Step 12: Budget assurance

This step is a powerful grounding to implementation, shared courtesy of Mike Richardson of the Sherpa Alliance. Mike is a former high-tech CEO who is now a TEC chair in San Diego.

Mike had the great insight that the first 11 steps anchor when every line manager has the ability to provide budget assurance to the CEO and CFO for their work areas. He considered this a key way to help profit- and growth-responsible executives crystallize a higher road of breakthrough leadership and results. When he learned about Operations Accounting and Finance, he suggested that these tools would mean Managing by the Numbers by everyone, everywhere, all the time throughout the enterprise.

When Mike was CEO, he had the budget assurance process operate in three dimensions:

Forecasting process / cycle: Using the Financial Scoreboard (Step 8) and the Financial Dashboard (Step 9) in Operations Accounting and Finance, we recommend monthly rolling projections and benchmarking. Then, we recommend quarterly and annual rolling projection review.
Budgeting process / cycle: Within the overall context of Operations Accounting and Finance, it becomes much easier for each person responsible for his or her area to see its own work group and how it inter-relates with all the other areas of the enterprise.
Disbursement authorities / approval process: Over the 18 to 24 months required to implement Operations Accounting and Finance practices, testing lines of authority and approval can be done in three-month increments and then evaluated for how well it is working.

In each step, Mike recommends you keep what he calls the TQDA sequence:

T: Things to think about
Q: Questions to ponder
D: Decision to make
A: Actions to take

Mike’s tools and processes provide load-carrying support for mountainous journeys and can be found at www.sherpaalliance.com. The 12-step path can be reiterated at a greater level of depth within each cycle.

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