Linking SP with Budgets_Sustainable Strategy Conference Day 2.pptx

Linking Strategic Planning with Budgeting

1. Welcome Transcend Short-Termism | Build Long-Term Value

2. Who do we have here today? Benjamin Kofi Quansah Founder and Managing Partner BKQ Consulting LLC Specialties : Strategy Execution using the Balanced Scorecard system, Activity-Based Costing/ Management implementation, Full life Cycle Grants Management, Financial Management of development projects. I help people shift their mental framework from trying to doing so they can turn their lives and that of their organization around

3. Transcend Short-Termism | Build Long-Term Value Take a look at Strategy from different perspectives. The word perspective is from the Latin perspectus . It means to look through or see clearly . That is exactly what we want to do: examining the strategy, making it clearer through the lens of different viewpoints

4. Transcend Short-Termism | Build Long-Term Value If we want our strategy to be effective, build long-term value, and ensure organizational sustainability, it must contain the following: Financial aspirations Markets served Processes to be conquered The people who will steadily and skillfully guide the company to success

5. Planning is something we all do. It is a critical management task because its outcome determines decisions and actions that not only affect future success, but also threaten an organization’s very survival. Planning in today’s volatile business environment is very different from what it was 10 years ago. Creating effective plans requires organizations to understand what they control, acknowledge the things they cannot control, and create a planning process that makes sense.

6. Bring the strategy to life with unmistakeable clarity necessary for everyone in the organization to act on it each and every day

7. Test of A Good Strategy Dynamic Consistency Internal Consistency External Consistency Does the strategy call on the organization to do today the things it needs to do tomorrow to be successful? Does it accurately anticipate competitive responses and handles these before they become problems? Do the parts fit together so that the whole is greater than the sum of the parts? Does the strategy capitalize on opportunities and neutralize threats in a unique way? Dynamic

8. Benjamin Kofi Quansah, CGMS Managing Partner, BKQ Consulting LLC Linking Strategy to Planning and Budgeting For Organizational Sustainability

9. A successfully linked strategic planning/budgeting process depends not only on integrating all the entities of an enterprise, but also on reconciling long-term goals (strategy) with short-term realities (budgeting).

10. According to Balanced Scorecard Collaborative research, 60% of organizations do not link their strategies to their budgets

11. There must be an explicit link that identifies strategic investments to enable the organization distinguish between strategic and operational management. To build long-term value, these strategic investments ( through strategic initiatives ) are to be identified explicitly and managed separately.

12. Where Do Our Initiatives Come From? Mission Vision Strategy Objectives Measures Target Initiatives Budget 12

13. Outline Developing the Strategy: Mission, Vision , Value Gaps, and Analysis Strategy 01 Decompose the Strategy into Strategic Themes and Objectives . Strategic Objectives 02 Develop Measures for each Strategic Objective Measures/KPIs 03 Set Targets: Define stretch targets through a cause-and-effect scenarios Targets 04 Action Plan 05 Develop a portfolio of cross-functional initiatives for each strategic theme Budget 06 Establish Funding: Create a special budget category-strategic expenditure- to separate strategic investments from operational investments

14. 6 Principles 2. Assign Accountability for strategic themes 3. Set targets: define stretch targets through cause-and –effect scenarios 4. Develop a portfolio of cross-functional initiatives for each strategic theme 5. Integrate functional plans with the strategy 6. Establish funding: create a special budget category- strategic expenditure- to separate strategic investments from operational investments 1. Decompose the strategy in strategic themes

15. A strategic theme is an area in which your organization must excel in order to achieve your vision By using strategic themes as the building blocks of strategy maps, companies can clarify their strategic message and simplify decision making, governance, and other strategy execution tasks.

16. A management tool that provides motivation for why transformational change is necessary. Strategic Change Agenda

17. People in the organization may not understand why it needs a new strategy and why they need to change in order to achieve the stretch target. Leadership must create a sense of urgency and communicate the need for change. The strategic change agenda defines the journey from where the organization is to where it could be

18. Strategic Change Agenda Internally focused Tactical, operational Short-term, single source funding Manual Top-down Focus on tasks Domestic Budget drives strategy Externally focused Strategic Multisource funding, strategic investments Standardized and automated Identify, develop, and empower Focus on results, connected to the strategy Global Strategy drives budget Mission Executive Team Focus Funding Core processes Leadership People Benchmarking Budget

19. THANK YOU