The annual budget meeting droned on, and the frustrated executive muttered to himself, “We are stuck in minutia! I’m wasting my time here!” 

It’s November, and if you lead people or projects, you’re likely spending time nailing down budgets for next year.

I work with organizations driving high-stakes strategies. A common mistake I see boards and leadership teams make is to go through budget reviews without ensuring they’re clear on the bigger strategy it supports.  

My dad was a CFO for decades. He specialized in turnarounds. He always guided,

“Your budget is a blueprint for building your strategy. It helps bring your strategy to life.”

That perspective can make budget discussions WAY more interesting! 

When you are driving a big new strategy — or getting one back on track — the stakes are high and so are the risks.  Much like an architectural blueprint, your budget can help you see more clearly the bets you are placing.

A  blueprint for a structure is a way for people to communicate what they are going to achieve together. They require the input and expertise of a lot of people and perspectives.

This process isn’t new.  

The oldest known architectural plans were found in Saudi Arabia and Jordan, almost 8000 years old. They depict “desert kites” which were vast structures built to trap animals for food. Their drawings have evidence of corrections and changes as the people planning the big feat had to get on one page.  

In construction, “red line drawings” are a crucial part of the architectural design process. They are blueprints that have been reviewed and marked up with changes and revisions, typically in red ink. They reflect not only errors caught but also clarifications as people realize the interdependencies and potential, and can better visualize what they are trying to achieve.

Discussions about your budget can serve as “red line drawings” for your strategy blueprint. A budget discussion is your opportunity to get everyone on one page — not only about the numbers but the strategy behind it.

When your budget discussions are stuck in the minutia, and you’re getting blurry-eyed with spreadsheets, I encourage you to challenge your team to step back and see the big picture of what you are building together.

Here are five questions every board and leadership team needs to consider before you finalize your budget for next year:

·  How does this budget support our mission and strategy?

A mission answers the fundamental question:  Why does this organization exist? The strategy is a plan to achieve the mission. It clarifies the problems an organization is focused on solving. 

Ask: How is our strategy changing this year? Are we all clear and aligned on why we’re changing? Does our budget reflect this change?

·  Does this budget directly address each of our strategic priorities?

Strategic priorities are the goals that are most critical to the success of your strategy over time. An annual budget ensures that the right resources, time, and effort are aligned to tackle these priorities over the next 12 months.

Ask:  Are we starving any strategic initiative by budgeting inadequate resources — and actually setting the organization up to fail? Or are we saying that this is no longer our strategic priority? 

·  What assumptions are we making that will need to prove true?

Assumptions are beliefs that are accepted as true without proof. They can get buried in a spreadsheet and you don’t even know it!

Ask: What are we actually assuming about our people and our capacity to execute, the marketplace and our customers and our funders, the economy and our supply chain? Why do we believe these to be true? Are we in agreement on these assumptions?

·  What are the biggest risks as we execute this plan?

Every strategy has risks. Holding an open discussion about the risks you are taking actually reduces anxiety and builds confidence in the plan. It also ensures the elephants in the room become visible.

Ask: What risks are we taking in this budget to seize windows of opportunities? What risks are we taking that might result in losses? Are these reasonable risks in light of the reward? Are we taking any risks that seem unnecessary?

·  How are we going to de-risk this plan over the course of this year?

De-risking is an action verb. Once a strategy is defined, and the next year’s budget is “locked” –that does not mean it is on autopilot!  The assumptions need to be revisited and proven to be true.  The risks that you know you are taking need focus.

Ask: What process are we putting in place to revisit these risks and assumptions regularly? What can we do now – that we control– to mitigate some of the risks we are taking? 

Let’s be honest: Driving a high-stakes strategy can be invigorating and exciting – but it can also be stressful! But your budgeting process can actually REDUCE the stress if you use it to ensure everyone is on one page, and that the assumptions and risks you are taking are well understood.

As you help people climb out of the minutia, they will remember what you are trying to accomplish as a team- and get excited again to join you! 

Welcome your thoughts.

— Susan

This article is part of my newsletter, “Driving a New Direction,” to equip and energize leaders with practical ways to move forward, whether you’re leading a new strategy or getting one back on track. If you’d like insights like this once or twice a month, I’d love you to subscribe below.

To learn more about De-Risk System for Impact℠ workshops and custom consulting, and my upcoming book, “Fast Track: A Roadmap to De-Risk, Align People and Communicate Your Big Idea“, explore my website at www.gotomarketimpact.com, or contact me at susan.schramm@gotomarketimpact.com.

This article originally appeared at www.gotomarketimpact.com