The meeting had been going on for five hours and it was deteriorating rapidly. We started as a motivated leadership group, committed to spending the day hashing out our business strategy for the next 12 months. Each department head had arrived ready to pitch their case on the direction they wanted to take and stake their claim on the resources they needed.
But we had worked in a vacuum. My colleagues and I built our strategies independently, and without a unified vision for the business. We had been given no direction on the budget, other than to make the numbers add up. Without a nominated facilitator, you can imagine what happened. The meeting became a platform for ‘my department / project / people are more important than yours’ postulating.
This is a rather extreme example. But I think most of us in senior leadership roles have at least one strategic planning and budgeting horror story. It can be a process fraught with challenges.
So what can be done to avoid hash ups like my story above?
Getting a process as efficient and effective as possible starts with asking the question: what comes first the budget or the strategy?
Chicken and the egg and which is which
A budget is an orderly method of allocating financial, physical, and human resources to achieve strategic goals. A budget is critical to set targets, predict cash flow and profit and measure performance against your goals. A budget sets out how resources will be allocated and what measures will be used to measure progress and performance. That’s all covered in Business 101.
Strategy is exciting, creative, blue sky planning. It’s plotting the possibilities, a compelling vision for the future, figuring out ways to tap into your business’ potential. It’s about naming and claiming your goals and designing ways to achieve them.
Strategy can get us all whipped into a frenzy until the budget is thrown over us, like a wet blanket, the reality slap of what we can and can’t do.
I’ve worked through processes that put the budget first, and those that put the strategy first. I’ve worked with many clients who have tried both and all sorts of variations. I think the back and forth nature of treating the budget and strategy separately creates a frustrating, laborious process.
The most effective and efficient process I’ve worked with is where the budget and strategy join hands and work together in a coherent manner So how do you achieve this?
FOLLOW THESE FIVE STEPS
- Be clear on the planning process from the outset
Consider the following points:
What are the aim and steps of the process? What tools will you be using? What are the key dates and milestones? Who ‘owns’ the process? What’s the communication plan for keeping key stakeholders and the broader business informed on progress? Will you be kicking off with a strategy day? Who will facilitate? How will the leadership team stay focused as they bounce between blue sky thinking and deep diving into detail? How will changes to the strategy or budget be decided and communicated?
Keep the process simple. Smart people like to complicate and over engineer things. A simple process is more likely to get traction, buy in, speed things up and help provide direction on what’s important.
- Be clear on the roles and responsibilities through the planning process
Who is the ultimate decision maker? What does each stakeholder need to do, by when? Who do they go to for help or guidance? Who will keep them accountable and how?
- Get real about the time the process takes to be done properly
We have two roles as a leader: to run the business as it is today, and to keep an eye on the future and the strategy needed to realise that dream. Changing gears between the two can be challenging. Ensuring the team has the headspace and time leading up to the planning process is critical.
- Be clear on the vision for the business
Is each stakeholder crystal clear on the direction for the business and how their department fits into delivering that vision? It’s important the leadership teams are aligned on the greater vision, rather than competing for the budget they want?
- Be clear how decisions will be made
Within every business competition for resources is inevitable. It is good business to create and share a transparent process on how final decisions will be made. The savvy amongst us present plans that link strategy and the budget together, by working in performance outcomes and targets on the new goals with salary increases. If stakeholders understand how plans will be approved it does influence how these plans are conceived and presented.
So, what happened to the story I started with? Luckily we had a very perceptive CEO who quickly regrouped the process by refocusing us on the vision for the business and smacked down some clear guidelines for the process assigning accountabilities and then stepped in and managed the progress.
There was one rooster in the hen house and it was exactly what we needed.
Karli Furmage is a trainer, coach and writer. Contact: hello@karlifurmage.com