In many organizations the hoshin plan and the budget are built by different people on different calendars, and meet for the first time in January. The result is priorities without funding and spending without priorities.
In this guide
Key Takeaways
- →Split the budget in two: run costs early from the forecast, priority funding after the offsite.
- →That lets finance meet its board dates without fixing priority funding before the priorities exist.
- →Every priority gets a funding line, or a recorded statement that it needs no new funding.
- →The common gap: capacity resolves an overload by adding people, and the hire never reaches headcount.
- →Agree reallocation limits in advance, or retired priorities keep spending until the next cycle.
- →Count stop-doing savings, so freed funding is visible rather than quietly absorbed.
Two plans, two calendars
The budget is usually owned by finance and runs on a fixed calendar driven by the board. The hoshin plan is owned by strategy or operational excellence and runs on its own. Often the budget closes first, because it has a board date it can’t miss.
When it does, hoshin catchball happens against resources that are already fixed. A site can agree a target that depends on two more engineers, only to find the budget has none. Priorities make the matrix without funding, and spending continues on work no priority asked for.
A priority without funding is a wish. Funding without a priority is last year’s plan running on.
Align the calendars
| Planning week | Hoshin | Budget |
|---|---|---|
| 1 to 3 | Reflection, breakthroughs | Prior-year forecast, run-rate costs |
| 4 to 5 | Offsite: vital few, capacity check | Funding envelope for priorities set after the offsite |
| 6 to 9 | Catchball | Priority funding allocated within the envelope as targets settle |
| 10 to 11 | Cascade, lock | Budget finalized with every priority funded |
Aligned to the twelve-week planning calendar. Adjust to your board dates.
The key move is to separate the budget into two parts: run costs, which can be set early from the forecast, and priority funding, set as an envelope after the offsite and allocated during catchball. That lets finance meet its dates without fixing priority funding before the priorities exist.
Connect each priority to funding
- Every priority has a funding line, or a recorded statement that it needs no new funding.
- Every major new spend maps to a priority or to run costs.
- Capacity and budget agree. People the capacity check assumes are in the headcount budget.
- Stop-doing savings are counted, so freed funding is visible and assigned.
The third check catches a common gap: the capacity check resolves an overload by adding people, but the hire never makes the headcount plan.
Reallocation during the year
The budget is set annually; the hoshin plan is managed quarterly. When the quarterly review retires a priority because its bet lost, the funding it released should move to where the evidence says it will do more good. That only happens if finance is part of the quarterly review, or at least receives its decisions.
Agree in advance what level of reallocation the hoshin review can decide on its own and what goes to finance. Without that, retired priorities keep spending until the next budget cycle.
Questions for finance
- Can the priority funding envelope be set after the offsite rather than before?
- Can priority funding be held at group level and released as catchball settles?
- Who decides reallocation when the quarterly review retires a priority?
- Will finance attend the lock gate?
What the link needs from the software
Budgeting itself lives in finance systems, and this article does not suggest moving it. What the hoshin side has to supply is the other half of each answer: which work serves a priority, which serves nothing, and what a retired priority just released.
That is why the second check is the hard one. “Every major new spend maps to a priority or to run costs” reads as a finance question, but answering it means listing every project and asking what it serves. Where hoshin and the project portfolio sit apart, that list has to be built by hand each year, and the spend that maps to nothing is exactly the spend nobody volunteers.
| Check | What the tool has to answer | How to test it in a demo |
|---|---|---|
| Every priority funded | A funding line, or a recorded “no new funding”, per priority | Show me a priority with no funding decision |
| Every spend maps | Projects that link to no objective on the matrix | List everything serving nothing |
| Capacity equals headcount | The hires the capacity check assumed, as plan dependencies | Show me which priorities wait on a hire |
| Stop-doing savings | What each stop frees, and the priority it goes to | Retire a priority and show where its funding went |
| Mid-year reallocation | The quarterly review’s decisions, in a form finance can read | Show me what Q1 released and reassigned |
| Envelope allocated in catchball | Funding settling as targets settle, not before | Show a target and its funding agreed together |
Row 2 is a filter where the portfolio sits beside the plan, and an audit where it does not.
Row 3 is the one that closes the gap this article names. A capacity overload resolved by hiring creates a dependency with a lead time, and unless that dependency is visible in the plan, the priority is counted as staffed from January while its people arrive in April. Replanning mid-year covers what happens when it is not.
What an unfunded priority costs
An unfunded priority does not fail loudly. It stays on the matrix, reports amber, and consumes attention in every monthly review while its team waits for a decision that was never made. At the reflection it is marked “not tested”, which means the year produced no evidence about whether the idea works. The cost is the year, and the bet is still unplaced.
The reverse costs as much and is harder to see: spending that maps to no priority. That is last year’s plan still running, funded, with nobody deciding to continue it.
On licensing, the published figures differ in shape. OnStrategy lists $200 per month for unlimited users. i-nexus publishes a free Starter tier for up to five users and $28 per user per month at its Standard tier. Row 2 above is the relevant test: answering it needs the project portfolio visible beside the plan, which is a question of scope rather than seat count.
Profit.co publishes two plans, Essentials and Enterprise, and quotes against modules and scale rather than a public seat rate. Hoshin kanri runs alongside project portfolio management on one platform, with OKRs and Goals, Balanced Scorecard and Strategy Roadmap in the same Essentials plan, so “which projects serve no objective” is a filter rather than a year-end audit. What drives the cost of hoshin kanri software covers the rest to total.
The 30-day free trial is long enough to load the current matrix and the major projects and see how much of the portfolio maps to nothing.
Plan and portfolio in Profit.co
Profit.co runs hoshin kanri alongside project portfolio management on one platform, so the projects that carry each priority can be connected to the objectives they serve. That makes it easier to see which work maps to a priority and which doesn’t when funding is allocated. Budgeting itself usually lives in finance systems; the connection that matters is that every funded project traces to the plan. More on the planning software page.
Against the four checks, that gives each one a place to look. Check two becomes a filter on projects with no objective. Check four lands on the stop-doing list, where each stop already names the priority its freed capacity goes to. And the mid-year decisions finance needs are the quarterly review’s own record rather than a separate note someone remembers to send.
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Questions this article answers
Every priority has a funding line, every major new spend maps to a priority or run costs, headcount in the capacity check appears in the budget, and stop-doing savings are counted and reassigned.
Targets get agreed against resources that are already fixed, so priorities end up unfunded and spending continues on work no priority asked for.
Agree it in advance: a threshold the hoshin quarterly review can decide alone, and above it, a decision with finance.
Into run costs, set early from the forecast, and a priority funding envelope set after the offsite and allocated during catchball. Finance keeps its board dates without fixing priority funding too early.
Because the capacity check resolves an overload by adding people, and the hire never reaches the headcount plan. Check that capacity and budget agree before lock.
No. Budgeting lives in finance systems. What the plan side supplies is which work serves a priority, which serves nothing, and what a retired priority just released.
