40 min

The Change Society | Beyond Budgeting - The foundation of radical change The Change Society Podcast

    • Business

“Unless you address the budgeting process, all the talk about radical change are just nice words”.




There probably isn’t a better way to introduce this show than the words of our guest Bjarte Bognses. 





Bjarte, winner of the Harvard Business Review/McKinsey Management Innovation award,

is the undisputed leader of the Beyond Budgeting movement - the topic of today's episode.




Lots of ground was covered in this one, including where the movement was originally inspired, how the adoption of beyond budgeting has increased since the pandemic, how to get the CFO and executive team on board with rolling budgets and how Handelsbanken operate with no budgets, targets or individual bonuses.




The topic becomes more than just about the budgeting process. It’s an exercise in challenging traditional management and leadership principles that can unlock the true potential of organisations normally slowed by bureaucracy and red tape.




As usual, a ton of value for any executive or leadership team looking to change and innovate.



References:




Twitter: https://twitter.com/bbogsnes
LinkedIn: https://www.linkedin.com/in/bjarte-bogsnes-41557910/
bbrt.org
Implementing Beyond Budgeting Book

1.29 - Intro



The first time we kicked out the budget, and costs came down
The beginning of the Beyond Budgeting journey back in 2005
Enjoying public speaking and podcasting




4.17 - What is Beyond Budgeting?


The purpose is to create a more dynamic, flexible human organisation
Changing the budgeting process, but also the budgeting mindset
We are looking for a better name!




5.44 - Heritage of Scandinavian Management Techniques


Beyond Budgeting is more prevalent because of culture. Informal and trusting
A movement inspired by companies in both Scandinavia and the UK
The idea started in 1998, two years before the agile manifesto




8.24 - The 12 key principles and what they are looking to challenge


Divided into six leadership principles
The traditional models don’t reflect the management processes you need to unlock these leadership beliefs
We have to practice what we preach as leaders
Traditional management built on two principles - can’t trust people and that the future is predictable and plannable. 
 The pandemic has busted these apart




13.16 - Are you seeing a shift in uptake of Beyond Budgeting since the pandemic from boards?


Every big company is on some sort of agile transformation
Unless you address the budgeting process, wanting to change is just lip service
Everyone loves innovation, but that enthusiasm is limited to tech - not management




18.58 - Using the right language to align groups of executives


We should leave performance management behind as a label
Stop managing performance, and start enabling
E.g. Traffic lights manage performance while roundabouts enable it




20.55 - What are the barriers to transitioning to this new world?


The fear of losing control, although that is often just an illusion
We don’t need targets to evaluate performance
Hitting the target, but missing the point




25.33 - Case Study 

Handelsbanken has been operating with no budgets, targets or individual bonuses since 1970. Has never needed a government bailout



26.55 - How to take the CFO and Finance team on a journey to rolling budgets


They initially find it a bit big and scary
Ask ourselves - why do we budget? Set targets, forecast and resource allocation
It created gaming and sandbagging
We can continue to do all three, but we do them in separate processes
Target- an aspiration, what we want to happen
Forecast- what we think will happen
Resource allocation- optimisation of scarce resources





35.28 - What does the future look like?


Like-minded communities are joining forces to spread the word 
In 15-20 years, we’ll smile at management in 2021
Be the pioneer or the laggard 

“Unless you address the budgeting process, all the talk about radical change are just nice words”.




There probably isn’t a better way to introduce this show than the words of our guest Bjarte Bognses. 





Bjarte, winner of the Harvard Business Review/McKinsey Management Innovation award,

is the undisputed leader of the Beyond Budgeting movement - the topic of today's episode.




Lots of ground was covered in this one, including where the movement was originally inspired, how the adoption of beyond budgeting has increased since the pandemic, how to get the CFO and executive team on board with rolling budgets and how Handelsbanken operate with no budgets, targets or individual bonuses.




The topic becomes more than just about the budgeting process. It’s an exercise in challenging traditional management and leadership principles that can unlock the true potential of organisations normally slowed by bureaucracy and red tape.




As usual, a ton of value for any executive or leadership team looking to change and innovate.



References:




Twitter: https://twitter.com/bbogsnes
LinkedIn: https://www.linkedin.com/in/bjarte-bogsnes-41557910/
bbrt.org
Implementing Beyond Budgeting Book

1.29 - Intro



The first time we kicked out the budget, and costs came down
The beginning of the Beyond Budgeting journey back in 2005
Enjoying public speaking and podcasting




4.17 - What is Beyond Budgeting?


The purpose is to create a more dynamic, flexible human organisation
Changing the budgeting process, but also the budgeting mindset
We are looking for a better name!




5.44 - Heritage of Scandinavian Management Techniques


Beyond Budgeting is more prevalent because of culture. Informal and trusting
A movement inspired by companies in both Scandinavia and the UK
The idea started in 1998, two years before the agile manifesto




8.24 - The 12 key principles and what they are looking to challenge


Divided into six leadership principles
The traditional models don’t reflect the management processes you need to unlock these leadership beliefs
We have to practice what we preach as leaders
Traditional management built on two principles - can’t trust people and that the future is predictable and plannable. 
 The pandemic has busted these apart




13.16 - Are you seeing a shift in uptake of Beyond Budgeting since the pandemic from boards?


Every big company is on some sort of agile transformation
Unless you address the budgeting process, wanting to change is just lip service
Everyone loves innovation, but that enthusiasm is limited to tech - not management




18.58 - Using the right language to align groups of executives


We should leave performance management behind as a label
Stop managing performance, and start enabling
E.g. Traffic lights manage performance while roundabouts enable it




20.55 - What are the barriers to transitioning to this new world?


The fear of losing control, although that is often just an illusion
We don’t need targets to evaluate performance
Hitting the target, but missing the point




25.33 - Case Study 

Handelsbanken has been operating with no budgets, targets or individual bonuses since 1970. Has never needed a government bailout



26.55 - How to take the CFO and Finance team on a journey to rolling budgets


They initially find it a bit big and scary
Ask ourselves - why do we budget? Set targets, forecast and resource allocation
It created gaming and sandbagging
We can continue to do all three, but we do them in separate processes
Target- an aspiration, what we want to happen
Forecast- what we think will happen
Resource allocation- optimisation of scarce resources





35.28 - What does the future look like?


Like-minded communities are joining forces to spread the word 
In 15-20 years, we’ll smile at management in 2021
Be the pioneer or the laggard 

40 min

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