This page contains an archive of news items that have appeared on the BBRT Home Page since 11 December 2009.
31 July 2014
Beyond Budgeting Conferences
In October, two very interesting Beyond Budgeting conferences
co-organized by the Beyond Budgeting Institute are held in Kuala
Lumpur (9 October) and London (22 October),
Both conferences are designed to give participants a great introduction to what Beyond Budgeting is all about.
In just one day, you will learn everything you need to sweep away outdated command and control methods and begin your journey towards a leaner, more adaptive, more resilient organisation. Both conferences are packed with real world case studies and thought-provoking, interactive sessions led by CEOs, business thinkers and pioneering practitioners of Beyond Budgeting.
For more information and to sign up please follow these links:
Kuala Lumpur: https://gallery.mailchimp.com/33069b15098259cee2f42cf2b/files/cdf40a43-2378-4f8a-9cf4-8ec3811f41cd.pdf
3 July 2014
New Case Report
We have just finalized a case report about BBRT member Uno-X Automat which is part of the Reitan Group, the fifth largest company in Norway. The vision of the Reitan Group is to become Scandinavia´s most value driven company. This is achieved by amplifying a culture that has the customer as the ultimate boss and a working environment where authority is delegated to employees who are their own decision makers. The case report is a great example of the unleashing of performance potential that can follow when an organization is given autonomy. The case story is available to BBRT Members on the BBRT Members’ Community web site.
New research paper on Lean and Agile Financial Planning
BBRT-member Maarit Laanti and Rami Sirkiä have recently prepared an interesting paper on Lean and Agile Financial Planning. This is based on their mutual experiences with financial controlling in software development projects at Nokia. We are grateful to Maarit and Rami for sharing their experiences and knowledge, and for making this research paper available to the Beyond Budgeting Institute and the members of BBRT. The paper is now available to BBRT members on the BBRT Members' Community website.
30 June 2014
Beyond budgeting – integrated planning and performance management
Independent consultant Adrian Ryan, with input from Bjarte Bogsnes, explains how businesses can use planning and process management to drive integrated reporting. To read the full article click HERE
10 June 2014
Dynamic Forecasting: A Planning Innovation for Fast-Changing Times - Bjarte Bogsnes, Statoil
Bjarte Bogsnes holds the unique distinction of being the onle person to have "blown up the budget" at more than one company: at his previous employer, Borealis and at his current on, Statoil, the Norwegian oil giant. Now he want to blow up the calendar too - calling it an arbitrary (and anachonistic) basis for forecasting. A dedicated champion of the Beyond Budgeting movement, Bjarte takes the concept of rolling forecasts one big step further, with dynamic forecasting.
The full article was published in the Balanced Scorecard report and canbe read by clicking HERE
Getting Performance Without Performance Management
A few months ago, past MIX M-Prize winner, Bjarte Bogsnes of Statoil and Chairman of the BBRT developed a hack for the MIX entitles "The End of Performance Management (As We Know It)". In this hack Bjarte suggested that the idea of managing performance was itself incompatible with the the 21st Century notion of reinventing management. His conclusion was that performance management itself need to be reinvented and renamed for a new age. During October 2012 almost 70 people took part in a discussiob about the future of performance management. The resulting report captures the results of their experience. The report can be read by clicking HERE
30 May 2014
Beyond Budgeting made it to the cover of the May edition of CFO Magazine (again):
This is very much thanks to a great effort by Steve Player, our partner in North America. To read the full article click HERE
Lean Kanban Conference in Bologna
On 30 May, Beyond Budgeting was represented at the Lean Kanban-conference in Bologna
- Rikard Olsson, from BBI's Swedish partner Ekan Management, held a very much appreciated introduction to the Beyond Budgeting ideas and why management innovation is crucial for companies that want to achieve sustained competitive advantage.
Lean Kanban Conference in San Francisco
Early in May, Beyond Budgeting was well represented at the Lean Kanban North America conference in San Francisco. This event featured a full Beyond Budgeting track of speakers:
- Bjarte Bogsnes (our chairman) served as one of the keynote speaker for the entire conference.
