I hope I grabbed your attention with my headline as my intent for this blog is to present an interesting
read for those who enjoy learning more about the world of Business Acumen.
As many of the readers of this blog know, I share stories and learnings that come directly from the observations gained during the research and execution of business simulation-centric learning journeys involving business acumen, business leadership and strategic business selling content.
As innovators of business simulation technologies, our design and development teams are continuously reviewing the feedback from user experiences and making adjustments to our models and simulation interfaces to make their experiences even better. Over the past year as we have rolled out our new platform and interfaces, we made the big and bold decision to give participants the opportunity to set an overall operational budget and then allocate that operational budget across the functions of Marketing, Sales, R&D, Manufacturing, Customer Service, HR, and Finance on a percentage basis as opposed to forcing participant to come up with and then calculate the budgets in actual dollar amounts.
We made that big decision based on user feedback that presented data that simulation participants were frustrated with making “so many decisions” and were looking for shortcuts to get to the same result. One of the drivers of their frustration and feeling there were too many decisions is that we have seen the average Business Acumen training programs get reduce from 5 days to 4 days to 3 days to 2 days to now where we are luck to get one day. The same simulations that we used 10 years ago are now basically obsolete. When that happens, adjustments need to be made and so we did our best to adjust to the needs of the learners.
But something unbelievable happened on the way to a better user experience!
Many of our participants are revolting. For the past several weeks, we’ve heard loud cries saying “I hate this top down approach! I don’t want to have to set a corporate budget and then allocate it to the functions! I want to be able to do a bottom up budget where the functions inform corporate what they need to execute their strategy!”
Wow. Big Wow. The pushback has been tremendous, so we are going to go back to the drawing board and fix the software interface to allow for easier bottom up budgeting. But that’s not exactly what this blog is about. This blog is about the recognition of a maturity in the level of business acumen we are seeing across clients around the world.
I shared this data with a small group of our most trusted advisor clients who are recognized as key opinion leaders in the universe of talent development. They were all as surprised as I was by the pushback. Based on our discussions, I committed to coming up with three reasons why learning bottom up budgeting can be beneficial to a business.
Three Benefits of Learning to Do Bottom Up Budgeting
Below are three high-level benefits of bottom up budgeting that I will start to share and use in introducing our business simulations to teach better business acumen skills:
- Unrestricted First Pass from Functions to be Aligned
Starting with a bottom-up budget provides a totally unrestricted first view of the needs of the functions so the conversation can be on alignment and strategic allocation.
- Provides Executives with a More Realistic Enterprise View
A bottom-up budget presents a realistic view of the enterprise needs from a strategic perspective when it’s driven by the function leads instead of given to the function leads.
- Allows for Real Strategic Dialogues Between Functions for Final Budgeting
A bottom-up budget can take some of the “politics” out of the discussions that lead to final budget allocations because they are driven by the functions. The final budget can be based on realistic conversations based on real data presented by the team and then finalized together to execute the strategy.
In summary, I am actually thrilled by the push back. It illustrates to me that things in the world of business acumen have evolved and instead of us focusing on simple things like helping people understand how to read a P&L, we are helping people to optimize their bottom-up budgets to flawlessly execute their strategies.
