Welcome to your new budget year. Presumably, a great deal of time, effort, collaboration, and planning has gone into creating your company’s budget over the past few months. Now comes one of the most telling aspects of the fiscal and strategic culture of any corporation. Will management employ the new budget as a dynamic tool that can coordinate and determine the success or failure of achieving the corporation’s objectives, or will they put it to the backburner and assume that the budget’s assumptions will stand still for a year?

For countless companies, budgets are neglected by not evolving into powerful tools of strategic forecasting. They reside on the sidelines of a business to be dusted off quarterly for untimely reviews that provide justification for holding department heads’ feet to the fire for inadequate cost maintenance or sales performance. Yes, budgets do in fact bring with them elements of accountability, a sense of whether annual targets are attainable, and the ability to draw attention to areas of a company that require immediate attention. However, budgets and their more active cousins, forecasts, have a much more critical purpose than merely as catalysts for variance reporting. Budgets and forecasts enable companies to conduct all of their diverse activities in concert with one another. Budgets become forecasts, and in the hands of strategic business managers and capable business unit leadership, those forecasts are effectively employed to decide a corporation's success or failure.

Webster’s Deluxe Unabridged Dictionary defines strategy as, “the science of planning and directing large-scale operations, specifically the maneuvering of forces into the most advantageous position prior to actual engagement…” Companies dedicated to strategic forecasting employ ongoing processes of maneuvering their forces into the most advantageous position vis a vis all other forces, their clients, markets, suppliers, employees, and competitors, to make them more responsive, competitive, profitable, and valuable to their shareholders.

The most basic case of a company using its forecasts to coordinate resources happens when a company responds to revised sales forecasts by securing internal and external resources that are required to convert the sales to revenues. A company’s degree of strategic sophistication (and success) is defined by how far into the future and how deep into its organization it recognizes change and re-aligns forces in one area to promote performance in another.

Without a doubt, running a successful corporation is a team sport. Trying to increase revenues without precisely timed and coordinated human resources, information technology, facilities and infrastructure, capital, and business partners, is no different from hiring a zillion dollar quarterback and giving him no pass protection, wide receivers, or running backs. Super Bowls are won by teams that bring those resources to bear with a defined purpose and at the same time.

Strategic forecasting enables corporations to:

• run dynamic, rather than linear processes, to move faster for their clients and outrun their competition
• capitalize on synergies and efficiencies that are promoted by business units responding to change in concert
• deliver products and services efficiently, as volume increases, or to realign cost structures as sales decrease

What are the top three ways for companies to improve their performance as strategic forecasters?

1. – A strategies culture starts at the top. Demand that your senior managers possess superior skills for relating all of your company’s resources to one another, to your business drivers, and to your primary goals and priorities.

2. – Create a corporate culture in which business unit leaders are valued as much on their ability to predict the performance of their business units as their ability to affect performance. Converting a typical top producer into a strategic minded top producer ensures the rest of the company can run along side, rather than behind, him or her.

3. – Surround yourself and your organization with both internal and independent external strategic advisors. Fresh and varied perceptions of how your company can respond to change are invaluable to the strategic process.

Having a strategic forecast and the right people running it is as close to having a “crystal ball” as a corporation can get. Before looking outside to discover your next competitive advantage, rate your executives as strategic forecasters and ask yourself how better strategic forecasting can set you apart from your competition.

Real Estate Strategies Corporation, located in Kenilworth, New Jersey, and serving clients throughout the country, helps companies create and execute Business DRIVEN Real Estate Solutions...and Opportunities, faster and with less risk. Visit www.realstrat.com.

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