- Steve Player served as the Beyond Budgeting track chairman
- Gretchen Stepke of HOLT CAT (BBRT Member) shared how they had eliminated budgets as part of their 2009 improvement efforts.
- Doug Kirkpatrick of Morningstar explained how they created a company that operates without any bosses. The Morningstar case has previously been featured at BBRT events both in the US and in Europe.
- Kevin Meyer cofounder of the Gemba Academy described how his team eliminated budgets as part of their lean management approach.
- Steve Adams of Kaiser Permanente (BBRT Member) described their improvements in cost transparency and measurement. These are helping streamline operations while enabling continued decentralized management.
25 April 2014
Beyond Budgeting: a Proven Governance System Compatible with the Agile Culture
Many large and mid-sized organisations struggle with taking Agile beyond IT largely because Agile doesn't provide any guidance on governance structures. In a new article Michael Sahota, Bjarte Bogsnes, Jaana Nyfjord, Jorgen Hesselnerg and Almire Drugovic argue that the leadership and governance principles of Beyond Budgeting are an excellent complement to Agile's team orientation because they are aligned around values and mindset (culture). Beyond Budgeting provides the organisational guidance needed to create an environment where Agile can thrive.
To read the full article click HERE
21 March 2014
European BBRT-Members’ Meeting
During the two last days, BBRT Members gathered in Brussels for the bi-annual European BBRT Meetings. On Wednesday, we held the Implementers’ Meeting which this time focused on Business Forecasting. Yesterday’s BBRT Meeting featured very interesting presentations from New Zealand-based Mainfreight and the north European diary giant Arla. Bjarte Bogsnes presented his views on individual bonuses and last but not least: the members’ meeting included a review of a very interesting research from the Norwegian bank sector. The study shows a strong negative correlation between long-term financial results and the use of traditional budgets. Meeting presentations and the research study are available for download by BBRT Members from the private BBRT Members' Community website.
19 March 2014
Beyond Budgeting Conference in Brussels
On 19 March we held an open Beyond Budgeting conference in Brussels together with CFO Magazine. Anders Olesen from Beyond Budgeting Institute introduced the audience to Beyond Budgeting, our network and ideas. Hereafter, two longstanding BBRT-Members Statoil and A.P. Moller – Maersk presented how they have benefited from adopting the Beyond Budgeting principles in their management models. In connection with this conference, the February version of CFO Magazine featured an interview with Beyond Budgeting Institute which can be read HERE
14 February 2014
Beyond Empowerment - New TED video with Doug Kirkpatrick on Beyond Empowerment
Doug Kirkpatrick, author of Beyond Empowerment: The Age of the Self-Managed Organization, spoke about Beyond Empowerment and his experiences at Morning Star at the BBRT Members meeting in Oslo in March 2013 and at the BBRT North America Conference in June 2013. TED has recently released a fantastic video on YouTube in which Doug gives a succinct and powerful explanation of Beyond Empowerment. To see the video go to http://www.youtube.com/watch?v=Ej4n3w4kMa4/a>
Swedish challenger steps into the breach on high street
AA recent report in the The Times newspaper (UK) states that "even as many high street banks are working out to slim down or shut branches, Handelsbanken, a small Swedish lender has been opening outlets nationwide". It notes that customer deposits are up from £3.1 billion at the end of 2012 to £5 billion. Operating profits in the UK have risen from £236 million on revenues of £650 million to profits of £366 million on revenues of £847 million. To read the full article click HERE
IInteresting to note that Barclays Bank is increasing senior level bonuses are the same time as profits are going down. They say that they have to pay the right package to attract the right people. If they are they are the right people, how come profits are going down?
5 February 2104
GlaxoSmithKline (GSK) drops individual sales targets
Another company has seen the error of its ways and has been forced to drop individual sales targets. GlaxoSmithKline (GSK) is to scrap individual sales targets for its commercial staff.
