Aligning Resource Allocations with Key Processes

In most large organizations, creating alignment between strategy, budgeting, project governance, and individual incentives is an awful problem. In a recent conversation with Tempus users, Rita McGrath, a respected author and speaker on business strategy and Columbia Business School professor, discussed the importance of investing to support today’s business (yielding current returns) while at the same time investing in the businesses of the future (creating option value). When thinking about your existing business versus innovation opportunities, the existing business dominates most people’s day-to-day work, especially during a downturn in the economy and the ongoing issues related to supply chain disruptions. However, as McGrath points out, “we know that the companies who will succeed in the long run are the ones that are able to demonstrate that they have a growth trajectory and that they can execute against that.”

When considering your resource allocations, McGrath explains that it’s critical to line up these four processes:

1. Strategy
2. Budgets
3. Projects
4. People

When Strategy is done correctly, it has identified what the critical challenges are that your business needs to meet and is pulling you into the future by making clear what you are going to do to move forward. While Strategy goes into the future, a typical company’s Budget process starts a year before, and budgeting anchors you in whatever served your company well in the past. This immediately creates a disconnect between Strategy and Budget. Added into the mix is Project governance, which is often carried out by people operating with a different purpose and allocation mindset, separate from those focusing on strategy and separate from those focusing on budgets. The last challenge is determining what People will invest personally and whether it will get met. Unless a company has a transparent way to see where resources are going and what they are being invested in, they tend to end up with jumbled portfolios that aren’t aligned or managed well. To bring these four processes into alignment, there are questions every business must ask:

• What shape of the portfolio does my Strategy require? More specifically, what is the allocation of resources to the core business versus innovations?
• Do we have a process to bring Budgets in alignment with the Strategy and Projects that we’ve elected to pursue?
• What is our Project governance model? Do we have a way of connecting the governance model to our Strategy and Budgets?
• Have we really thought through what the incentives are for our People? Is it just lip service that we want growth and innovation, or else how are we motivating People to want to help innovate to get ahead?

Rita Gunther McGrath is a best-selling author, a sought-after speaker, and a longtime professor at Columbia Business School. She is widely recognized as a premier expert on leading innovation and growth during times of uncertainty. Rita has received the #1 achievement award for strategy from the prestigious Thinkers50 and has been consistently named one of the world’s Top 10 management thinkers in its bi-annual ranking. As a consultant to CEOs, her work has had a lasting impact on the strategy and growth programs of Fortune 500 companies worldwide. Rita is the author of the best-selling The End of Competitive Advantage. Her new book is Seeing Around Corners: How to Spot Inflection Points in Business Before They Happen. She is a highly sought-after speaker at exclusive corporate events around the globe, such as the Global Peter Drucker Forum. She received her Ph.D. from the Wharton School (University of Pennsylvania) and has degrees with honors from Barnard College and the Columbia School of International and Public Affairs. For more information, visit RitaMcGrath.com.

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ProSymmetry, a global leader in resource portfolio management, provides resource management solutions to large enterprises including many Fortune 500 and Global 2000 companies with its proprietary platform Tempus Resource. Tempus Resource, recently named in the Gartner® Magic Quadrant™ for Adaptive Project Management and Reporting, is a purpose-built resource forecasting and capacity planning solution for strategic business decisions. With capabilities including bulk resource forecasting, skills and talent management, portfolio and resource capacity reporting, and interactive scenario planning and what-if analysis, Tempus gives organizations actionable intelligence and cutting-edge analytics.