In this powerful and unapologetic white paper, Professor Malcolm McDonald exposes the dangerous over-reliance on forecasts, targets and budgets as substitutes for strategy. Based on decades of academic research and commercial case studies, the paper shows how rigid budget regimes can incentivise short-termism, dishonesty, poor customer focus, and even organisational collapse.
Instead of backward-looking number-chasing, Malcolm calls for market-based strategy and customer-centred planning — as the only reliable foundations for long-term commercial success.
Key Arguments
- Forecasts and budgets ≠ strategy: Many failing firms were highly profitable on paper — right before collapse
- Targets distort behaviour: From sales reps to police officers, people hit the numbers — even if it destroys value
- Budgets are often gamed: Managers sandbag targets, inflate marketing spends, or manipulate definitions to appear successful
Hard-Hitting Examples
- Enron’s fraud linked to impossible target pressure
- NHS queue definitions changed to meet quotas, damaging patient care
- UK police incentivised to pursue petty crimes over serious ones due to tick-box culture
- Unilever wasted £500m a year on budgeting that incentivised underperformance and backward-looking behaviour
Strategic Fix
- Start with the market, not the spreadsheet: Define where value will come from before setting numbers
- Work backwards from long-term objectives: e.g. “We want to be market leader in 3 years”
- Align targets with value creation: Reward teams for real strategic gains, not just metric manipulation
Quote
“Even a laptop can create a forecast. But without strategy, targets just create chaos.” – Professor Malcolm McDonald
Download the Full White Paper
This summary highlights the warning — the full paper includes corporate examples, financial consequences, and a roadmap for restoring customer and strategic focus to the heart of planning.