When the Beyond Budgeting Round Table (BBRT) was established over ten years ago its vision was to find steering mechanisms that could replace budgeting and help to make organizations more adaptive to change. But its members quickly realized that management processes (the way we set goals, strategy, plans and budgets, allocate resources, coordinate actions, and measure, reward and control performance) with budgeting at their core were not neutral in terms of management thinking and behavior. In fact, these processes were designed to enable leaders to command and control the actions of front-line people. Head office did not want managers to think or act on their own. In fact, they didn’t want any surprises. So if leaders now wanted managers to be more responsive, innovative and ethical, what did they need to change? The answer was not about fixing a few problems. It required a new way of thinking about management. It meant designing a new coherent management model.
How effective is your management model?
How effective is your management model? Does it provide your senior executives with the early warning signals they need to respond rapidly to changing events or leave them facing angry shareholders who demand to know why you didn’t see the problems coming? Does it encourage managers to strive for maximum potential performance or reward them for being highly skilled at negotiating ‘comfortable’ targets and playing the political game? Does it ensure that all resources follow the best current opportunities and add value for customers or encourage ‘sandbagging’ and a ‘spend it or lose it’ mentality? Does it encourage people to bring their creativity and passion to work every day or just demand obedience to the plan? And does it add value to all its users (think of the budgeting process), or just waste vast amounts of their time?
The management model (how you set targets, recognize and reward people, plan actions, allocate resources and measure and control performance) is the primary driver of management thinking and behavior in organizations today and has a major influence on the bottom line. It is also the key to survival in turbulent times. And while recent times have been the most turbulent in living memory most companies continue to manage with performance management models that are annual, negotiated and fixed and that add too little value.
In this executive summary we address eight questions:
- What is the problem?
- What is the vision for change?
- What is Beyond Budgeting?
- Which organizations have become Empowered and Adaptive (Beyond Budgeting) Organizations?
- What are the Beyond Budgeting principles?
- What are the constrasting mental models?
- How do you start the journey to an Empowered and Adaptive Organization?
- What are the benefits to my organization?