Implementing Beyond Budgeting
Unlocking the Performance Potential
2nd Edition
Published on 28. June 2016
304 pages
978-1-119-22228-6 (ISBN)
Description
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.
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.
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Wiley
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Person
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.
Content
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
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
