Over the twenty years that I have worked with Beyond Budgeting, I have asked tens of thousands of managers and Finance people all over the world about how satisfied they are with the budgeting process.
Welcome to this blog series, where I look forward to share with you some of my reflections on what I believe are very important issues for most organisations today.
In this article we will look at the different methods an organization can use to set direction. Planning involves many kinds of methods that help managers make decisions.
In a rapidly changing business environment, the traditional, out-dated budgeting mentality is being challenged more and more. While the process of moving away from a traditional budgeting mentality is painful and slow, it is happening around the globe. The question is, are we ready to abandon the traditional budget completely?
Many will still argue that target setting works. “What gets measured gets done”. Yes, targets do work. That is actually the problem. Managers hitting their target is, however, no guarantee whatsoever that this was their best possible performance, given the circumstances.
A move beyond traditional budgeting does not necessarily mean losing the budget. Rather, it’s important to reduce some of the traditional planning approach and taking a modern, flexible view of how to best remain agile and perform better.