The traditional budgeting process is primarily designed to prioritize and allocate scarce resources to enable the organization to deliver on its objectives. However, this process comes with several inherent limitations. For example, resources are often locked in long before sufficient information is available, the connection to strategy tends to be weak, the process is disconnected from the company’s natural rhythm, and it is time-consuming—often becoming outdated just a few months after completion.
In this episode we explore how budgeting can be redesigned into a dynamic and forward-looking system for resource allocation. This includes separating different processes and adopting a portfolio management perspective on budgeting. We also discuss how to decentralize decision-making and prioritize flow and strategic adaptability over strict cost optimization. Finally, the episode explains how to reduce unnecessary demand in service delivery and provides examples of how a dynamic allocation process can drive greater efficiency.

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