Allocating Resources

Have you allocated resources for each strategic theme’s portfolio of initiatives?
A. We haven’t.
B. We know we need to … but resources are scarce.
C. We allocate resources as we go.
D. We have allocated some resources for each strategic theme’s portfolio of initiatives.
E. We have allocated specific resources – people, facilities, systems and funding – for each strategic theme’s portfolio of initiatives.
[Score:  A=0, B=1, C=2, D=3 and E=4]
Why is this question important?

Resources – people and funding – must be provided for each strategic theme of initiatives.

Most businesses distinguish between operational (OPEX) and capital expenditures (CAPEX).  Kaplan and Norton believe a third category is necessary – strategic expenditure (STRATEX) to segregate the resources required to implement initiatives that deliver long-term benefits.

STRATEX is designed to enhance the intangible assets – human, information and organisational:

  • Human Capital – the availability of skills, talent and know-how required to support the strategy
  • Information Capital – the availability of information systems, databases, networks and infrastructure to support the strategy
  • Organisational Capital – ‘climate for action’ – the ability of the organisation to mobilise and sustain the process of change required to execute the strategy.

If funding falls short on the STRATEX side, the company risks underfunding future growth.

All funds – operational, capital or strategic expenditures – all come out of the one pot! – the company’s cash-flow.  Thus balance has to be achieved.

The key questions to answer are:

“What is the necessary set of initiatives required to execute each Strategic Theme?”

“What resources – people and funding – must be provided for each strategic theme of initiatives to enable successful execution?”