In today’s discussion, I will explore the concept of funds and its connection to Enterprise Strategy and Planning (ESP) and outline practical steps to ensure alignment. In the initial post of this series, I outlined Atlassian’s perspective on ESP and its six fundamental components. Let’s explore the crucial connection between funding and strategic priorities, highlighting how securing and allocating resources effectively can be the key to achieving organizational goals.
Atlassian defines Enterprise Strategy and Planning (ESP) as the process of setting and operationalizing strategy through a lifecycle of Strategy, Planning, Execution, and Evaluation, focusing on six core facets:
Key Belief
Every organization, whether a non-profit, a corporation, or a government agency, operates with a set of strategic priorities. These priorities define the organization’s goals, guide its activities, and ultimately determine its success. But priorities without funding are just wishful thinking.
The Link Between Funding and Strategic Priorities
Strategic priorities represent what an organization wants to achieve. Funding provides the how. It’s the fuel that powers the engine of progress. Without adequate funding, even the most well-defined strategic priorities remain abstract concepts, unattainable aspirations. Here’s how funding directly supports strategic priorities:
- Enabling Action: Funding translates plans into action. Whether it’s hiring new talent, investing in new technologies, or launching marketing campaigns, money makes things happen. A clearly defined budget aligned with strategic priorities ensures resources are allocated where they can have the greatest impact.
- Driving Innovation: Innovation requires investment. Capital can support research and development, pilot projects, and the adoption of new technologies, all of which are essential for organizations looking to stay ahead of the curve and achieve ambitious goals.
- Building Capacity: Strengthening an organization’s capacity often requires financial investment. This can include training talent, improving infrastructure, and developing robust operational systems. Increased capacity empowers organizations to take on larger projects and achieve a more significant impact. With a software company, capacity equates to a knowledge workforce.
- Measuring Progress: Funding also supports measuring and evaluating progress toward strategic priorities. Data collection, analysis, and reporting require resources, but they are essential for demonstrating impact, securing future funding, and making necessary adjustments to strategy.
Aligning Funding with Strategic Priorities: Best Practices
Effectively linking funding to strategic priorities requires careful enterprise planning and execution. Here are some best practices:
Best practices
- Clearly Define Priorities
- Develop a Comprehensive Budget
- Prioritize and Make Trade-offs
- Zero-Based Thinking
- Seek Diverse Funding Sources
- Regularly Monitor and Evaluate
- Clearly Define Priorities: Before seeking funding, clearly articulate your organization’s strategic priorities. What are your primary goals? What are the key performance indicators (KPIs) you will use to measure success?
- Develop a Comprehensive Budget: A detailed budget is crucial for demonstrating how funds will be used to achieve specific objectives. Be transparent and specific about how each allocation contributes to the overall strategy.
- Prioritize and Make Trade-offs: Resources are always limited. Prioritizing strategic initiatives and making difficult trade-offs is essential for maximizing impact. Focus on the activities that will deliver the greatest return on investment.
- Zero-Based Thinking: Instead of automatically carrying forward last year’s budget, start fresh. Challenge every expense by asking: “How does this expenditure support our strategic goals?”
- Seek Diverse Funding Sources: Don’t always rely on a single funding source. Depending on the type of organization, explore a variety of options, including grants, donations, sponsorships, and earned income. Diversification can increase financial stability and reduce reliance on any single source.
- Regularly Monitor and Evaluate: Schedule monthly or quarterly strategic events to continuously monitor progress towards strategic priorities and evaluate the effectiveness of funding allocations. Be prepared to adapt your strategy and budget as needed based on performance data and changing circumstances.
Funding is not simply a means to an end; it is an integral part of the strategic planning process. By aligning funding with clearly defined priorities, organizations can translate their vision into reality, achieve meaningful impact, and build a sustainable future. A thoughtful and strategic approach to funding is essential for organizations of all sizes and types looking to achieve their goals and make a difference.
Metrics
Lagging Indicators
On-Budget Strategic Priorities: Percentage of completed strategic priorities in the last period of performance where the spend was equal to or below the budgeted amount.
Off-Budget Strategic Priorities: Percentage of completed strategic priorities in the last period of performance where the spend exceeded the budgeted amount.
Leading Indicators
Funded Strategic Priorities: Percentage of strategic priorities that were not completed in the last period of performance, where they have been fully funded and the budget has not changed within the period of performance.
Spend Rate: The amount spent on strategic priorities in the period of performance, relative to the forecasted spend rate.
Total Budgeted Strategic Priorities: Total funding amount allocated for all strategic priorities within the period of performance.
Current Spend on Strategic Priorities: Total budget spent on strategic priorities within the period of performance.