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Welcome to the BBRT global newsletter, which is designed to keep you informed of developments in Beyond Budgeting and the BBRT. For further information visit our web site at www.bbrt.org.
Why "shareholder value" is the wrong target but a reasonable measure
Abstract: The mantra of the modern CEO is “creating shareholder value.” But too many mistakenly make this a fixed target and are then dragged into making short-term decisions that disrupt the longer-term wealth-creating capacity of their businesses. “Mortgaging the future to pay for the present” is one way of putting it. The root of the problem is using shareholder value as a target rather than a measure (and even as a measure it is imperfect as around 70 percent of share price movements are driven by factors outside an individual company’s control). Thus leaders can make promises and announcements to the market that send strong “buy” messages to investors (thus driving up the share price) but then have to deliver on those promises. To fail is for the CEO to suffer ignominy and, in some cases, losing his or her job. This paper suggests that shareholder value be kept as a longer-term measure and that the real goal should be to consistently beat your peers. After all, that’s how the market judges your performance.
How to stop being a slave to analysts by no longer giving earnings guidance
Abstract: The practice of earnings management is often the pretext for the macho leader to set a stretch target that is then cascaded down inside the organization and shared across all its component parts. But it doesn't make sense when future visibility is as difficult as it is today. This paper examines the evidence about the benefits of earnings guidance and why increasing numbers of companies are moving away from the practice.
The BBRT INSIGHTS research papers are delivered to BBRT members on a regular basis. BBRT members can download the full paper from the BBRT Private Forum. Join the BBRT to get access to the full papers and all the past BBRT research material.
There's still time to book your place for the 6th Annual North American Beyond Budgeting Conference on 2-4 May. BBRT Members enjoy two free places and a discount on further attendees. This major event will take place in Orlando, Florida and features major speakers such as: Bob Paladino, Christophe Couturier (Millipore), Mark Graham Brown, Steve Morlidge (ex Unilever), Michael Hugos, Juan Castro (MD Anderson Cancer Center) and Amand Sanwal (American Express). For further information click here.
Inaugural meeting for BBRT DACH (Germany, Austria & Switzerland)
The inaugural meeting for BBRT DACH was held in Basel, Switzerland on 6 March. Over 40 attendees heard presentations from Hilti and Egon Zehnder International on their management models, which are very similar to the Beyond Budgeting devolved and adaptive model. Robin Fraser and Franz Röösli introduced the Beyond Budgeting principles and the BBRT. The presentations and subsequent discussion aroused considerable interest in the BBRT among the participants.
Contact Franz Röösli for further information about BBRT DACH.
Public Sector Interest Group
The 8th meeting of the BBRT Public Sector Interest Group (PSIG) took place in London on 6 March. The theme of the meeting was "Implementing rolling frameworks and rolling forecasts". Members presented and discussed their development and challenges in relation to the theme, . Steve Morlidge presented and discussed why rolling forecast horizons are important in organizations and how they can form part of a very effective management process. Issues that Steve discussed included: over what time period should we forecast, is it one consistent process or different processes in different horizons, how do we measure forecast accuracy and efficiency. The meeting drew some major conclusions relating to rolling forecasts in the public sector.
Contact Peter Bunce for further information about BBRT PSIG
We have great pleasure in welcoming the following organization as a member of the BBRT:
April
May
July
October
BBRT is an independent international shared learning network for all organizations that seek to improve their performance management through sharing information, past successes and implementation experiences. Our purpose is to help organizations introduce a new management model for the innovation age.
For more information, please visit www.bbrt.org, email Peter Bunce, or call +44 1590 679803
BBRT, 745 Ampress Park, Lymington, Hampshire SO41 8LW, UK Tel: +44 1590 679803 Fax: +44 870 705 8799 Email: info@bbrt.org
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