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How to turn a budget cut into a strategic thinking opportunity.

How to turn a budget cut into a strategic thinking opportunity.

As the fiscal year ends, the planning teams wrap up the annual planning and distribute next year’s budgets. Ideally, this would be a time of excitement as each new year brings new challenges and new opportunities.  Unfortunately, more times than not, new budgets are met with disappointment rather than excitement. Disappointment because rarely do teams get all of the resources they requested, and reviewing the new budget dampens the excited to launch into a new year.

But do budget constraints mean a team’s plan doomed, or do they need to sharpen your strategic thinking? Sometimes, when one door closes, …you can open another door.

If your team has experienced this letdown, forget any potential limitations represented by the new year’s budget and use the end of the year to think differently about next year’s strategic goals. Use this time to gather your team and conduct a limited-scope strategic thinking exercise to ensure success regardless of constraints.

Here is my three-step process for a departmental strategic thinking exercise.

Step 1: Pull your collective attention away from the status quo and reconnect with future success.

Find, review, and share your company’s longer-term strategic goals with your team. Clarify the near-term goals and use this broader discussion to define or clarify your team’s role in your organization’s success.

Finish this statement: “Our role in our firm’s success is to _____________.”

With the role defined, facilitate a discussion that deepens the understanding of the critical results your team must deliver to strengthen your company’s strategic performance.

Step 2: Align focus on this role and critical results.

Review all the activities, processes, and deliverables your team is engaged in today. Compare this list to the critical results defined in step 1. What could you stop, hand-off, or reduce efforts on that might free up capacity within your existing budget?

Plan to careful divest from these activities and align your team’s capacity to the activities that provide the highest strategic payoff. Deciding to stop doing something a team member has worked to execute can seem unfair. But if this effort focuses on the status quo, you should be planning to align it with future success?

We see leaders back away from making these tough decisions when they think about facing the staff engaged in this activity. Strategic management is about leading with the future in mind. Realigning activities, resources, and members of the team to serve strategic performance should be a regular activity for all management teams.

Step 3: Finally, if your strategic thinking indicates that you will require more resources to execute against the organization’s future success, appeal to acquire additional resources.

Go back to your original budget request and evaluate it given your updated view of priorities. How would you change this request? Package your request for additional resources in terms of the long-range goals of your firm and make another attempt to secure what you believe you need to support these future goals.

Don’t make your pitch immediately, wait for the new year to start before appealing for additional resources. Timing can be more strategic than your updated plan. No planning team wants to start the year revising their budget, but by the end of the first quarter, the reality of your market and its dynamics have already marred it. If you wait until the year has begun, you will have a better chance of winning the additional resources your updated plan needs.

This strategic thinking exercise can be used at any time during the year too. It is especially helpful when a new leader is added to the team,  or in the years between strategic planning efforts to ensure full alignment with future goals, or when a team needs a jump-start to improve strategic performance.

Learn to sustain strategic leadership throughout the year.

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