Shipulski On Design

In business, we have vision statements, mission statements, strategic plans, strategic initiatives, and operating plans. And every day there are there are countless decisions to make. But, in the end, it all comes down to one thing – how we allocate our resources.  Whether it’s hiring people, training them, buying capital, or funding projects, all strategic decisions come back to resource allocation.  Said more strongly, resource allocation is strategy.

Take a look back at last year.  Where did you allocate your capital dollars?  Which teams got it and which did not?  Your capital allocation defined your priorities.  The most important businesses got more capital.  More to the point – the allocated capital defined their importance. Which projects were fully staffed and fully budgeted? Those that were resourced more heavily were more important to your strategy, which is why they were resourced that way. Which businesses hired people and which did not?  The hiring occurred where it fulfilled the strategy. Which teams received most of the training budget?  Those teams were strategically important.  Prioritization in the form of resource allocation.

Repeat the process for this year’s operating plan.  Where is the capital allocated?  Where is the hiring allocated?  Where are the projects fully staffed and budgeted?  Regardless of the mission statements, this year’s strategy is defined by where the resources are allocated.  Full stop.

Repeat the process for your forward-looking strategic plans.  Where are the resources allocated?  Which teams get more?  Which get fewer?  Answer these questions and you’ll have an operational definition of your company’s forward-looking strategy.

To know if the new strategy is different from the old one, look at the budgets.  Do they show a change in resource allocation?  Will old projects stop so new ones can start? Do the new projects serve new customers and new value propositions?  Same old projects, same old customers, same old value propositions, same old strategy.

To determine if there’s a new strategy, look for changes in capital allocation.  If the same teams are allocated more of the same capital, it’s likely the strategy is also the same. Will one team get more capital while the others get less?  Well, it’s likely a new strategy is starting to take shape.

Look for a change in hiring.  Fewer hires like last year and more of a new flavor probably indicate a change in strategy.  And if people flow from one team to another, that’s the same as one team getting new hires and the other team losing them.  That type of change in resource allocation is an indicator of a strategic change.

If the resource allocation differs from the strategic plan, believe the resource allocation. And if the resource allocation is the same as last year, so is the strategy.  And if there is talk of changing resource allocation but no actual change, then there is no change in strategy.

Image credit – Scouse Smurf

Comments are closed.