Beyond Budgeting and Path to Agility: Enabling Organizational Agility at Scale
I recently participated in a book club with colleagues to review and discuss This Is Beyond Budgeting by Bjarte Bogsnes. A few of us had heard of the concept, others were brand new to the party. All of us were intrigued by the promise of the subtitle: A Guide to More Adaptive and Human Organizations
While this is the first edition of the book, Beyond Budgeting concepts, principles and practices are rooted in many decades of real-world experiences (and frustrations) from people serving in corporate finance and human resource roles.
As we dove in, we realized there was a great deal of synchronicity between Beyond Budgeting’s (BB) and Path to Agility’s (P2A) approach to enabling sustainable organizational agility at enterprise scale.
Challenging Management Thinking
P2A and BB both challenge management thinking that we can overcome today’s enterprise trials and tribulations using methods that assume the world of work is largely stable, understood, simple, and obvious (SUSO).
Those outdated methods are holdovers from the industrial age, the birth of Scientific Management (1909). These legacy thinking and planning processes tend to be backward-looking. They create real challenges at enterprise scale and are slowing down, if not outright blocking, effective organizational change – and limiting the ability to obtain meaningful outcomes.
All of us in the book club chuckled at this quote: “Most corporate planning is like a ritual rain dance. It has no effect on the weather, but those who engage in it think it does. Much of the advice and instruction is directed at improving the dancing, not the weather.”
P2A and BB embrace that the world of business is volatile, uncertain, complex, and ambiguous (VUCA). While it is impossible to predict the future, both models provide flexible, interactive, and adaptive approaches to navigating today’s rapidly changing terrain in any kind of atmospheric conditions.
Complementary and Comprehensive Approaches
P2A and BB are grounded in principles of purpose, transparency, autonomy, and trust, and when used together provide a complementary and comprehensive approach to unlocking enterprise performance.
Beyond Budgeting Principles and Processes
BB has found that key leadership principles and management processes are instrumental in achieving and sustaining broad organizational transformation. These, like P2A, have evolved over the years guided by the insights of hands-on practitioners
Look Forward, Separate, and Improve
BB tackles the legacy “1909” planning and budgeting mindset by teasing apart the underlying questions the “corporate rain dance” is intended to answer: How do we define performance and how can we best enable the organization to deliver that performance?
Another quote resonated with much of the book club: “…as managers our job is not to spend a minute of our time motivating our teams. Rather, it is to ensure that we don’t spend a single moment of our time de‐motivating them.”
By separating three components – targets, forecasts, and resource allocation – BB allows each to run on different numbers and rhythms better suited to each. This approach reduces one of the most troublesome barriers to sustainable transformation: resistance.
Getting Started: Solving the Budget Conflict
Purpose-Driven Leadership and Accelerated Learning
P2A addresses the key challenges of organizational change by:
- Separating the concept of outputs from outcomes; prioritizing (a limited set) of key, measurable, business goals and using those as a guiding light.
- Identifying key stages of transformation: Align, Learn, Predict, Accelerate, and Adapt.
- Assessing the current state of Agile Outcomes and Capabilities and practices – “where we are” – across multiple levels: Organization, System, and Team.
- Providing forward-thinking guidance on “where we want to improve next.”
At a more operational level, P2A drives purpose-driven leadership and accelerated learning by:
- Creating organizational objectives with relative, not fixed/absolute success criteria
- Reviewing and adapting forecasts based upon new information learned around market/business rhythms and events, not just around the calendar year
- Establishing and communicating shared, organizational core values to allow programs and teams to operate quickly and effectively through sound judgment, and not through detailed rules and regulations
- Building a guiding coalition that includes finance and human resource team members, (along with Business and Technology) that has the skills and abilities to drive change throughout the organization
- Aligning organizational structures and performance enablement systems to evaluate teams and systems holistically for co-learning and growth, not individual appraisals
It was interesting to see the crossover between the Path to Agility and Beyond Budgeting models. Moreover, I’m grateful that we got to spend some time with Bjarte Bogsnes, and that we invested time to level up our broader understanding–as a book club.
For more information about Beyond Budgeting, see:
To discover how you can leverage Path to Agility to enable organization agility at scale: