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Your Budget and Work Plans Can Act as Your Strategic Anchor

No matter how far we’ve come to rely on technology, when it comes to data presentation and analysis, an offline spreadsheet is still the primary tool.  Don’t get me wrong, there are great tools for spreadsheets, but keeping the information offline is detrimental to accurate planning in a large enterprise.

It’s seems intuitive that as a company grows in size and complexity, there’s a greater need to tightly align its budget and resource allocations to fit the demands of a corporate work plan. Even more so, when new budget and work requests are aligned with the objectives of a company-wide business transformation, or grand efficiency measures, or programs for excellence, the budget must be more scrutinized at a granular level so that it can support all ambitious plans and strategic goals.

Not obvious to all

Perhaps this is not as intuitive as we think. An article in Harvard Business Review in 2011, “Is Your Budgeting Process Killing Your Strategy?” suggested that budget and strategic planning be separated completely as the budget process drags down the strategic process. It describes the budget process as a monster that removes all forward thinking visionary aspects involved with its bureaucratic mechanical limitations.

Avoid making budget planning a stand-alone silo

But authors of these research pieces would advise companies more prudently if they differentiated between strategic planning and strategy execution. You can allow all the creative juices to flow and aim for the skies in your strategic planning. However, if you want to ensure that the plan is brought down from the skies and implemented, you need to connect it hermetically with the budget planning.  

Gartner issued research stating that “The main focus of any budget process is to ensure the effective cross-functional prioritization and alignment of key initiatives and projects. It should not be an exercise that focuses primarily on individual line items of spend. In other words, the goal of a budget process is to ensure the right business decisions are being made, in-line with the corporate strategic direction.*”

I would go further and say that grounding the strategy plan with the budget process requires the addition of risk analysis. In this way, management can truly evaluate the feasibility of a strategic plan.  There should be quarterly audits to check the alignment. In addition, the budget plan needs to match the strategy plan (or business transformation plan) line by line. When using this integrated approach, executives can use the budget planning process as the backbone of the strategic vision of a company and can truly be drivers of change.  

Another point. The wise King Solomon said “there is nothing new under the sun” and year after year, your company’s budget is allocated. Therefore, there is much wisdom in incorporating the history of the particular business unit’s utilization to the current year’s planning.

Just 5, not 50, steps to alignment

The statements above are very broad and sound simple, but in my next post I’ll explain by taking you through five steps that keep your budget aligned with your strategy plan, or business transformation plans. It also keeps your budget planning in alignment with your overall work plan and with all the other resources required to successfully execute your goals.