This Is Beyond Budgeting

Chapter 3Beyond Budgeting

The Model and the Principles

As already discussed, traditional management is built on the assumptions that the future is predictable and plannable, and that people can't be trusted. Beyond Budgeting challenges both. Few would today agree on the first assumption because finance crises, pandemics, and wars and much else have shattered most remaining illusions of predictability.

When it comes to people, the jury still seems to be out. Although work has changed and become more complex and less “manageable,” many seem to hang on to beliefs and practices belonging to a different time.

The management thinkers Peter Drucker and Russel L. Ackoff had some wonderful reflections on these assumptions.

“Most of what we call management is about making it difficult for people to do their job”. (Drucker)

“Most corporate planning is like a ritual rain dance. It has no effect on the weather, but those who engage in it think it does. Much of the advice and instruction is directed at improving the dancing, not the weather” (Ackoff). See Figure 3.1.

Figure 3.1 The corporate rain dance.

The Beyond Budgeting model and the first version of its 12 principles was developed by Jeremy Hope and Robin Fraser in the late 1990s, based on what they observed in several companies. These had all challenged budgeting and traditional management. What the two found in these companies ...