. And lo and behold, you have a whole new change, a whole new industry with Uber. You know, I have I love wearing sneakers as many people do. I love just the comfort of them and everything like that. But I just hate putting sneakers on. I hate the whole concept of tying shoes. I know it sounds like a really basic, stupid little thing, but I don’t know. I might choose to go from time to time up and whatever. I just don’t. It’s one extra step. 

John I love the comfort of slippers or whatever with sandals where you just flip flops, you just slip your feet in. That’s awesome. Now I wear Cusack’s, which are sneakers that look great and they’re lace sneakers. You can’t tell the difference, but you just slide your foot in. I never need to untie my shoes. I love their sneakers that I just slip into Kissack. Awesome. Fantastic. So there’s somebody that said, You know what? We don’t have to have a sneaker that’s just the same old way where you tie it up. And that’s the way you get your foot inside of it. Why couldn’t we do both? Why couldn’t we have this sneaker? The laces look and the slipper feel? It’s kind of what it is. So think about this with your business. 

John I’m going to give you six questions that you can ask yourself or your team. And this could be just again your life in general, your personal life, because part of this is figuring out how you change your life. If you want a better life, you have got to become better. If you want to change your life, you have to change. So this starts with you. So I want you to think about all the things that you do, and I know we’re trying to be more productive. We’re trying to be more positive, we’re trying to get smarter, we’re trying to grow. I want you to think about the ways that you go about doing each of those things. I want we want better relationships. What are the things that we’re doing and how do we do them? How do we go about it? What’s the rhythm of our week or our day? And there might be a better way to do it. So here are six questions you can ask yourself. 

John So think about yourself for those business leaders. And when you think about one thing that you do, maybe it’s that weekly two-hour sales meeting that you have with your whole team, whatever it may be. Just think about one thing as an example, as you go through these questions. 

John The first question is why are we doing this? What’s the goal that this is helping us accomplish? OK, so the first question is why? Why are we doing or why am I doing this? What am I trying to accomplish? What’s the objective? That’s question number one. 

John Question number two, really simply, is it working OK? If the answer is no, well, then stop it right away and you need to go through the other four questions. Just stop it if it’s not working. And believe it or not, that may seem very obvious. But there’s a lot of people, a lot of companies, a lot of people in general that do things again. It’s not working. They don’t even think about the fact it’s not working or examine it to see if it’s not working. It’s just not working and they keep doing it, in which case it’s a waste of time, energy and money, and everything. 

John Third question is what is the cost? So let’s assume it is working, OK? Answer number two is yes, it is work. It’s producing the difference. What is the cost? And when I say costs, I don’t just mean financial costs there might be, but what’s the cost in terms of time that we’re investing in? The opportunity cost? What else we could do with us two hours per week or whatnot. It’s also the emotional cost. So is this whatever we’re doing? Is it causing negative emotions? Is it causing frustration, anger, disappointment, sadness, anxiety, whatever? 

There is a potential cost and that has to be factored in now that we know the cost, that’s question number four. Is it worth the cost? OK, I really. Want you to examine and think about this closely. Is it worth the cost, OK, if it’s not, or if that benefit that you were just talking about or thinking through in your head is suddenly really diminished because you know what you have, there is a cost to it? And as a leader, you have to sometimes solicit the feedback of other people to find out what the true cost is. I mean, listen, I’ve run meetings before and done them for a long period of time that sometimes we’re not the most effective. Yeah, it was an hour could have been half an hour, and it was my team that sometimes, hey, listen, we’d spent too much time on this or that. We got to have a clear objective of what we’re trying to accomplish and do it at the least amount of cost. So for us, is it worth the cost? Here are two other questions that can really help you come up with something different. 

John This is question number five. Can we do this in either less time? So can we do the same thing in either less time or with fewer or fewer steps? If it’s a process, can we do it with less money? Can we do it with fewer people? Can we do it within a shorter timeframe? And I’m not. I’m or frequency. These are questions. These are challenging questions. I’m challenging the norm. Is there a different way for us to do this? OK, that’s question number five. Is there a better, shorter, faster way to do the same thing? 

OK, now here’s question, number six, if this thing that we’ve been doing was not possible anymore. I just had no, it wasn’t even an option. I could not do it. It was off the table. And you were forced to get rid of it. What would you do if that option is no longer available? What would be your alternative? Sometimes we just have not thought through what alternatives look like. Force yourself to do that. OK? My guess is you’re going to come up with something, and if nothing else, you’ve challenged the norm and you’ve proven that it’s worthwhile. There’s something called zero-based budgeting, which basically it’s we tend to set budgets. You’ve heard me talk about this, many of you before we send budgets, set budgets for this year or the future based on what’s happened in the past. Well, let’s figure out what that budget is for. How much we’re going to spend on technology based on what we’ve been spending is a little bit more. A little bit. Yeah, less. I want you to think differently. 

John Zero based budgeting as everything starts from zero and we justify the budget in each area, we justify it from the ground up. All bets are off the table with justified from the ground up and say, OK, is this necessary? I want you to think like this because think of yourself as a leader that was hired to come into your organization. And if you’re a leader, if not, you, maybe you’re not a formal leader in a company. You don’t have many people reporting to you. It doesn’t matter. You are a leader. And you know that if you’ve been a loyal podcast listener to the show, you know you are a leader. You’re a leader of your life, you’re a leader of your career, you’re a leader of the people that you’re impacting, your leader of your family, your leader of your friends, your influence, and other people. OK, so what I want you to truly think about is if you were brought in as a turnaround expert to take over your leadership role and turn your company around, turn your business unit around, turn your finances around, turn your health around, turn your relationships around, turn your mentality around, turn your life around, whatever. 

John What would you do differently? I truly think about myself as a turnaround expert. I’ve done this four times in different business situations, and every time it was looking at everything, it’s happening really critically and critically. Meaning you’re examining to say, OK, is what’s happening. Something’s not working. And in some cases, it was everything. I was not working, but it was basically just to find everything from the ground up. We’re no longer going to do things just because we’ve been doing them. We are going to literally start from scratch if we have to. You don’t have to start your whole life from scratch. But if you just say and take little things, why do I start my day? I used to eat breakfast every morning just because I’ve been. It’s been drummed into my head growing up. You got to eat breakfast and it’s the most important meal of the day. You know it’s you burn. Your body goes back to burn all those calories throughout the day. You know, it’s I realized it’s not the most important meal of the day. 

John A lot of times I wasn’t eating the healthiest foods, but even when I was when I started to learn about intermittent fasting, which I know is many of you have heard about or have done, you know, I don’t eat till noon. And you know what? I work out in the morning. I go to the gym at six o’clock in the morning and I do all the stuff that I was doing before, if not even more. And I have as much, if not more, energy. And it’s one less meal and it’s fewer calories in the course of the day. So, no, I didn’t need breakfast. I didn’t actually need to be doing that and consuming that extra seven 800 calories or 1000 calories or whatever early in the morning. I just didn’t need it. I didn’t know it, but I didn’t need it wasn’t until I really challenged my thinking and said, Hey, I don’t know, and I started reading stuff and talking to people that were doing it. 

John I’m like, I’m like, You really don’t have breakfast and you feel you still feel good. They’re like, Yeah, and you look great. Wow, OK, let me try it. And before you know it now, OK, I don’t eat breakfast anymore because it brings benefits. There was a cost to what I was doing and it was extra calories, and in many cases, it made me more tired. You don’t have a big breakfast and want to, you know, take a nap or whatever. So bottom line is zero-based budgeting can help you become a better leader. 

John OK, those six questions again, why are we doing this? What’s the goal we’re trying to accomplish? Secondly, is it working? If it’s not working, stop it right away. If it is third. What is the cost? OK, financially, time-wise, you know, emotionally, mentally, whatever the case may be. What are the cost and question number four? Is it worth it? Question number five, Can we do it differently? The same thing can we do differently in less time, in fewer steps, with less money, with fewer people, with less frequency, whatever? Can we do the same thing differently? And the sixth question is what if we couldn’t do it at all? What if it was off the table? We had no choice what we’re doing not available, and we had to come up with something different. Or nothing at all? What would we do? What would our option be at that point? 

John So, in any event, I think this will really make a big difference for you. Those six questions tackle this for yourself. Tackle this for your organization. And let me know how it goes. I hope you enjoyed this help. It was valuable and as always, like, subscribe, share, give me ideas for future content and guess I had a string of great guests on recently. That’s what I’ve been doing, actually doing these guest episodes, you’re seeing them come out now, dynamite. So have, you know, great guests, people with really good stories to tell great personalities and in some kind of leadership capacity? 

John I want to broaden it. I want to. I want great success stories. People that come from behind in life, whatever things that are interesting and you know me, I love to talk. Leadership will figure out, you know, we’ll have a nice conversation. I’ll think about our my guest episodes are basically a conversation with somebody. Then I tell each guest this before we start, I said, Listen, you and I just can have a conversation. I get a lot of people, people asking me, OK, what are the questions? Can you send me the questions? I’m like, No, I don’t. I’m not going to give you. I’m don’t have stated questions, not an interview. It’s just a conversation. We’re going to have a really casual conversation and the audience is going to be eavesdropping into that really cool conversation. 

John That’s it. I don’t have any prepared questions. I just want to know what you do going into it a little bit about you. I’ve got my thoughts, some kind of where we’re going to head, but that’s what I love about this. It’s just a conversation like we’re getting together and somebody is eavesdropping. So if you know great guests, let me know. 

John As always, I appreciate you listening and tuning in, and I appreciate you going down below and giving five-star reviews. That’s important. It changes the algorithms and all the stuff the podcast gets pushed out to more people. So please do that. If you haven’t done that, go down of click. You’ll see go down all the way down to the bottom of the podcast and click your review. Add a comment. Very much appreciate it. So thanks, everybody. Have a good one. Talk to you soon, bye!

Thanks for joining us on today’s episode of Tomorrow’s Leader for suggestions or inquiries about having me at your next event or personal coaching you can reach me at John@johnlaurito.com. Thanks, lead on!

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