Implementing Beyond Budgeting: Unlocking the Performance Potential

The future of management is here! Traditional management was invented for very different times and is today in serious trouble. The level of volatility, uncertainty, complexity and ambiguity in business environments is record high. People’s expectations towards their employers and leaders have also radically changed. A number of organizations are exploring management innovation that can help them not just coping but thriving and out-performing in these new and different realities. Beyond Budgeting may be the most important new idea out there addressing these radical changes, due to its broad scope and coherent approach. Abolishing the traditional, detailed annual budget is necessary, but not sufficient. Organizations on the journey are questioning their old leadership beliefs and are tearing up their old command-and-control management models, with “agile” and “human” as the foundation for a new start. Implementing Beyond Budgeting is both a theoretical introduction and a practical guide to bringing such a more empowered and adaptive management model to life. Drawing on the author’s twenty years of Beyond Budgeting experience, this book not only demonstrates the serious problems with traditional management through numerous practical examples. It also follows several companies on their Beyond Budgeting journey, including Scandinavia’s largest company Statoil where the author has been heading up implementation since 2005. You'll get a first-hand glimpse at the reality of transitioning a large multinational company, and gain a real-world perspective on what successful implementation entails. This new second edition has been significantly revised and expanded. It covers the amazing development of the Beyond Budgeting movement and how the Statoil implementation journey has continued since the first edition of this book was published in 2009, sustaining major events like for instance the 2015 oil price crash. A new chapter on “Beyond Budgeting and Agile” has also been added. New implementation experiences, great new case stories, new management innovation examples and management metaphors (traffic controls!) are introduced, as well as the author’s latest reflections on a range of management issues including target setting, forecasting, performance evaluation and incentives.

Table of Contents:
Foreword xi Acknowledgments xiii About the Author xv Introduction xvii Chapter 1 Problems with Traditional Management 1 Introduction 1 Which Way in a New Business Environment? 4 The Trust and Transparency Problem 7 The Cost Management Problem 14 The Control Problem 22 The Target-Setting Problem 26 The Performance Evaluation Problem 30 The Bonus Problem 34 The Rhythm Problem 45 The Quality Problem 49 The Efficiency Problem 52 Chapter 2 Beyond Budgeting 55 The Philosophy 55 Beyond Budgeting Roundtable 65 The Beyond Budgeting Principles 69 Handelsbanken—the Pioneer 74 Miles—a Master of Servant Leadership 80 The Reitan Group—Values at the Core 84 Chapter 3 The Borealis Case 91 Introduction 91 Creation of Borealis 92 The Journey Begins 94 The Borealis Model 99 Implementation Experiences and Lessons Learned 115 Borealis Today 119 Chapter 4 The Statoil Case 123 Introduction 123 Creating the Foundation 126 Starting Out 130 The Statoil Model 134 A Dynamic Ambition to Action 190 What Could Be Next? 199 The Beyond Budgeting Research Program 210 How Are We Doing? 212 A New Start for Statoil? 217 Chapter 5 Beyond Budgeting and Agile 221 Chapter 6 Making the Change: Implementation Advice 229 Create the Case for Change 232 Handle Resistance 238 Design to 80 Percent and Jump 240 Keep the Cost Focus 241 Don’t Start with Rolling Forecasting Only 243 Involve Human Resources and Agile IT 244 You Can’t Get Rid of Command and Control through Command and Control 246 Do Not Become a Fundamentalist 249 Balanced Scorecard Pitfalls 250 Revolution or Evolution? 260 Closing Remarks 263 Index 265

About the Author :
BJARTE BOGSNES has had a long international career, both in Finance and HR. He has been advocating Beyond Budgeting for more than twenty years and led its implementation at two large European companies, Statoil and Borealis. Bjarte is the chairman of Beyond Budgeting Roundtable (BBRT) and is a popular international business speaker. He is the winner of a Harvard Business Review/McKinsey Management Innovation award.