budgeting presentation
DESCRIPTION
How to get your budgeting right in the corporate industryTRANSCRIPT
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BUDGETING:
Case Study, Concepts and Debatable Ideasby Ambassador Tal Edgars
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Summary: Today’s presentation
1. Business Model Done D2. Strategy
3 Alignment
Done Done3. Alignment
4 Budgeting
Done
4. Budgeting
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BudgetingBudgeting
The art and science of allocating and aligning Resources to g g
strategic plans
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Budgeting: Some thoughts…
Two major roles of Budgeting:1 Provide real life CONSTRAINTS to strategic planning1. Provide real-life CONSTRAINTS to strategic planning2. Provide RESOURCES to realize strategic plans
Why Constraints?1. Over aggressive unrealistic planning, usually by
Marketing/Sales need to be grounded to real lifeMarketing/Sales need to be grounded to real life2. Creative entrepreneurial thinking when resources are
limited3 E f th d f A t bilit i ‘ROI’ thi ki 3. Enforce the need for Accountability i.e. ‘ROI’ thinking
for all Managers
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Alignment: 4-Wheels M d lModel
Business
ModelStructurePerson
Strategic Planning
Structure
CultureLeadership
Resources
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Alignment: Framework
• Focus pointC lt • Alignment
• Quality
Culture
Quality• Innovation & Differentiation
Ri k t ki g• Risk taking• Performance Management• Corporate obsession• Decision makingDecision making
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Alignment: Framework• Org Structure• Job Design• C&B• Policies & procedures
Structure
p• Decision making• Job fitJob fit• Management Systems• BSC and KPIs• BSC and KPIs• Decentralized & Empower
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Strategy: Framework
• Role modeling• Vision/Mission/PhilosophyV s o M ss o losop y• Leadership Style• Delegation & Empowerment
Leadership
• Delegation & Empowerment• C&B, Promotions• Sense of Urgency• Speak regularly about p g y
Performance
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Strategy: Framework
• Recognition• Recruitment• Training• Profit sharing
Person
• Values• Motivation• Self Efficacy• Self Efficacy• Awareness• Useful CompetenciesUseful Competencies• Career aspirations• Attribution (control)
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Strategy: Framework
Enablers• TechnologyTechnology• Equipment
M t i l
ResourcesFunding• CAPEX• Materials
• Human
• CAPEX• OPEX
• Intellectual Propertyp y
• Partners• Property• Property
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Alignment: 4-Wheels M d lModel
Business
ModelStructurePerson
Strategic Planning
Structure
CultureLeadership
Resources
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Each Discipline Requires Different Priorities & Resources
Organization, jobs,skills
Culture, values,norms
Operational Excellence
Customer Intimacy
Product LeadershipInformation and
systems
Management systems
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Each Discipline Requires Different Priorities & Resources
Operational Excellence
•Central authority low level of empowermentOrganization •Central authority, low level of empowerment•High skills at the core of the organization
•Disciplined Teamwork
Organization, jobs, skills
Culture, values, Disciplined Teamwork•Process, product- driven•Conformance, 'one size fits all' mindset
, ,norms
• Integrated, low cost transaction systems•The system is the process
Information and systems
•Command and control•Quality management
Management systems y g
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Each Discipline Requires Different Priorities & Resources
Organization, jobs,kill
Product Leadership•Ad hoc, organic and cellular
skills
C lt l
•High skills abound in loose-knit structures
•Concept future-drivenCulture, values,norms
Concept, future driven•Experimentation and 'out of the box' mindset
P t i ti tInformation and systems
•Person-to-person communications systems•Technologies enabling cooperation
Management systems
•Rewarding individuals' innovative capacity•Risk and exposure management•Product Life Cycle profitability
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Each Discipline Requires Different Priorities & Resources
Organization jobs
Customer Intimacy
•Empowerment close to point of customer contactOrganization, jobs,skills
Culture, values,
•Empowerment close to point of customer contact•High skills in the field and front-line
•Customer-driven
I f ti d
Culture, values,norms
Customer driven•Variation and 'have it your way' mindset
Information and systems
•Strong customer databases, linking internal and external information•Strong analytical tools
Management systems
•Customer equity measures like life time value•Satisfaction and share management•Focus on ‘Share of Wallet’
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Managing Gaps between actual and planned budgetsplanned budgets
1. Budgeting vs. Priorities2. Basic Budgeting policies3. Activity Grid to determine budget 3. Activity Grid to determine budget
priorities4 Budgeting for Investments based on the 4. Budgeting for Investments based on the
‘BCG Matrix’ principles
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Budgeting vs. Priorities
Priority = Time + Money
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Budgeting vs. PrioritiesE l B i Si i R&D P i i i
Upturn Flat DownturnExample: Business Situation vs. R&D Priorities
Fight Complacency
Sharpen EdgeInnovation
AcquireSales
Cash FlowKeep Momentum
ConquerProfits
Build momentumF d NPD Cycle Time
Improve Edge
Focused on ‘Breakthrough’
JV, In-source, Out-
Improve Top 15% revenue-generating products
Extensions
Counter Competitor
, ,source
Eliminate bottom 20%
p
↓ R&D, ↑Sales
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Basic Budgeting policies
• Flexibility to switch between line items• Reserve FundsReserve Funds• Loans/External Funding
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Activity Grid to determine b d t i itibudget priorities
Increase (↑) Create (+)Increase (↑)What are features/
activities/services to
Create (+)What are features/
activities/services to increase? introduce?
Reduce (↓)What are features/
Eliminate (-)What are features/ What are features/
activities/services to reduce?
What are features/ activities/services to eliminate?
1. Manage conflicts where limited resources should go2. Solve problem of compounding activities & resources
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Budgeting for Investments based on the ‘BCG Matrix’ principlesp p
Market Market Potential
Business Performance
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How to maximize Budget?
1. Align budget to priorities2 Integration of businesses and 2. Integration of businesses and
functions for teamwork3. Do practical, implementable stuff
that bring real results (hard work) g ( )
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Budgeting in a Downturn
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Budgeting in a Downturn
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Budgeting in a Downturn
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Budgeting in a Downturn
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THE END; DISCUSSION