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Management article
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Reference no. B0609A
Published by: Harvard Business Publishing
Published in: "Balanced Scorecard Report", 2006

Abstract

In part one of this two-part series, Linking Strategy and Planning to Budgets, David P Norton made the case for a new expense category, STRATEX, dedicated to funding strategic initiatives - the means by which the enterprise carries out strategy. In part two, Norton and Philip W Peck argue that successful strategy execution requires more than just a separate strategy budget: The organization must link both strategy and operations to the budget - and do so in a way that is transparent (thus easy to analyze and revise) and future focused. Causal models, driver-based planning, and adaptive tools such as rolling forecasts together constitute just such an integrating mechanism that can also give organizations more information (the whys, not just the whats), flexibility, and agility - vital capabilities in a competitive, fast-changing world.

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Abstract

In part one of this two-part series, Linking Strategy and Planning to Budgets, David P Norton made the case for a new expense category, STRATEX, dedicated to funding strategic initiatives - the means by which the enterprise carries out strategy. In part two, Norton and Philip W Peck argue that successful strategy execution requires more than just a separate strategy budget: The organization must link both strategy and operations to the budget - and do so in a way that is transparent (thus easy to analyze and revise) and future focused. Causal models, driver-based planning, and adaptive tools such as rolling forecasts together constitute just such an integrating mechanism that can also give organizations more information (the whys, not just the whats), flexibility, and agility - vital capabilities in a competitive, fast-changing world.

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