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Beyond Budgeting: How Managers Can Break Free from the Annual Performance Trap

Book Description

The traditional annual budgeting process--characterized by fixed targets and performance incentives--is time consuming, overcentralized, and outdated. Worse, it often causes dysfunctional and unethical managerial behavior. Based on an intensive, international study into pioneering companies, Beyond Budgeting offers an alternative, coherent management model that overcomes the limitations of traditional budgeting. Focused around achieving sustained improvement relative to competitors, it provides a guiding framework for managing in the twenty-first century.

Table of Contents

  1. Title Page
  2. Dedication
  3. Copyright Page
  4. Table of Contents
  5. Foreword
  6. Acknowledgments
  7. Introduction: Toward a New General Management Model
  8. Part I - The Promise of Beyond Budgeting
    1. Chapter One - The Annual Performance Trap
      1. Budgeting Is Cumbersome and Too Expensive
      2. Budgeting Is Out of Kilter with the Competitive Environment and No Longer Meets the Needs of Either Executives or Operating Managers
      3. The Extent of “Gaming the Numbers” Has Risen to Unacceptable Levels
      4. Toward a Vision of a New Management Model
      5. Chapter Summary
    2. Chapter Two - Breaking Free
      1. The Adaptive Process Opportunity: Enabling Managers to Focus on Continuous Value Creation
      2. The Radical Decentralization Opportunity: Enabling Leaders to Create a High Performance Organization
      3. Scaling the Twin Peaks of Beyond Budgeting
      4. Beyond Budgeting Provides Benefits for Shareholders
      5. Chapter Summary
  9. Part II - The Adaptive Process Opportunity: Enabling Managers to Focus on Continuous Value Creation
    1. Chapter Three - How Three Organizations Introduced Adaptive Processes
      1. Rhodia
      2. Borealis
      3. Svenska Handelsbanken
      4. Chapter Summary
    2. Chapter Four - Principles of Adaptive Processes
      1. Six Principles of Managing with Adaptive Processes
      2. Changing Attitudes and Behaviors
      3. Chapter Summary
    3. Chapter Five - Insights into Implementation
      1. Defining the Case for Change and an Outline Vision: It’s an Essential First Step
      2. Convincing the Board: Be Prepared
      3. Getting Started: It’s Easier Than You Think
      4. Designing the Model and Implementing New Processes: It’s Coherence That Matters
      5. Training and Educating People: It’s Never Enough
      6. Rethinking the Role of Finance: It’s an Opportunity to Add Value
      7. Changing Behavior: It’s Driven by New Processes, Not by Management Decree
      8. Evaluating the Benefits: There Are Plenty of Quick Wins
      9. Consolidating the Gains: It’s about Winning Hearts and Minds at the Top
      10. Chapter Summary
  10. Part III - The Radical Decentralization Opportunity: Enabling Leaders to Create a High Performance Organization
    1. Chapter Six - How Three Organizations Removed the Barriers to Change
      1. Ahlsell
      2. Leyland Trucks
      3. Svenska Handelsbanken
      4. Chapter Summary
    2. Chapter Seven - Principles of Radical Decentralization
      1. Principle 1: Provide a Governance Framework Based on Clear Principles and Boundaries
      2. Principle 2: Create a High-Performance Climate Based on Relative Success
      3. Principle 3: Give People Freedom to Make Local - Decisions that are Consistent with Governance Principles and the Organization’s Goals
      4. Principle 4: Place the Responsibility for Value Creating Decisions on Front-Line Teams
      5. Principle 5: Make People Accountable for Customer Outcomes
      6. Principle 6: Support Open and Ethical Information Systems - That Provide “One Truth” throughout the Organization
      7. Chapter Summary
    3. Chapter Eight - Insights into Changing Centralized Mind-Sets
      1. Selling the Benefits: How the Soft Numbers Become Hard
      2. Changing Processes Precedes the Devolution of Responsibility: The Order Is Crucial
      3. Devolving Responsibility: It Cannot Be “Given,” Only “Taken”
      4. Overcoming the Resistors: The Forces of Centralization Are Never Far Away
      5. Letting Go: It’s the Ultimate Challenge
      6. Changing Recognition and Rewards: It’s the Seminal Moment
      7. Maintaining the Momentum: It’s a Never-Ending Process
      8. Chapter Summary
  11. Part IV - Realizing the Full Promise of Beyond Budgeting
    1. Chapter Nine - The Roles of Systems and Tools
      1. Shareholder Value Models
      2. Benchmarking Models
      3. The Balanced Scorecard
      4. Activity-Based Management Models
      5. Customer Relationship Management Models
      6. Enterprisewide Information Systems and Rolling Forecasts
      7. Using the Integrative Power of Tools to Support Front-Line People
      8. Chapter Summary
    2. Chapter Ten
      1. Is the Model Simple, Low Cost, and Relevant to Its Users?
      2. Is the Model in Tune with the Success Factors of the Information Economy?
      3. Does the Model Encourage Good Governance and Ethical Behavior?
      4. Reconnecting Front-Line People to the Organization
      5. Chapter Summary
  12. Glossary
  13. Notes
  14. Index
  15. About the Authors