Does anyone really enjoy the budgeting, planning, and forecasting exercises that we all do?

The budgeting process is all too often an endurance contest. It usually involves multiple negotiations to achieve some randomly selected incremental improvement. Often it is guided by a few senior executives who decide that they need to achieve some target in order to get their bonus once they “make the number.” And making the number usually occurs some 15 or more months after setting the target!

I just returned from the 9th Annual Beyond Budgeting Conference in Dallas. During the conference, I heard several sports analogies used to describe the current state of affairs in the budgeting/planning/forecasting world. It hit me that in reality the annual budget process really is more like pro wrestling than most sports.

What the heck am I talking about? Well … as you read this, think about the planning process that your organization uses.

Budgeting is a lot like pro wrestling in these ways: At the start of the process, there is a lot of hype (”We’re going to make this easy and really take a hard look”). It involves good guys (truly taking a fresh look and wanting to do the honorable thing), bad guys (think “sandbaggers”), and useless referees (uninvolved executives who don’t want to overcommit until they see where the boss wants things to end up). Then there is lots of action and thrashing about (how many iterations do you create in trying to get the answer “right”?) before the sudden end (time is running out because we have a Board meeting … think about TV time limits).

And in the end, the outcome really was “fixed” because the “boss” knew who the winner would be (the answer they wanted but didn’t let anyone know ahead of time)!

Then we get to spend the next year explaining why, when we are “wrestling with reality” in the real world, it is different than when in the “fixed” world of the budget we spent hours and hours creating.

Isn’t there a better way? Simply put … yes.

That way is outlined in The 12 Beyond Budgeting Principles. Please don’t think I am some kind of “born again” convert to this concept. Hey … I may have been guilty of doing some budget “fixing” in my own day. And there is no question that I have spent way too much time in my career looking back at “budget variances.” But it got “old” to me years ago, and I tried not to let the process get to me too much. I even tried to convert to looking ahead with rolling forecasts versus annual budgets but neglected to really effectively address the cultural change that was required.

Over the last several years, I have learned that there are folks in organizations around the globe who do “get it” and have been developing the Beyond Budgeting thought process. They are worth listening to and learning from.

Beyond Budgeting is not an “out of the box, click and play” solution. It requires rethinking what we have been trapped by for 100 years. It also requires leaders who realize they cannot “fix” the budget to “hit the numbers” for them to “make the bonus.” It takes a well-governed climate of trust, laced with the freedom, capabilty, and responsibility to act based on solid information access.

Check it out … and think about getting on board! ###