Bill Canady argues for zero-based budgeting focused on Quad One growth. Start with your profitable core, let demand signal what capacity you need, then ask how much you're actually willing to spend. Most companies find the answer is far less than they currently spend.
Build it from zero, not from what Quad One has today, from what Quad One needs to grow at the rate your bridge says it has to grow. This is a step everybody wants to skip, and it's the one that creates the value because the output of step five is the demand signal for capacity. Now the rest of the business gets added on top of a structure that was designed around the profitable core rather than the core being whatever is left over after everyone else took what it wanted. Now, this is deliberately because by the time you get there, you're asking a very clarifying question. Given everything I've now allocated to quads 1, 2, and 3, what am I actually willing to spend to serve this? Usually the answer is a great deal less than what we currently do. That's a good thing.
