This Is Beyond Budgeting

Chapter 9What's in It for the Bottom Line?

We are, for good reasons, constantly asked for hard proof on how Beyond Budgeting improves the bottom line. Although absolute improvements, of course, can be measured, the challenge is how much to attribute to Beyond Budgeting as opposed to other tail‐ or headwind. Still, we do have some interesting data, which all paint quite a convincing picture.

Many start the journey thinking of the obvious cost savings they will get by eliminating bureaucracy, but they soon realize that the biggest benefit lies in the performance improvement that comes from being more adaptive, setting better targets, getting unbiased forecasts allowing for better decision‐making, having a more efficient resource allocation and more engaged and motivated employees. Many of these effects are not easily identified on the bottom line.

Remember William Bruce Cameron's wise words: “Not everything that counts can be counted, and not everything that can be counted counts.” We should always do what we believe is right, even if there are no immediate numbers to back it up.

Still, compelling evidence keeps emerging. Recently, Boston Consulting Group (BCG) did a study among Beyond Budgeting practitioners (Figure 9.1) on how the model affected their operations and performance. The most profound effect was financial, through an increase in sales, but many others reflected better quality and efficiency in affected management processes, which typically will translate into better ...