Beyond Budgeting

Beyond Budgeting is a “grass-root” movement of companies that are leaving traditional management practices, including budgeting, for more flexible and dynamic management processes built on a positive view on people. The Lean & Agile principles have much in common with Beyond Budgeting. Lean & Agile challenge traditional beliefs about how best to run business support projects, while Beyond Budgeting challenges traditional thinking about how to best run organisations. Both arrive at very similar conclusions. Complex knowledge organizations operating in uncertain and dynamic environments need agile and flexible processes, supporting fast and value driven decisions.

The Beyond Budgeting movement believes that organizations only will realize the full potential from Lean & Agile when this becomes the way we run our business and organization, and not just in our projects.


Bjarte Bogsnes – Beyond Budgeting in Statoil

“It is both scary and amazing to observe how little management practices have developed over the last fifty years, a period where we have seen groundbreaking innovation in most other parts of business and technology. My sons who now are finalizing their business studies could easily have used many of my own textbooks from thirty years ago, especially those covering budgeting, planning and performance management. Most business schools still teach, and most companies still practice a “command-and control” approach born in a time when the pace and predictability of business environments were radically different, and when the expression “knowledge organisation” did not exist”, says Bjarte Bogsnes, VP Performance Management Development in Statoil.

Statoil is Scandinavia’s largest company. One of it’s values reads “Challenge accepted truth, and enter unfamiliar territory”. Bjarte Bogsnes will share Statoil’s long journey, which by no means is over, towards a new coherent management model which “takes reality seriously” both from a business and people perspective. He will advocate the need for joining forces with HR on this journey, because management processes must be fully aligned with leadership principles and practices. The two communicating opposing messages is a recipe for confused and disillusioned employees. Bogsnes will also argue that organisations will not succeed with their lean and agile efforts on development projects unless lean and agile also becomes the way the organisation, and not just it’s projects, are run.

Sigurd Aune – The SpareBank 1 Gruppen’s Road to a New Corporate Governance Based on the Principles of Beyond Budgeting

SpareBank 1 Gruppen is a Norwegian holding company that, through its subsidiaries, provides and distributes products in the field of life and P&C insurance, fund management , securities brokering and factoring. The company joined the BBRT in 2008. Sigurd Aune, CFO SpareBank 1 Gruppen will describe their Going Dynamic (Beyond Budgeting) project. This will include why they needed to change, what they are changing, their progress so far and the challenges that lie ahead. After Sigurd’s presentation there will be an opportunity for further discussion.

Helge Eikeland – Continue your Beyond Budgeting journey with help from Agile, Lean and Scrum

Statoil is introducing the so-called “Scrum” method in business support project throughout the company with the goal of achieving better, cheaper and more sustainable results in a shorter time. Scrum is based on the principles of ‘lean’ and ‘agile’ and is closely related to Beyond Budgeting. Helge Eikeland, Statoil will explain the principles of Scrum and how they are beneficially using it in their Beyond Budgeting implementation.

Heidi Pschibilla – Lean Implementation: Lead by Example

Successful Lean Transformation achieved through leading by example. It has been noted that the number one secret to success for a successful and sustainably lean transformation is management commitment and support the initiative. This presentation is targeted towards identifying those key elements that management must possess and exhibit in order to support the initiative and drive the right culture change. Heidi’s presentation is based on a real case in a European manufacturing company.

Garry Lohan, Kieran Conboy & Michael Lang – Beyond Budgeting: A Performance Management Model for Agile Software Development Teams

Continued uncertainty and rapid changes to business and technology environments have meant that a software development team’s ability to respond to changing user or customer requirements has become increasingly critical. As a means to respond to these changes the software development community has moved from a tradi-tional, plan-driven, structured approach to more agile development methods, which has had a huge impact on the way software is developed worldwide.

These newer methods of producing software are not always compatible with traditional Performance Management Models. As agile methods grow in popularity it is important that the management control in the organization is set up to complement an agile way of working. An innovation from the accounting literature called “Beyond Budgeting” has shown great promise as a performance management model for a changing business and operating environment. This model is conceptually similar and appears to align well with agile methods. The research objective of this paper is to examine how the Beyond Budgeting model is being applied in the field of agile software development.

Peter Bunce – How the Beyond Budgeting Management Model Enables Lean Thinking and the Agile Organization

Lean thinking has been around for decades, yet relatively few organizations have adopted and benefited from its ideas to the fullest extent. Even fewer organizations have gone on to become both lean and agile. As the evidence for such radical improvements is so compelling you have to wonder why. Most organizations implement lean thinking as a series of tools and have no concept of agility. Effective lean thinking and agility require organizations to push decision-making and responsibility down to the self-managed teams, yet the way most organizations are designed and managed inhibits changing from hierarchies and command-and-control to these self-managed teams.

