08/20/2025

How to Sync Your Budget with a Strategic Plan

The two are often misaligned as they're built on incompatible frameworks

CEOs are routinely told to “link their strategic plan to their budgets.” Yet over many years, I’ve observed an alarming disconnect between the two. Aligning strategy and budgets is touted as a hallmark of effective management. And, in theory, it is. You test a strategic idea by analysing its impact. Change suppliers – what happens to revenues and costs? Upskill employees – what happens to the bottom line?

However, in practice, this neat coupling is hard to achieve. Why? Because strategic plans and budgets are built on incompatible frameworks. They don’t speak the same language. Budgets are concerned with financial projections and cost control and are structured around categories of income and expenses. Whereas strategic plans aren't and, in practice, can be structured around anything the plan’s creator chooses – such as market opportunities, value propositions and company capabilities.

The result? Crossed wires, muddled priorities and leaders flying blind when making strategic decisions. This misalignment creates confusion, weakens execution and fuels internal conflict. A strategy team expecting funding for long-term digital initiatives might come up against a finance team expecting measurable returns this year; middle managers might not not know whose directives to follow – cost containment demands  from finance or innovation demands from strategy; more generally, executives may lack the visibility they need into the trade-offs they have to make.

Please select this link to read the complete article from Harvard Business Review.