Budgeting And Strategic Resource Allocation
Your strategy is simply where you spend your budget. Regardless of what your vision statements say, the flow of resources betrays your true intentions.
No matter how inspiring corporate goals may be, they remain mere wishes unless the fuel (money, time, and human capital) required to feed them is provided. Budgeting and strategic resource allocation is the process of pumping the company's limited blood volume to the most critical organs of the organization. The most fundamental mistake made when structuring a budget from scratch is distributing resources based on the habits of previous years (static budgeting); however, a budget must be designed to build the future, not to copy the past.
Strategic resource allocation demands that each departmental project be ruthlessly ranked according to its corporate return on investment (ROI). If a company has declared "digitalization" as its number one priority but allocates the lion's share to traditional marketing instead of R&D, there is a fatal disconnect between strategy and budget. Capital is finite, and the secret to success lies in massing this limited ammunition on the fronts that will generate the highest strategic impact.
