Liberate teams from the annual budget cycle.
The use of the traditional annual fiscal cycle to determine resource allocation encourages a culture that thwarts our ability to experiment and innovate. It perpetuates spending on wasteful activities and ideas that are unlikely to deliver value. How can we get out of the rut that is the annual budget process and encourage experimentation and innovation within our organization?
When it comes to budgets, It is hard to let go of the long-held belief that strong, centralized control provides valuable efficiencies. However well it may have served us in an era of lower complexity and slower technical advances, it now creates barriers that prevent us from adapting quickly to emerging opportunities. In this context, the resources and efforts required to gather information, communicate, and monitor rigid centralized processes outweigh any efficiencies gained. As well, a strongly controlled centralized budget process encourages competitive, rather than collaborative, internal behavior. This is counter-productive to innovation, which requires teamwork and collaboration across the organization.