There is life beyond the figures of hate .... Beyond Budgeting !

Here are some excerpts from a thought-provoking article about the work of the Beyond Budgeting Round Table ---- yes ---- it seems that the BBRT exists.  Sounds bizarre ..... but the article makes some telling points and offers some sensible alternatives.

QUOTE

"In essence, Beyond Budgeting entails a shift from a performance emphasis on numbers to one based on people. It assumes that performance improvement is more likely to come from giving capable people control over decisions (and making them accountable for results), than from simply adopting different measures and incentives.

This is not a comfortable message for a measurement industry that believes that implementing Economic Value Added or Balanced Scorecard are enough on their own to change performance. It is the combination of effective organisation and behaviour and effective performance management that leads to success. Just like any mathematical equation with multiplicative variables, if any of the variables is zero, the net result will be zero. The failure to recognise this has wrecked many attempts at performance improvement.

A recent Business Week feature on organisations in the 21st century warned managers:
“If you’ve worked as a manager for at least a decade, you can forget much of what you’ve learnt so far. Prepare to toss out your business-school case studies and set aside many of the time-honoured principles that have guided generations of managers. The vast changes reshaping the world’s business terrain are that far-reaching, that fundamental, that profound.”

And according to Gary Hamel :
“It is universally apparent that we are living in a world so complex and so uncertain that authoritarian, control-orientated companies are bound to fail.”

The concept of how a successful company operates in the information age is shifting from “make-and-sell” to “sense-and-respond”.

Make-and-sell is an industrial-age model based on transactions, capital assets, mass production, economies of scale and product margins. Sense-and-respond is an information- and service-age model, which emphasises client relationships, intellectual assets, mass customisation, scope and value creation.

To compete successfully in the information age, managers must be exceptionally good at six key issues. 
They must; 

·         create a climate for fast response, 

·         engage the best people, 

·         generate new business concepts, 

·         operate with low costs, 

·         find and keep the right customers and

·         keep shareholders satisfied."

END QUOTE

Authors: Robin Fraser (programme director of the CAM-I Beyond Budgeting Round Table) and Jeremy Hope (a consultant).

Brighten-up your day ---- read all about these ideas and others in the February 2001 edition of “Financial Management”, a magazine published by the Chartered Institute of Management Accountants (CIMA). Write to financialmanagement@cimaglobal.com or visit http://www.cimaglobal.com.

Editor: Ron Wells