Beyond budgeting - removing command & control fixtures to empower the organisation

in my previous blog entry i described how we started our journey to transform our organisation in order to create a more adaptive, dynamic, lean and ethical organisation. the model we adopt is based on beyond budgeting principles.

i would like to share a little bit on what beyond budgeting is all about.

the official beyond budgeting roundtable (BBRT) website http://www.bbrt.org/ describes beyond budgeting as follows:

“Beyond Budgeting is about rethinking how we manage organizations in a post-industrial world where innovative management models represent the only sustainable competitive advantage. It is also about releasing people from the burdens of stifling bureaucracy and suffocating control systems, trusting them to think, reflect, share, learn and improve.”

for us, beyond budgeting is a model that truly empowers teams of employees who face customers on daily basis, giving them the freedom to make choices in order to serve the customers better. this freedom gives space to employees to innovate and create value. it basically unlocks the latent talents of an organisation's human capital.

i believe the beyond budgeting model provides the catalyst for a culture transformation.

there are 12 principles associated with the beyond budgeting model. the table below lists and describes each principle:

Leadership principles

principle	description
Values	Govern through a few clear values, goals and boundaries, not detailed rules and budgets
Performance	Create a high performance culture based on relative success, not meeting fixed targets
Transparency	Promote open information for self management, don’t restrict it hierarchically
Organization	Organize as a network of lean, accountable teams, not around centralized functions
Autonomy	Give teams the freedom and capability to act; don’t micro-manage them
Accountability	Focus everyone on improving customer outcomes, not on hierarchical relationships

Process principles

principle	description
Goals	Set relative goals for continuous improvement, don’t negotiate fixed performance contracts
Rewards	Reward team-based success based on relative performance, not on meeting fixed targets
Resources	Make resources available as needed, not through annual budget allocations
Planning	Make planning a continuous and inclusive process, not a top-down annual event
Coordination	Coordinate interactions dynamically, not through annual planning cycles
Control	Base controls on relative indicators and trends, not on variances against plan

as you can see from the principles, there is a lot of flexibility in the management model - as contrasted with the traditional command & control model of compliance, and top down authority. traditional command & control relics like the budget, rigid structures and fixed targets with incentives are replaced by continuous planning, eco-system of autonomous value cells (i will blog about this sometime soon), and rewards for relative improvements based on values.

information too is transparent and open to many to use it for self management and organisational improvements. people are treated like entrepreneurs, and tasked to manage their own "business".

the beyond budgeting model also looks like the web 2.0. which is why there seems to be a gaining support for the model particularly in today's information based 21st century businesses. accountable is top down, but authority is bottom up.

as i said earlier, our journey has just only started. i am fully convinced that the model is one that could create a new culture of innovation, accountability, transparency, leadership, values etc. i will blog more about this soon.

some useful reference materials:

Implementing Beyond Budgeting: Unlocking the Performance Potential ~ by Bjarte Bogsnes

Beyond Budgeting: How Managers Can Break Free from the Annual Performance Trap ~ by Jeremy Hope

The Future of Management ~ by Gary Hamel

TED.com: Dan Pink on the surprising science of motivation (video)

by TheFazz on 7 Jan 10 at 1836 hours