Budget before strategy

The textbook has the order wrong. Or rather, the companies do, and the textbook has not noticed.

Strategy first, it says. Decide what you are trying to do, work out what it costs, then ask for that. Clean, logical, and I have almost never seen it happen.

What actually happens is that a number arrives. It comes from finance, from last year plus or minus something, from what the board was told in a different meeting. It is a figure before it is a plan. The strategy is then written to fit inside it, and everyone agrees to call that sequence the other one.

For a long time I fought this. I wrote the plan I believed in, costed it honestly, and took it into the room. The room admired it and gave me the number it had always been going to give me. Then I spent the first six weeks of the year cutting the plan down to size, which is six weeks of doing nothing.

Now I start from the number. Not because it is right, but because it is real. I ask what the best possible version of this budget looks like, and I make that the plan. If there is a case for more, I make it separately, with a specific thing the extra money buys, and I make it in the second quarter, once the first one has earned some trust.

It is not the sequence I would design. It is the sequence that exists.

The plan that works with the number is finished in January. The plan that argues with it is still arguing in March.