This presentation briefly outlines why we need to change from the traditional command-and-control management model to the Beyond Budgeting learn-and-adapt management model. It examines the basic requirements of lean thinking and agility why this learn-and-adapt model is necessary to enable lean thinking and agility to realise their full potential. It explores the visions and principles of the Beyond Budgeting management model, with examples from companies that have adopted many of these principles. Finally it explores some of the practical steps for successful implementation and change management. Peter Bunce is a Director of the Beyond Budgeting Round Table (BBRT), an international shared learning network dedicated to helping organizations move beyond command-and-control.  His background is in manufacturing engineering.

Pekka Vasankari – Handelsbanken: Our Way

Founded in 1871, Handelsbanken is one of the leading banks in the Nordic region, with over 700 branches in 22 countries. It regards Sweden, Denmark, Finland, Norway and Great Britain as its domestic markets. The Handelsbanken management model is acknowledged by the BBRT as almost certainly the best ‘Beyond Budgeting’ exemplar in existence.

This presentation will describe the principles and values of running a multinational bank through good and bad times. Handelsbanken has for decades been successful in applying a decentralized management model. The strong core values and beliefs are the Handelsbanken way to better banking. Pekka Vasankari is the Branch Manager at Handelsbanken Espoo-Leppävaara, Finland.

Kenneth Hauge – Dynamic Management in a Global Telecomms Business

Telenor Group is one of the largest mobile operators in the world with approximately 38000 employees situated in 13 different countries across Europe and Asia. In addition to its own telephony and broadcast services, the Telenor Group has substantial activities in subsidiaries and joint venture operations.

The initiative to begin the journey towards implementing Beyond Budgeting in Telenor was decided by the top management in the Telenor Group, including all the CFO’s of the Telenor Group, already in 2007. However, there is still some distance to travel until we have completed the implementation. The first year of the project it consisted of three pilots; Digi in Malaysia, dTac in Thailand and Telenor Broadcast in Norway. Going Dynamic was the name chosen for this ongoing project in Telenor. We found that the existing way of governing was not adequate as the growth in certain markets was higher than anticipated. The budget assumptions and goals we had in relations to these markets were therefore insufficient. Delivering “on budget” was not sufficient in the competitive market, but when everything was based on the budget (follow-ups, bonus agreements etc) there were limited incentive for the employees to go beyond the budget.

Telenor developed a Going Dynamic management model framework where the focus is strong when it comes to the relationship between establishing strategy and ambition, operationalizing the strategy and reporting and forecasting, follow-ups, reviews, and planning, and implementations. With this we are hoping to establish a stronger link between the strategy and operations making us able to respond to rapid changes and being able to initiate necessary actions accordingly. At the same time, the developed model maintains the same “level of control” as before (although without budgets). This is a more forward looking management model than previously. The Going Dynamic model increase probability of getting more forward looking financial and operating information as well as removing the yearly budget process. In addition, well defined responsibilities and documented management processes will strengthen and clarify the roles of individuals. Eventually, this kind of cultivation will encourage everyone to perform as business owners and not just following the budget.

Juha Rikkilä – Collision with Lean Management and Agile Development: Overturning the Project Paradigm

Project management has lived long through a growing criticism of not delivering to expectations. When agile development and lean management approaches are now emerging to product development, this paper assesses their impact to current practices of project management. It is indicated that the very basis of the project management has shaken, and new approaches need to be developed to accommodate the development efforts in contemporary product development organizations. A proposal is made for the outline of such an approach. In conclusion the changes in business management needed to enable this new approach, is discussed.

Peter Bunce – Tutorial: Removing the Barriers to Successful “Lean” and “Agile” Implementations

Many organisations try to go lean and even agile but few succeed. Research has indicted that lean should be implemented as a strategy, not a tactic, in which organisations need to set stretch goals and create an environment that supports their achievements. The purpose of this course is to help managers identify the factors for successful lean and agile implementations and develop a management environment in which lean thinking and agility can realise their full potential.

Lean is not just for the factory floor or for the back office work. Successful lean implementations involve the whole organisation and therefore involve the CEO, the rest of the executive team and senior management as well as those responsible for the implementation. This course will be of value to top executives, and senior managers in organisations that are either thinking of implementing lean or actually implementing it.

You will gain a better understanding of a management model that supports sustained, successful lean implementation and the issues that need to be overcome.

This workshop will help you to understand:

  • How lean thinking and agility principles can eliminate waste and improve quality and responsiveness in all types of organisation, not just manufacturing
  • How lean thinking and agility should be seen as core strategies in helping to make the organisation more focused on outcomes and satisfy “customer purpose”
  • Identifying the issues organisations face in achieving a successful lean and agile implementation that can be sustained over the long-term
  • How the management model should change to release the full potential of both lean thinking and agility.