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Implementing Beyond Budgeting, 2nd Edition by Robert S. Kaplan, Bjarte Bogsnes

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Foreword

Bjarte Bogsnes's book is an important contribution to the transformation of finance from the controlling and beancounting office to the company's value-creating office. Bogsnes describes how to transform finance's historical role of ex-post reporting and controlling into a new role that guides the enterprise forward for sustainable value creation. The transformation requires reexamining and, probably, abandoning some of the vestiges of finance's previous management control tools. In particular, several companies in Europe and North America have questioned their use of the annual operating budget, a management tool introduced at General Motors nearly a century ago by CEO Alfred Sloan and CFO Donaldson Brown. Although the operating budget was a great innovation at the time, today's dynamic and highly volatile environment has made an annual fixed operating plan an anachronism. The counterreaction to the high preparation cost, in time and money, of the annual budget and its inflexibility in light of rapidly changing external circumstances and internal opportunities has launched the Beyond Budgeting movement. Several academics and consultants have written articles and books, and led working groups of companies, about how to abandon the fixed annual budget.

The current book makes a major contribution to this movement. Unlike the previous writers, Bjarte Bogsnes has been there and done that. And not just once. Bogsnes was the intellectual and project leader at two transformational ...

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