Agile for Budgeting

Agile (Scrum in particular) is a framework for Product development, not just software development. It’s been successfully used for a wide variety of products, from medical devices to ad campaigns.

Let’s consider an organizational budget as another form of product, and explore if Agile might offer some advantages as an approach. Key among Agile values are embracing change; transparency; inspect and adapt.

Annual budgets are resistant to change, by their nature. While a sizeable portion of the budget might be necessarily fixed, not all of it need be. Some good-sized chunk of the overall budget can be marked as “adaptable”, being altered at some time-boxed frequency during the year, to best meet business priorities at that point in time, by a consistently organized team. Depending upon the organization, its culture and needs, the release of this could be quarterly or more often.

The overall annual budget tends to reflect a command and control culture in most organizations, even in those perceived otherwise. The budgeting typically is one pass, and then consolidated. Instead, try multiple passes, iterating, with transparency of plans between organizational units.

The funds for each item are implicitly the metric for business value; if there are other factors, then this needs to be explicitly stated, and ranking of business value made clear, for each budget item.

If an organization is going through a significant transformation, the budget not only should reflect this, but needs to adapt to changing circumstances along that transformational journey. The environment around the organization will change, and particularly for transformations, malleability is essential for success. Adaptive means agile, not the traditional approach.

note: originally posted to LinkedIn Pulse, Nov. 2015

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: