Separate strategic initiatives from normal P&Ls

Ringfence the budget and people of your strategic initiatives and watch progress against time closely

Frequently strategic initiatives don’t get budgeted. Why? Does everyone think they have no cost or they earn their way immediately? Are they designed as a stretch challenge for management, pulling epeople, budget and resources from elsewhere?

Not carving out specific resources and budgets will set these initiatives up for failure. Most organisations have a natural gravitational pull towards maximising today’s P&L, rather than tomorrow’s strategic position. Leaving the resources mixed will push this trade-off lower in the organisation, where the pressure is less likely to be resisted and the long term strategic benefits less visible. Most middle managers will buckle under this pressure and keep their best people focused on the P&L, holding back the initiative as “discretionary spending” to mitigate a potential shortfall later.

Strategic Initiatives obey project principles, not operating principles. The critical metric is progress against time, not impact on quarterly profit. The reward from bringing results forward will dwarf higher quarterly costs if it truly is a priority strategic initiative.

It will ensure that any trade-offs between the P&L and the strategic initiatives are made at your level if you ensure full dedicated resources are allocated up-front, even if it generates a little extra work for the accountants at budgeting time.


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