Business Agility and Budgets

I’ve just started reading an article from the Harvard Business Review.

The idea in brief

“Budgeting – as most companies practice it – should be abolished. Radical? No, simply the next logical step following everything else you’ve already done to eradicate command-and-control hierarchies in your company – and enable it to nimbly adapt to changing market conditions. Abolishing budgets will free up even more or your employees’ creativity, self-motivation and willingess to share information – essential ingredients for any firm’s agility…

Raising the bar

Abandoning budgets doesn’t mean abandoning high expectations. On the contrary, you raise the bar even higher. Instead of demanding that managers and business units meet fixed targets, you ask them to do something much tougher: measure themselves against how well their competitors will have done during the same period.

… rather than taking short-term actions designed solely to save the credibility of forecasts, they focus on improving their long-term competitive position…”

Buy the full article (“Who Needs Budgets?”) from Harvard Business Review


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