In a recent Q&A email, we asked the InnoLead community the following question:
“Whose approval do you need in order to spend your budget after it has been allocated? Or do you just need to inform and align your senior leadership about your plans?”
Below are a few of the best responses — but we invite you to post your answer in the comments below.
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Advice from Respondents
Need Some Approval/Alignment:
- Budget is allocated in a cost-center that is observed and audited by the controllers. Senior leadership is informed about project progress. (Industrial manufacturing)
- Usually a quick call or email to my direct manager. (Pharmaceuticals)
- The budget is approved by the CEO (and the budget committee) but the alignment throughout the year has to be balanced between many many groups (CTO office, center of excellence, design centers, and business units). (Contract manufacturing)
- From the Board of Directors (Non-profit industry association)
- Once allocated, I inform and align with a senior advisory team. Un-budgeted initiatives are generally decided upon by the CEO.
- We have an Innovation Council made up of myself, my boss who is the VP of Digital, and our Global Marketing Directors, with which we align on opportunity prioritization and then I manage our spend with my team accordingly.
No Approval Needed:
- No one — once it has been allocated I have full P&L authority to spend
- We have no budget. We run an all-volunteer army of pirates that over-deliver every year on our corporate goal. The front line is our army and the alumni stay involved. (Utilities)
- We have strong ability to manage or budget as we see fit once it is approved, and we stay aligned with key/highly engaged BU leaders for alignment, and on occasion, to supplement some targeted discovery/MPV work. (Technology)
- Spend as I see fit, but report quarterly on project results and financials (Medical devices)
- I can spend my budget as I see fit, just need to make sure that there is transparency. The real key though is making the case for new projects and obtaining funding — we fund projects when there is a large spend, not a blank check to go do things. (Apparel)
- I do not need to inform (Academia)
- Depends on amount. No pool required inside of my LOA, and I work directly with our CEO on larger items
- For small efforts we just need to inform afterwards. For larger spends we get approval from our innovation committee (CEO, CIO, and the 2 heads of our product lines). (Insurance)
- If the innovation team or another area has the budget we let the Innovation Committee know, we do have them approve or not the go forward of the POC / initiative (not mainly the budget). If we need budget in excess, we go to the executive staff (CEO reports) and CEO. (IT Services)
From a respondent in the energy industry: “What I’ll add is a question at the premise as to whether you need approval. Typically, we give leadership unnecessary power by abdicating responsibility to them that we should have taken on our own. My favorite case comes from Intuit where (simply put) they don’t provide funding to any team until they’ve done some initial work to test desirability or value… This creates a culture of trying things first and bringing data to justify future bets.”
“Otherwise, what is your leadership using to gauge the value of the bets you’re placing outside their own judgement? The teams should be doing this since they’re closest to the data. I’ve seen internally this fail when senior leadership has final stamp of approvals on opportunities either prematurely or where they’re not aligned to the strategy of the org. Yes, it needs to tie to the strategic fit of the organization, but it begs the question of who has the right data to make decisions. Where this has gone better is when metered funding is tied to a project teams outcomes.”
“They’re essentially given some line to go explore and get data that proves the value of future bets. Then decisions can be made on evidence (or lack thereof) and not speculation. This is a better means of decision making and balances data gathering with decision making in a highly uncertain environment.” (Oil & Gas) In a recent Q&A email, we asked the InnoLead community the following question: