How to transform the strategic plan and budget into

Business leaders are often advised to "align their strategic plan with the budget." While this sounds theoretically correct, in reality, there is often a discrepancy between strategy and budget. Strategy is based on market opportunities, value propositions, or organizational capabilities, while the budget is structured around financial categories. As a result, conflicting priorities, internal contradictions, and decision-making difficulties arise.

To address this issue, it is important to build the strategic plan and the budget on the same foundation around stakeholders. Below are four key steps for its implementation.

Step 1: Review the strategic plan around stakeholders

The foundation of the strategy should be the stakeholders upon whom the organization's success depends. Typically, these include:

- Customers

- Suppliers

- Employees

- Shareholders

- Community

It is essential to clearly articulate what you expect from them and what they expect from you. For example, customers want quality products at an affordable price, while you want revenue. Employees want fair conditions and development, while you want high engagement and productivity. This approach makes the strategic plan measurable and connected to finances.

Step 2: Analyze the operational budget

The budget is typically categorized by revenue and expense categories such as "materials," "salaries," "advertising," and so on. However, in reality, all of this is related to stakeholders. For example:

"Materials and supplies" → suppliers

"Employee benefits" → employees

"Insurance" → employees or customers (depending on the type)

This analysis reveals that the budget is not just a collection of numbers but also a reflection of the organization's relationships.

Step 3: Reconstruct the budget around stakeholders

The budget should be reclassified according to the same stakeholders around which the strategy is built. Thus, revenues will be placed in the "customers" section, salaries and benefits in the "employees" section, and so on. This classification will help the executive team see how each strategic move impacts specific stakeholders and the associated costs.

It is important to understand that this is an exercise for discussion and does not necessarily have to change the accounting system.

Step 4: Integrate strategy and budget

When the strategic plan and budget are built on the same foundation, it becomes possible to see the financial implications of strategic decisions.

For example:

Price reduction → change in revenue from customers

Deepening relationships with suppliers → cost reduction or faster delivery

Increasing employee benefits → rise in costs, but improvement in retention and productivity

This approach ensures that all departments speak the "same language" and see the real impact of their decisions.

***

When strategy and budget develop in separate "universes," confusion and assumption-based decisions arise. A unified approach built around stakeholders eliminates that gap:

Strategy becomes practical and applicable.

The budget gains greater meaning.

Executive discussions become transparent and results-oriented.

Thus, strategy is no longer a "wish list on paper" but a tool that is directly connected to the organization's financial engine.

*The article was also prepared using data from AI․