Traditional budgeting and its critics. Critics of traditional budgeting often make their points in a colourful way. Consider the following comments by the CEO of a multinational with revenues ofmore than $36 billion and more than 200,000 employees:

We set “stretch” goals for our people. $tretch means that we try for huge gains while hav¬

ing no idea how to get there—but our people figure out ways to get there. To reach these stretch goals, it takes an atmosphere where a goal doesn’t become part ofthe old-fashioned budget. The budget is the bane of the corporate world. It never should have existed. A budget is this: If you make it, you generally get a pat on the back and a few bucks. If you miss it, you get a stick in the eye—or worse.

Making a budget is an exercise in minimization. You’re always trying to get the low¬

est out of people, because everyone is negotiating to get a lower number.

IfI worked for you, you would come charging into the boardroom and say, “I need four! We’d haggle all day, me making presentations, with 50 charts, saying the right number is two. In the end we’d settle on three. We’d go home and tell our families that we had a helluva day at the office. And what did we do? We ended up minimizing our activity. We weren’t dreaming, reaching. I was trying to get the lowest budget number I could sell you. It’s all backward.
236 CHAPTER 6 Required 1. Do you agree that “The budget is the bane of die corporate world. It never should have existed”? Explain.
2. Assume you are the CEO of a television station. Your marketing manager shows you the preceding extract and suggests that you “dispense with the annual budget ritual.” How would you respond?