Budgeting for Sustainable Value Creation with Enterprise Agility
Erich R. Bühler
Philanthropist, logosophist, founder and CEO of Hanna Prodigy and Enterprise Agility University. Author of Leading Exponential Change, Enterprise Agility Fundamentals, and The Convergence.
Once again, I've heard that Google and other companies are laying off employees. And they claimed for a while that they were focusing on people first!
In our opinion, this is a clear behavior we see in the marketplace with companies that adopt agile mindsets (bottom left). When exposed to constant change or disruption, they tend to move to the upper left quadrant, which is revenue-focused.
Let me say something very loudly... volatile times require more than profit-oriented budgeting. We know that conventional approaches do not take into account the complex interdependencies that impact sustainable growth during acceleration in markets. Companies need to take a holistic view and consider value creation for customers, the company and workforce wellbeing in their financial planning. This enables flexible resource allocation, even in times of uncertainty and avoid them moving to the top left quadrant.
What do you know about the TriValue Company Model (TVC) and its budgeting process? TriValue Company (TVC) budgeting comprises three value areas:
- Customer value: Delivering excellent products/services today plus co-creation of products and business models.
- Company value: Ensuring operations, ecosystem and environment enable continuous performance
- Workforce wellbeing value: Providing security, stability and innovation for employees
By considering all areas, companies plan not only for immediate returns, but also for long-term adaptability and resilience by using Future Thinking (a crucial part of TVC).
The full transition to TVC budgeting might take time, especially for large, established companies. It requires upgrading forecast modeling capabilities to handle new data sets. We also know that management must commit to changes in financial management and planning. As a result of this, a phased approach works best. We recommend choosing business units that are already showing or are open to some TVC behavior. In that way, you can test updated budgeting processes with those individuals first. Small successes will help justify the company-wide rollout!
In departments that are still using in old ways of thinking, modify processes slightly to incorporate workforce and sustainability considerations into funding discussions. You should also offer training and incentives until capabilities evolve at eye level.
Even if the culture is slow to change, market pressures should accelerate the adoption of TVC budgeting. As leaders realize that sustainable growth requires a balance of values across the board, they will embrace a comprehensive model like TVC that enables it.
The ability to quickly reallocate people and resources as markets change becomes a competitive advantage for any organization. Workforce stability also increases productivity and innovation, which is important for delivering to different stakeholder and building an always responsive organization.
In our opinion, TVC budgeting will soon become a prerequisite for optimizing the risk-reward ratio in the midst of exponential change. The days of economic models fixated on single metrics are over. Sustainable collective progress requires decisions that are made from the perspective of the TriValue Company.
If you would like to find out more about how to carry out TriValue Company budgeting in your organization, please read this article on our EA World Community Website.
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