- Helping Innovation Survive the Budget Season
By Chipp Norcross
When I hear a client tell me that they are in the midst of budget season, my heart instantly goes out to them. In my experience, budget season is like a bad game show (“Guess What Number I’m Thinking Of!”). The contestants arrive with great visions of how they want to grow their business in the coming year and leave with a parting gift of a set of steak knives and a flat expense budget. If you are in the middle of budget season, here are three ideas for how to make the most out of this time of year, and perhaps even manage a few wins in the process.
1. Use the budget constraint as a positive constraint for innovation – We’ve all heard the saying that necessity is the mother of invention, and constraints are often the mother of innovation. Many managers go into budget season with a long wish list of projects which get whittled down one by one. Then, when we receive their approved budget, we spend time lamenting the projects that we can’t do because of funding constraints. The Operational World response to this is to dutifully get to work on the projects we do have funding for.
A manager with an Innovation World mindset will look at the approved budget through the lens of maximizing opportunity. We ask their team, “How to maximize business growth using the 2% budget increase,” instead of wondering how we will make due with only a 2% increase. This kind of problem-solving can yield new ideas for efficiencies and alternatives that may not have been identified when the original plan was put together. It may turn out the the original list of innovation projects is no longer the best place to invest and that entirely new options are identified.
2. Take a blank sheet approach to running the department focused on targets and goals – If you are earlier in the budget cycle, it can be very insightful to spend a day with your team asking, “How to achieve our department goals as efficiently as possible.” This kind of workshop can be helpful in many ways, not the least of which is that it triggers a clear conversation about the department’s long term and short term goals and the activities that support reaching those goals. We often take it for granted that our team is all on the same page about our goals and what we need to do to achieve them. In reality, there are usually quite a number of things that we are spending time or money on because it has become habit to do so. Refocusing on value-creating activities can create fresh energy for the upcoming year as well as free-up budget for new projects and growth initiatives.
3. Support innovation projects with not only details and analysis but also a story –
Each organization has its own requirements for submitting a capital request or expense budget. While some are incredibly detailed, some are surprisingly high-level. In either case, senior managers find themselves needing to make tough decisions about whether to fund Project A or Project B in the upcoming year. The numbers look good, there is good rationale for each, and there is a high likelihood either will succeed.
In a situation like this, it’s important to remember that senior managers are consumers just like every one of us and the right marketing will appeal to them.
- What is the story behind the project?
- Why should they care at an emotional level?
- What is the problem it solves?
- What is the benefit to the company?
- The benefit to the customer?
- The benefit to them as senior managers?
When the numbers are close, the choice will most likely come down to what “feels right” or what is “on strategy”, which we can influence by crafting the right story.
Note that we do not need to wait until a budget presentation to share this story, it is a case that we can build over the course of many months leading up to budget season. That way our proposed innovation projects are eagerly awaited by senior management as solutions to acknowledged issues instead of something new that they need to understand the rationale for funding. While this idea may be more helpful for next year’s budget season, it’s never too early to start making the case.