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Budgeting is a crucial process for allocating organizational resources. However, traditional budgeting methods often focus solely on financial returns or customer focus, ignoring other vital dimensions of value creation.

The TriValue Company (TVC) model provides a framework for balanced budgeting that optimizes value across three interconnected areas:

By taking a TVC approach, organizations can ensure budgets reflect strategic priorities around delivering customer excellence, generating sustainable profits, and promoting employee wellbeing.

The first step is identifying key metrics or "Spot indicators" for each value dimension. For Customer value, indicators could include customer satisfaction scores, co-creation or retention rates. Company value indicators may encompass revenue, costs, society impact, capacity to change expressed economic cost, and profit margins. Workforce wellbeing indicators can range from compensation and turnover to health, safety, and engagement levels.

Once key indicators are selected, finance teams can collaborate with other departments to set specific, measurable targets for each metric that align with broader organizational goals. Having clear targets provides a benchmark for determining adequate budget allocations.

The next step is assessing the people, resources, and investments required to meet established targets across the three value dimensions. This may involve research, forecasting, and financial modeling to quantify needs and estimate potential returns. Some questions to consider:

Trade-off analysis is also necessary to balance investments across the three areas. The TVC framework helps identify synergies and reconcile competing needs through collaborative decision-making.

Finally, budgets are compiled with the optimal funding levels and allocations to achieve the organization's TVC-aligned goals. Building continuous monitoring mechanisms allows for budget adjustments based on performance against the spot indicators. Many of the sensing techniques provided in Enterprise Agility can help with this.

Adopting a TriValue Company approach to budgeting ultimately leads to financial plans supporting strategic value creation across all dimensions. And better balancing value helps build organizational capabilities for agility, innovation and sustainable growth. The TVC model provides the missing framework Finance departments need to evolve traditional budgeting practices. Do you want to know more about this topic? Let us know!

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