Good ideas don’t always spread.

Wilt Chamberlain was a great basketball player but terrible free throw shooter. The average NBA player shoots 75%. Wilt made only 51% of his foul shots over his 14 year NBA career. The 1961-62 season, however, was different.

During the 1961-62 season someone taught Wilt how to shoot free throws underhanded. The underhanded shot (see picture above) was softer and more consistent than the traditional way of holding the ball above the waist.

Using the underhanded “Granny Shot” resulted in Wilt making 28 of 32 free throws during his record setting 100 point game March 2, 1962.

But Wilt stopped shooting free throws underhanded the following year.

The reasons why Wilt stopped shooting foul shots underhanded are the same reasons why accountants stopped using Activity-Based Costing.

Activity-Based Costing (ABC) is a best-practice method defined during the 1980’s. It’s based on a simple principle: “Activities consume costs & Products consume activities”. I was blessed to be director of the research project that gave birth to ABC.

Activity-Based Costing was successfully implemented and used by such notable companies as UPS, Federal Express, Ralston Purina, and Chrysler beginning in the 1990’s to improve decision-making and profit. Yet ABC is rarely taught in college or used by companies in 2016.

The reasons why Wilt abandoned the underhand free throw are the same root causes why Activity-Based Costing is rarely used:

• Wilt was willing to change but not transform his technique. Change is often successful but soon abandoned. Transformation is permanent. Wilt’s change to underhanded foul shots ended after one year. Rick Barry, however, transformed his foul shooting entirely to underhanded for his career, resulting in a 89% lifetime free throw average..
• Accountants were willing to try Activity-Based Costing pilot projects but not transform the company costing system. The results of ABC projects from 1990-2000 were overwhelmingly favorable. But few companies transformed their costing systems to ABC.
• Wilt was not required to shoot underhanded by leadership. Even though competition frequently fouled Wilt because of his poor free throw results, neither his coach or team owner pressed him to change. A task of leadership is to create an alignment of strengths in ways that make our weaknesses irrelevant. Shooting foul shots underhanded made Wilt’s weakness irrelevant, but his coach did not make him continue in his strength.
• Accountants were not required by the CEO, CPA or IRS to convert to Activity-Based Costing. Even though ABC pilot projects consistently demonstrated more accurate and understandable cost reporting. The majority of CEO’s moved their attention from ABC to the next hot topic promoted by consultants or trade journals.
• Wilt had a high threshold of collective behavior. He refused to change unless most every other player in the league shot underhanded. Wilt was willing to abandon a better method in exchange for conforming to the majority of players. Rick Barry had a low threshold. He was willing to be a loner if the outcome was positive. Not so with Wilt.
• Accountants have a high threshold of collective behavior. By nature, accountants are conformists. If the majority of accountants and accounting software products don’t use Activity-Based Costing, then neither will they. Marketing professionals have a low threshold. They are by nature non-conformists.

Being underhanded is bad. Shooting underhanded is good. Both in the game of basketball and the profession of cost accounting.

To learn more about Activity-Based Costing CLICK HERE. To request a free evaluation of your cost system CLICK HERE.

Budgets are boring. They’re easy to create. Simply take last year’s spending and multiply it by an inflation factor or an across-the-board budget cut percent. Voila, you’ve got a budget.

Easy activities rarely determine an organization’s success. Creating a budget is relatively easy and not mission critical.

Strategy is mission critical. Strategy determines success or failure. Yet leaders spend far less time on strategy than on budgets.

During my 20+ years in consulting, I’ve seen many budgets but few strategic plans.

If you need to excite yourself and your “troops”, there are two steps that must take place before the budget.

Step 1: Strategy
If you’re satisfied with the way things are, then you don’t need a strategy. Just keep do’in what you’ve been do’in.

But if you’re not satisfied with this year’s results, then you’ve got to implement change. What do you change? That’s determined by your strategy.

A strategy is what you intend to do differently to win in the marketplace.

I focus on strategies that fall into one of three categories:

1. Focus on being unique. Define a niche for your existing products or services. Complete the sentence “We are the only organization that _____________.” Author Doug Hall says “If you’re not unique, you’d better be cheap.” Zipcode Honey or Texas Organic Lawncare are examples of niche strategies.

2. Focus on being the best. Provide what your competition does but more efficiently and effectively. If you’re a baker, make sure your cake tastes better than anyone else. If you want to make it unique, fine, but you’ve got to deliver the best quality. Amazon.com and Google are examples of companies whose strategy is to be the best retailer or search engine.

3. Focus on invention. Identify a new customer need and satisfy it with something you invent. Possibly the customer doesn’t even know they have the need. Facebook or Apple are examples of companies whose strategy is to invent social media or smartphones customers didn’t know they wanted.

Step 2: Plan
Define a 1-page plan to implement the new strategy. For an example of a 1-page plan CLICK HERE.

To be successful, a strategy must have a written, doable sequence of activities to achieve a distinct, measurable goal. And to be successful, the plan must be communicated to all employees.

Step 3: Budget
Unfunded plans fail. Create a budget that financially supports implementation of the plan.

A budget is the last step to success, not the first.

It does not require a PhD to predict that technology has and is going to continue to significantly change our corporate and personal life. Peter Diamandis, author of Abundance: the future is better than you think, recently asked readers “What do you believe won’t change over the next two decades?”

One thing that won’t change in the next 20 years is the proven sequence of strategy, plan and then budget.