As we noted earlier, a big problem with conventional budget processes is that targets disconnected from reality can be all but meaningless for the people who have to meet them. An operations process that runs on the social software of execution solves this problem, because the people
themselves help set realistic targets. And since those targets are the ones their rewards are linked to, the operating plan is where they take full ownership of them. This is the bedrock of accountability.

LARRY: Let’s assume we rolled up the operating plan, and the corporation was $50 million short of what it had to do in order to meet the estimates of the street and so on. I tell them, “We as a company think this is the realistic target. This is what we’ve led people to believe. We’ve asked you to come up from what we agreed upon earlier, but there’s still a gap between what you think you canmake in the ten operating businesses and what we think we have to make.”

I can’t just give them numbers they can’t make, because that isn’t going to be helpful. We’ve got to talk about how we fill the gap. I say, “What ideas do we have that begin to close this gap? We’re going to keep health care costs flat across the organization, so that’s going to give you two cents a share. I’ve got some ideas to help you, but I’m
still short.”

Taken from: Execution The discipline of Getting things Done