Agile Budgeting and Lean Funding

 

The essence of budgeting is to ensure we are allocating our funds to those endeavors that will manifest our vision and strategy. While our strategies may span years, it is important that our endeavors be Agile and enable us to shift as the world and our competitors change around us and as our own abilities and understandings change within our organization.

We need to think of strategy as our long term guide, budgeting as our short term guide of how much we are going to allocate to the different strategies and funding as the actual allocation of our funds. Doing this can be straightforward, but requires the right entity to be funded.

Funding should be done on a just-in-time basis and for items that include the construction, deployment and realization of value. It must include both the business needs and the development capabilities needed. 

Budgeting can be done in real time as well (Beyond Budgeting), but most executives will feel more comfortable budgeting on a quarterly basis. This entails aligning anticipated funding to longer term strategies. An annual budget adjusted quarterly works well if a longer term view is decided. We call it “Agile” budgeting since it is adjusted on a short time-frame based on changing conditions and understanding.