Does our budget reflect your STRATEGY? – It’s not too late!
Updated: May 15, 2018
Have you ever heard the saying, “Show me your checkbook and I will tell you what your priorities are?” Or how about, “Put your money where your mouth is?” These statements are certainly true for you as an individual as well as for businesses large and small. Learning to set strategy and then ensuring to match your budget and spending is an important step. When a company creates a #businessstrategy for how to ensure their business is vibrant and efficient, then once that strategy is developed, a #financialbudget being created to support the strategy is critical to its success. Otherwise, the strategy will likely not be carried out as it was intended.
Many times we develop great goals or a great long range strategy. We put all of the pieces together with the full intention of seeing that strategy through. We gather the team that includes our best employees, our customers and other stakeholders and we gather information to create this plan for the future that will change the way we do business every day. We are enthusiastic and know deep down that this plan is exciting for our business.
Then, at the end of the year, we may find we were not as successful as we wanted to be. Maybe we even find that the energy we poured into that plan has dwindled with our managers and employees. So, now it’s time to make a new plan and we don’t have the same drive to create the plan. It starts to feel like an exercise that we have to do but don’t have a passion to complete. We didn’t feel that we had a “win” like we had planned and we aren’t sure why. Why did we fall short? Why are we losing customers? How do we find a stride in creating a RESULTS focused strategy? How do we improve impact and results?
So many things go in to a great strategy and the associated goal setting process. To do it right can be a painstakingly long process and one that if you spend time, money and energy to create, it will provide clarity and focus and increase dramatically the chances for great success. It’s frustrating when we don’t know why we either are not successful or that the impact we expected is not as dramatic as we had envisioned. If we aren’t careful, strategy development turns into a struggle and looked at as a “waste of time.”
Strategy is never a waste of time, but when we are simply going through the motions, we don’t do a deep dive into the issues and customer focus needed for impactful strategy development. Good and authentic #strategydevelopment is not complicated, but it is methodical in its approach when done correctly. Brainstorming and creativity are snuggled in the middle of the process and preceded by good information and data gathering from our customers and other stakeholders. We then get creative when we work to find new and better ways to identify our customer and their needs and expectations.
Our next step will be to ensure that we are aligning this strategy and its associated goals around our budgeting process. Organizations that focus their budget process with strategy development align the resources necessary for implementation. They put their
“Money where their mouth is!”
I believe that most organizations and businesses that miss this step miss it incidentally and not intentionally. There are great ways to take a look back at your current plan, current budget, recent audits and current financial statements to score your alignment with your strategy. It’s not too late. To best include your strategy in the financial plan and budget, a “zero budget” process is most useful. To “zero budget” a business will take all budget items back to $0.00 and build a case to support the items back into the budget plan one item at a time. This allows the business to talk about the items and the impact on its strategy as well as customer needs and expectations.
Organizations and businesses that are currently drafting that new exciting plan, be sure that you take a look at your budget plan as well and “score” them against one another. Create a tool or find a tool that you can create a data driven model to analyze that the priorities in the plan, that are results driven goals, are fully funded for optimal impact.
The 4 steps in strategy development:
Identify all customers: Customers are both internal and external. To identify the all of the business’s internal and external customers in a critical and time consuming process. It must be seen as the first important step each and every time we develop a new long range strategy. The goals that are derived each year should also include some reflection on the customer needs and expectations, but the long range strategy has to be fully emerged in data collected from customers about their needs and their expectations.
Identification in GAPS: Once we know the needs and the expectations of our customers, we identify the gaps in what the customer currently experiences and what their desired state for future services or products are. These gaps demonstrate a direct correlation in what the customer expects. Keeping sales and keeping customers depends on you shrinking and eliminating this gap.
Understanding current process: A company that is focused on meeting the needs and expectations of its customers and has used that to identify gaps in service delivery must then focus its attention on all of the steps in their service delivery processes. It is at this point that we can be creative and find new and better processes. This is where the strategy development starts to work outside current processes. And these former processes were part of the budget and spending. If the budget and spending remain relatively unchanged, then the “lifeblood” of the strategy goes unfunded or underfunded. It loses its luster and its full impact is not reached. The results do not follow.
Aligning resources: When a company decides that the strategy that they have put together is the absolute best direction for its future and the future of its customers, and then the process of putting their priorities match their checkbook. This is not a step that is easy for most companies. This means that they will be working outside of their comfort zone.
Strategy development is a process that is critical for businesses and organizations that not only strive to be relevant, but to be innovators in their service and product delivery. To do this well and see the implementation through, the alignment of the budget and spending is critical. Some organizations and businesses find it beneficial to use an outside consultant to assist in this process. This is an effective way to ensure that the budget is sufficiently vetted line by line. Many times the current leadership might be just too close to the day to day operations to see where changes have to be made.