book

Beyond Budgeting

by Jeremy Hope, Robin Fraser

February 2003

Intermediate to advanced

256 pages

6h 3m

English

Harvard Business Review Press

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Budgeting Is Cumbersome and Too ExpensiveBudgeting Is Out of Kilter with the Competitive Environment and No Longer Meets the Needs of Either Executives or Operating ManagersThe Extent of “Gaming the Numbers” Has Risen to Unacceptable LevelsToward a Vision of a New Management ModelChapter Summary
The Adaptive Process Opportunity: Enabling Managers to Focus on Continuous Value CreationThe Radical Decentralization Opportunity: Enabling Leaders to Create a High Performance OrganizationScaling the Twin Peaks of Beyond BudgetingBeyond Budgeting Provides Benefits for ShareholdersChapter Summary

RhodiaBorealisSvenska HandelsbankenChapter Summary
Six Principles of Managing with Adaptive ProcessesChanging Attitudes and BehaviorsChapter Summary
Defining the Case for Change and an Outline Vision: It’s an Essential First StepConvincing the Board: Be PreparedGetting Started: It’s Easier Than You ThinkDesigning the Model and Implementing New Processes: It’s Coherence That MattersTraining and Educating People: It’s Never EnoughRethinking the Role of Finance: It’s an Opportunity to Add ValueChanging Behavior: It’s Driven by New Processes, Not by Management DecreeEvaluating the Benefits: There Are Plenty of Quick WinsConsolidating the Gains: It’s about Winning Hearts and Minds at the TopChapter Summary
AhlsellLeyland TrucksSvenska HandelsbankenChapter Summary
Principle 1: Provide a Governance Framework Based on Clear Principles and BoundariesPrinciple 2: Create a High-Performance Climate Based on Relative SuccessPrinciple 3: Give People Freedom to Make Local - Decisions that are Consistent with Governance Principles and the Organization’s GoalsPrinciple 4: Place the Responsibility for Value Creating Decisions on Front-Line TeamsPrinciple 5: Make People Accountable for Customer OutcomesPrinciple 6: Support Open and Ethical Information Systems - That Provide “One Truth” throughout the OrganizationChapter Summary
Selling the Benefits: How the Soft Numbers Become HardChanging Processes Precedes the Devolution of Responsibility: The Order Is CrucialDevolving Responsibility: It Cannot Be “Given,” Only “Taken”Overcoming the Resistors: The Forces of Centralization Are Never Far AwayLetting Go: It’s the Ultimate ChallengeChanging Recognition and Rewards: It’s the Seminal MomentMaintaining the Momentum: It’s a Never-Ending ProcessChapter Summary
Shareholder Value ModelsBenchmarking ModelsThe Balanced ScorecardActivity-Based Management ModelsCustomer Relationship Management ModelsEnterprisewide Information Systems and Rolling ForecastsUsing the Integrative Power of Tools to Support Front-Line PeopleChapter Summary
Is the Model Simple, Low Cost, and Relevant to Its Users?Is the Model in Tune with the Success Factors of the Information Economy?Does the Model Encourage Good Governance and Ethical Behavior?Reconnecting Front-Line People to the OrganizationChapter Summary

Overview

The traditional annual budgeting process--characterized by fixed targets and performance incentives--is time consuming, overcentralized, and outdated. Worse, it often causes dysfunctional and unethical managerial behavior. Based on an intensive, international study into pioneering companies, Beyond Budgeting offers an alternative, coherent management model that overcomes the limitations of traditional budgeting. Focused around achieving sustained improvement relative to competitors, it provides a guiding framework for managing in the twenty-first century.