Budgets Don’t Create Value — Opportunities Do

An island far away is always an opportunity, no matter how big boat you have

Introduction: Breaking Free from Budget Myopia
Most of my articles are about leadership and strategy, which is my “CEO hat”. Being COO as well as CFO for a significant part of my career, let’s put my “CFO hat” on.

As a CFO, one of the most frequent questions I would hear was, “What’s my budget?” It’s a fair question, but one that often reveals a mindset problem. When the conversation starts with a budget, it inadvertently limits creativity, strategic thinking, and the potential to create value.

Nowhere is this more evident than in marketing.

Teams often want to know how much they can spend, but the real question should be:

What do we need to achieve?

For example, if the product has a market potential of €10 million, shouldn’t the marketing strategy be built to capture that, rather than be constrained by a predefined budget? The focus shouldn’t be on spending the budget but on maximizing value creation.

The Flawed Approach to Marketing Budgets
Traditional budgeting often leads to wasted opportunities in marketing:

1. The “Use It or Lose It” Mentality: Teams rush to spend the remaining budget on campaigns with little thought to ROI, just to ensure the budget isn’t cut next year.
2. Limited Thinking: A fixed budget creates artificial constraints, causing teams to focus on what they can’t do rather than what they should do.
3. Disconnect from Strategy: Budgets are often set without aligning to market potential or company goals, leading to misaligned efforts.

For example, if a new product is launched, marketing teams may be told they have €100,000 to promote it. But what if the market opportunity is worth €10 million? That budget may be far too small. Instead of asking for a budget upfront, the conversation should start with:

What is the market opportunity, and what do we need to seize it?

“First say to yourself what you would be; and then do what you have to do.” — Epictetus, Dscourses

An approach to opportunity (picture / powepoint courtesy of PresentationGO)

A Better Approach: Start with the Outcome, Not the Budget
Instead of asking, “What’s my budget?” marketers — and all teams — should ask:

• What’s the market potential for this product or service?
• What resources do we need to achieve our goals?
• How do we create and capture value with a smart, ROI-focused strategy?

Even for investments (non-commercial teams) that aim to save some money or increase efficiency, the question should be: what are potential savings? What are potential gains from efficiency improvements?

Here’s how this shift in mindset works in practice:

1. Define the Opportunity: Understand the product’s market potential. If the total addressable market is €10 million, what’s the realistic share you aim to capture in the first year?
2. Design the Strategy: Build a plan that aligns with the market opportunity. Focus on tactics that deliver measurable results.
3. Determine the Budget: (not the first, but third step) — Calculate what’s needed to execute the strategy effectively and profitably. The budget follows the plan — not the other way around.
4. Track and Adapt: Measure ROI continuously and adjust spending based on what works. This ensures resources are allocated to the highest-impact activities.

In search for opportunity, no constraints

From Constraint to Empowerment: A New Way to Think About Budgets
When marketing teams — or any department — are given a fixed budget, the focus shifts to spending rather than creating value. But by flipping the script and focusing on the opportunity first, you empower teams to think strategically and take ownership of their results. This approach:

• Encourages Ownership: Teams feel empowered to act like corporate entrepreneurs, making decisions based on value creation rather than arbitrary constraints.
• Aligns Efforts with Goals: Resources are allocated where they’ll have the greatest impact, driving better results.
• Drives Innovation: Teams are encouraged to think creatively, seeking the best solutions to achieve their goals.

The Joy (and Responsibility) of Ownership
Here we are back to my “CEO hat” — leadership and motivation. Because this approach also adds an unexpected benefit: it makes work more meaningful. When people are given responsibility and the freedom to pursue opportunities, they feel more engaged and motivated. They’re no longer just spending someone else’s money — they’re driving success for the company and themselves.

But with great freedom comes great responsibility. Teams must be prepared to justify their spending, measure outcomes, and adapt quickly. This isn’t a blank check — it’s an invitation to think and act like entrepreneurs within the organization.

Case Study: Marketing for a Product Launch
Let’s answer some questions that are often a stumbling block between “finance departments” and “marketing” (or other commercial departments that invest money).

How do you calculate marketing budget? What is a good marketing budget for a small/medium/large company? What percentage should be spent on marketing? Etc.

Let’s say your company is launching a new gaming laptop. The traditional approach would allocate a fixed marketing budget — let’s say €200,000 — without considering the market potential. The marketing team would design campaigns to fit within this budget, often sacrificing reach or creativity.

Now imagine a different approach:

1. The marketing team researches the product’s total addressable market (TAM) and finds it’s worth €50 million annually.
2. They estimate they can realistically capture 10% of the market in year one, equating to €5 million in revenue.
3. To achieve this, they propose a marketing strategy that requires €500,000, targeting high-ROI channels like influencer partnerships, digital ads, and targeted events.
4. The CFO approves the budget because it’s tied to clear, measurable outcomes.

By starting with the opportunity rather than the budget, the team is empowered to aim higher, and the company is more likely to achieve meaningful results.

Addressing the Fear of Overspending
Critics of this approach might worry about teams overspending or failing to achieve their goals. But this can be mitigated through:

• Clear Metrics: Define KPIs upfront and measure progress continuously, e.g. revenue growth, customer acquisition cost, ROI and other metrics.
• Regular Reviews: Hold teams accountable with regular check-ins and adjust spending as needed.
• Empowered Leadership: Train leaders to make informed decisions about resource allocation.

By focusing on results rather than rigid budgets, organizations can avoid waste while maximizing opportunities.

Every metamorphosis is hard, and strange (Dali, source: Wikiart)

Conclusion: From Budget Keepers to Opportunity Seekers
As leaders, our goal shouldn’t be to control spending — it should be to enable success. Budgets are important, but they should serve the strategy, not dictate it. By shifting the conversation from “What’s my budget?” to “What’s the opportunity?” we empower teams to think bigger, act smarter, and achieve more.

This approach isn’t just about improving ROI — it’s about creating a culture of ownership, responsibility, and entrepreneurial thinking. It’s about making work more meaningful and rewarding, not just for the company but for every individual involved.

So, the next time someone asks, “What’s my budget?” challenge them to reframe the question. Because success isn’t about sticking to the budget — it’s about creating and capturing value.

What’s your take? How do you approach budgeting in your organization? Let’s discuss!