I am republishing this post, because it speaks to the recent questions of several entrepreneurs.

The problem is that entrepreneurs often read something like this and discard it as applying to larger companies or those further along in life or revenues.

They are wrong.

Sure, the information might not fit like a glove, but it can be tweaked; and the underlying philosophy fits any enterprise, large, small or micro.

Accounting Tools a Part of Corporate Culture

Gavin Cassar, a Wharton accounting professor, tested the prevailing wisdom of whether accounting techniques, such as budgeting, sales projections and financial reporting, would, in fact, help prevent business failures. In surprising results, he found that some accounting tools may actually lead them astray.

But he found the culprit not to be the tools, but rather the MAP (mindset, attitude, philosophy™) of those using them.

I sent the article to a long-time CEO who was s serial entrepreneur (now retired) and thought you would find his comments interesting and useful. I’ve changed names to keep the examples he mentions anonymous, but note that Corp A was part of a Fortune 500 company and Corp B was public with sales of several hundred million and a CEO who had been around the block numerous times.

There’s only one important accounting problem described in this article.

The other problems discussed are really problems in human psychology, such as being guided by hopes instead of realistic considerations and ignoring (widening) gaps between plans and results.

But the serious accounting problem described is the failure to collect and publish accurate and timely accounting information.

If you have a carefully worked out budget, unless the monthly accounting figures are available quickly and are correct, the budget is useless as a planning tool because it’s impossible to really judge whether the company is on plan or not.

To some extent, both Corp A and Corp B suffered from this.

Accounting was not held to high enough standards. Expenses were misclassified and weren’t posted in the months in which they were actually incurred.

Managers initially tried to sit down with accounting and straighten out the discrepancies. But it was impossible, either because of poor accounting tools or probably just gross incompetence.

After a time, managers stopped trying to correct the internal financial reports. They thought it was just wasting their time.

They also stopped trying to control their expenses. Why bother? The financial reports were so inaccurate they didn’t show up even large and willful expenses outside budget limits.

This, of course, led to increasing attempts by higher management to exert personal control over expenses.

At one point, the Corp B CEO was signing all expense reports. You had to receive his personal permission to go on a trip or to even take a client to lunch.

The budget meant nothing. And there was a line of managers outside his office asking permission to buy essential test equipment or fly an applicant in for an interview.

Stuff that should have been decided instantly by the managers concerned was delayed, frustrated and often cancelled altogether.

The Corp B example is very close to what is going on with one of the entrepreneurs mentioned at the beginning.

He is micromanaging every dime spent in his fast-growing startup.

So far, his impulse to exert control has cost his company two excellent recruits and two of his senior staff are in revolt.

He needs to let go, trust his people and give them the authority to do their job.

If he doesn’t there probably won’t be a company for him to micromanage.

Think about it.

Flickr image credit: Paul Downey

I’ve been written a lot about multitasking because I’ve never believed in it and today I have yet more proof that it just doesn’t work.

Not my opinion, but brain science done on focus and concentration.

Winifred Gallagher, author of Rapt: Attention and the Focused Life, a guide by to the science of paying attention, says, “Multitasking is a myth. You cannot do two things at once. The mechanism of attention is selection: it’s either this or it’s that.”

Whatever you choose to focus on, whether consciously or not, your mind will tune the rest out.

You’ve experienced this yourself. Think about the last time you were on the phone; how long was the lag time was between your words and the response? How apropos was the response or did the person ask you to repeat what you said?

Chances are the person you were talking with was checking email, tweeting, surfing or one of a myriad of other actions.

Or does this describe you in a conversation?

Gallagher says that “People don’t understand that attention is a finite resource, like money,” and, like money, you need to decide consciously what you want to spend it on and budget accordingly.

So stop multitasking and start living; as the old Alka-Seltzer ad goes—try it, you’ll like it.

Image credit: Daquella manera on flickr

Tons of downer news these days and many managers have faced/are facing the trauma of laying off members of the team that they’ve worked so hard to build, so I thought some upbeat advice/information and stories to help you do your job better managing would lighten your weekend.

Business Week was kind enough to offer up a trove of stuff worth reading.

Some of the smartest ideas came from readers such as Autumn Parrott at Frist Center for the Visual Arts.

“We had a 25% budget cut. To help people understand the budgeting process, we formed a committee comprising only people who are not senior managers. It started conversations between departments and created a greater understanding of how our money is spent. People serve for a year. Each department gives recommendations like ‘we’re spending $70,000 a year on cleaning, so now everyone should clean their own offices and only use a cleaner once a week.’ One benefit of bringing in a variety of people is you don’t come up with the same ideas over and over again.”

This is a real winner. Sharing financial information below executive level is anathema to most bosses, but doing so increases employees’ sense of ownership which usually unleashes a barrage of cost-saving ideas.

There’s a great piece on trickle-up innovation where low-cost products developed for emerging countries are being tweaked for sale to affluent ones—the opposite of typical development.

There’s a lot more, but one in particular I’d like your opinion about before I say anything.

Please read Making the Case for Unequal Pay and Perks, come back and tell me what you think.

I’ll be posting my thoughts in a couple of weeks.

Image credit: flickr