Funding the right work, or just the work we planned?
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Recently, a fellow CTO was venting to me about his challenges with finance. How his company would spend months debating and getting a budget approved. Only for their priorities to shift as soon as the allocations were approved.
We talk a lot about speed and flexibility in how we build digital products and solutions. Shouldn’t the same be true for our approach to managing funding? We iterate. We adapt. We respond to change. And yet, when it comes to funding, most organizations are still using an outdated playbook.
That’s not just inefficient. It actively hinders companies from generating value from their products and services.
Why budget cycles hold us back
Traditional, annual budget cycles are designed for predictability and control of spending. However, success in an increasingly digital world hinges on the ability to deliver customer value, which rarely aligns neatly with a 12-month fiscal calendar.
Customer needs, market conditions, and strategic priorities constantly evolve. Locking in funding more than a year in advance creates inflexibility and risk, leading us to prioritize outdated plans over current opportunities. Instead of enabling better decision-making, the predictable cost plans create friction and encourage the wrong type of planning.
What if we funded people instead of scope?
While many approval processes could certainly be streamlined, the real inefficiency lies in creating detailed plans upfront just to secure budget approval.
Traditional budgeting methods push companies to complete predefined projects rather than manage evolving products. Yet, it’s the beginning of any initiative when uncertainty is highest. Great products emerge through continuous learning, rapid adaptation, and ongoing refinement, not fixed upfront specifications.
Leading organizations have already broken free of this outdated cycle. Instead of aggregating budgets around discrete projects, they fund stable, cross-functional teams and give them the flexibility to decide how best to deliver outcomes.
This shift recognizes that product development is primarily people-driven, and while priorities evolve, team capacity remains a more predictable constant. Adopting this capability-based funding approach offers several key advantages:
- The business is able to respond to changes faster, without being locked into outdated plans.
- Managers are empowered to reduce waste by stopping low-value work earlier and prioritizing more valuable initiatives.
- Teams are kept together over time and hold the responsibility for business outcomes in the long run.
This shift is especially critical for product-led organizations. Unlike projects, great products don’t have an end date. They require ongoing investment. And the funding model should reflect this reality.
Making the shift: where to start
Moving to a capability-based funding model can be challenging. But it’s always worth questioning how we can improve the way we work. So, in that spirit, here are a few changes that can quickly add up to meaningful change:
- Start measuring success differently – Instead of focusing on whether a project was delivered ‘on time and on budget,’ ask: How much value did we deliver value to our customers?
- Introduce value-based prioritization – Frameworks like Cost of Delay help teams assess what’s truly urgent and valuable, so teams do the work that is most valuable, not just what was planned months ago.
- Involve operational teams in decision-making – The best feedback typically comes from people closest to customers and users, so breaking down silos between delivery and operations is a great way to start managing products better.
- Challenge legacy funding models – Start conversations with finance and leadership about how to make budget allocations that are more flexible. Even small tweaks, like quarterly reviews to assess resource reallocation, can make a big difference.
How I left it
Every business leader I know, including the CTO referenced above, wants to invest in the right work. But if we’re all still relying on traditional budget cycles, we’re fighting against time. A capability-based approach doesn’t just improve decision-making, it creates the conditions for real agility, innovation, and long-term success.
The shift isn’t easy, but it starts with asking a simple question: Are we funding the delivery of valuable work or just the same work we planned when we knew the least?
Additional insights
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