Unlocking opportunities in a volatile market: A focus on growth strategy, cost management, and capability management
CXOs and the rest of the organization have different degrees of separation with budgeting. The way they prepare oscillates between comfort and isolation. Sometimes, however, this separation stems from executive decisions, the deliberate seeding of sensitive information, and mostly from the deceptive portrayal of crises emanating from sociopolitical, economic, and technological shocks, all as a resilience approach to staying competitive.
It’s great not to know everything if financial planning can prioritize decisive factors—organizational growth and distress—strictly to select the budgeting type: ZBB (Zero-Based Budgeting), Incremental, Static, Performance-based, Activity-based, or Value Proposition.
It’s not worth the effort to know everything if number-crunching, attention to detail, and decision-making can ensure resource availability, track progress or lack thereof on growth goals, prioritize initiatives, predict financial performance, and map Plans B through Z if situations erupt.
Knowing everything puts undue pressure on thinking through aspirational targets and benchmarks rather than measuring outcomes and institutionalizing transparency. The very existence of the budgeting process can shift discussions from structured engagement on building organizational capabilities to considerations of cutting costs in SG&A and adjusting any deviations within.
It’s not essential to know everything if there is no chronic mismatch between what the organization thinks it spends its money on versus where it actually does. If the organization is not flying like Amelia Earhart in 1937, but is actually creating a modular approach to budgeting—like pilots in 2023 using technology-aided judgment before hitting turbulence—it’s okay not to know everything.
It’s a weakness to know everything unless organizations are creating financial superheroes who hoard 80% of their intellect to collect, filter, and format data reports, rather than using that information to boost transparency in decision-making by addressing anchoring bias for dynamic questions—costs versus outputs, financial flexibility versus operational impact on growth outcomes.
Is it too broad? The greed to know everything in this dull, dreary topic—budgeting—invites implications for the uninterested, doesn’t it?
Understanding the uncertainty: where does budgeting come from? At the onset, external factors include Fed-induced inflation, pandemic-induced supply chain disruptions, inefficient government-induced geo-political upheavals, and rampant cyberattacks. But then, organizational shocks are rife with increasingly frequent internal factors: founder dictatorship, activist investor-driven whitewash, or shareholder majority ownership cleanups.
Perceiving changes around and within, it’s definitely not good to seek the know-it-all pixie dust. Rather, it would be magical to build interruption-safe, crisis-resilient, dynamic budgeting controls.
Like death and taxes, if you are greedy to know everything, here are three perspectives for budgeting for the inevitable consequences: sense the risks and smell the weaknesses, govern the hunger, and elect the controls.
- Sense the risks and smell the weaknesses – In the likely event of a crisis, whether cyclic or permanent, reevaluate your financial response mapping, and play out the lurking realities of systemic, reputational, and regulatory consequences.
- Govern the hunger – Whether craving values or capabilities, growth or competitive edge, your budgeting controls should feed the narrative leadership is hungry for. Then, portion (budget) control gains momentum to adopt customer behavior, disruption tolerance, and financial failure effectiveness.
- Elect the controls – Decouple the concentration of budget profiling within a unit-body team, bolster decision-making with flexibility and speed through apt financial controls, and guard against false positives to elect well-rehearsed controls that withstand shocks to every budgeting playbook.
In short, reset the appetite, nurture a cross-functional agile mindset, boost error detection, counsel the financial superheroes, fortify the budgeting culture, and celebrate crisis. It’s good to know this, at the very least.
– Manav Ahuja
Co-founder & Managing Partner
Stratgyk Consulting Inc.
