Are Budgets Good for Growth?

With the budget setting period over for many of us, its important to point out one important fact: Budgets can often stifle innovation. While the budget process looks forward it does so with the past in mind and is used primarily as a spending control tool mechanism.

But budgets should be designed with managers and not accountants in mind. Not having dollars in the budget to fund a worthwhile project is myopic. Not only does it discourage growth (achieved thru additional revenue or cost savings) but it stifles innovation and employee ownership.  Image the impact on your business (not to mention the employees who thought of that winning idea) when developing an innovation is shelved because there is nothing in the budget.

The sheer amount and velocity of change within all business models requires a quicker response to meet competitive threat and/or emerging opportunities. A flexible budgeting process seems more appropriate in our fast-paced, global economy. Think of that the next time you need to close a performance gap.

Monitoring the return on incentive spending is also made easier (and more actionable) by illustrative technology. Flash for example can highlight information patterns providing convenient, real-time information to budget owners across the hierarchy. Thru data dashboards, mangers can examine all the relevant vital signs of key projects and measures while linking performance data to budget utilization. It is thru this process that budget monitoring (as a growth tool) becomes more relevant to the organization and provides the context for knowledge that can be exploited for gain.

Comments

[durbbrebra]

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