“Have a plan. Follow the plan, and you’ll be surprised how successful you can be. Most people don’t have a plan. That’s why it’s easy to beat most folks.”
– Paul “Bear” Bryant, football coach, University of Alabama
Planning and budgeting is a regular process many businesses undertake during the last quarter of the year. The benefits of implementing strategic and tactical planning on a yearly basis far outweigh the time invested in the process.
Many companies, MiniCo included, engage in annual planning and construct a budget and strategy as a guide for upcoming activities. But most companies never predicted or planned for anything like 2020. The chaos and frustration of this pandemic year effectively upended many companies’ annual plans and call into question the typical assumptions about planning for 2021 and beyond.
A recent article published by “Harvard Business Review” suggests that the challenges of 2020 provide an opportunity for companies to adopt a more agile approach to budgeting and outlines three concepts for moving forward.
- Pivot the purpose of planning and budgeting away from predictability and control and toward improving outcomes for customers, employees, and investors. The focus then can shift from defining the one “right” path to acknowledging that uncertainties exist and learning how to adapt and grow to manage obstacles when they arise.
- Focus on strategic success rather than financial precision. Budgets look impressive on paper, but tend to lose their luster as the realities of the year’s events unfold. Rather than allocating resources based on individual projects, this tactic encourages addressing the overall strategic goal and defining priorities accordingly.
- Create flexible budgets by planning more frequently. It doesn’t take an event as dramatic as a global health crisis to derail a budget that is set in stone. Identifying an overall annual forecast with opportunities to make adjustments on a quarterly, monthly, or weekly basis tends to improve accuracy and increase the chance of achieving strategic success.
One of the key elements in any corporate planning process is involving your team. Clearly communicate goals, expectations and deadlines to executives, managers, and others involved in the planning process. Update the entire team on a regular basis through staff meetings or reports reflecting the status of the organization’s goals and objectives. Providing information, education, and transparency for managers and employees helps to increase their sense of ownership and fosters “buy-in” of the plan and its goals. Creating a culture of team empowerment on all levels strengthens the ability of the organization to achieve its shared goals, particularly during times of perceived market unpredictability and increased uncertainty.
President and CEO
Source: “An Agile Approach to Budgeting for Uncertain Times,” Harvard Business Review, 8/27/20, http://www.hbr.org.