7 January 2014
Handelsbanken hits the UK Headlines Again
BBC Business News has just posted an article on its website about Anders Bouvin, the Chief Executive of Handelsbanken’s UK operations. Entitled “The Swedish bank boss who likes to do things differently” it starts by stating the bank he runs will challenge your preconceptions. For a start he doesn’t receive an annual bonus and he hasn’t seen his bank fined for incentivizing his staff to promote inappropriate products – because they are not incentivized to do so! He believes that the Handelsbanken’s group success is down to the bank’s belief in the primacy of customer service and localism.
To read the full article go to http://www.bbc.co.uk/news/business-25336448
Other UK banks now state that they are aiming to focus on customer service (whilst closing branches), particularly the new boss of RBS. But will they adopt the Handelsbanken model and stop incentivizing sales of products? Probably not. Meanwhile Handelsbanken keeps growing in the UK with now 169 branches. BBRT has been studying Handelsbanken since 1997 and it’s one of our star cases. Join the BBRT to find out more about the way Handelsbanken is managed and operated.
13 December 2013
28 January 2014: Beyond Budgeting workshop for BBRT-members in Denmark. This is held at Lego’s offices in Billund. For more information, please contact Anders Olesen (firstname.lastname@example.org)
4 February 2014: Introduction to Beyond Budgeting. Open meeting with information and inspiration about Beyond Budgeting and the BBRT network. This is held at the offices of Ekan Management in Gothenburg. For more information and to sign up, please contact Malin Wennebro at Ekan Management (email@example.com)
13 February 2014: Introduction to Beyond Budgeting. Open meeting with information and inspiration about Beyond Budgeting and the BBRT network. This is held at the offices of Ekan Management in Stockholm. For more information and to sign up, please contact Malin Wennebro at Ekan Management (firstname.lastname@example.org)
14 November 2013
BBRT meeting in London in October a great success
The high participation numbers and the level of debate, discussion and networking again showed the value of these meetings.
- Rob Wilson’s presentation on Aviva’s approach to systems thinking gave everyone some very valuable insights on how to empower the front line teams to better serve their customers. Less of the traditional tools and targets and more focus on values and purpose dramatically increased both customer and employee satisfaction and drove down costs.
- The time line used by Manuel Ferreira in his presentation of NORS’ Darwin project gave a great insight into how a company has introduced the Beyond Budgeting principles in a short time.
- Pontus Wadström’s presentation gave us a good insight into how Skanska has approached changing its KPI reporting
- Finally, Bjarte Bogsnes gave an excellent update on Statoil’s Beyond Budgeting implementation. This showed how implementations evolve over time and the great strides that Statoil is making.
BBRT members can access the presentations from the BBRT Members’ Community.
7 November 2013
Resulting from a major research study, BBRT Member NHH (the Norwegian School of Economics) has published a major new book “Managing in Dynamic Business Environments”. This book focuses on budgeting control and on-going Beyond Budgeting trends and its consequences for the organization.
Ensuring an optimal balance between individual autonomy and management control is a critical challenge for organizations operating in dynamic business environments. Too much of the former leads to chaos and too much of the latter guarantees rigidity. This book explores the tensions that arise in seeking the best possible balance between these two dimensions. Resolving these tensions is a critical challenge for achieving competitiveness.
In order to examine budgeting control and on-going ‘beyond budgeting’ the book’s starting point is the Beyond Budgeting movement and what it implies for a new approach to autonomy and management control. This discussion is further supplemented with a broader approach to the issues of control that spans issues such as self-control, time control, transparency as control, ethical control and cultural control.
Beyond Budgeting at the forefront of management innovation
In the Finn Øien 2013 lecture at the BI Norwegian Business School on 7 June, Prof Julian Birkinshaw stated that the Beyond Budgeting movement with its cases on Statoil and Handelsbanken (plus others) is at the forefront of management innovation.
Prof Birkinshaw is professor of Strategy and Business Entrepreneurship at the London Business School and is a co-founder with Gary Hamel of MLab. His lecture “Reinventing Management: How to make your company fit for the future” provides an excellent summary on why management innovation is necessary to make companies fit for the future. His views resonate very strongly with the Beyond Budgeting principles and the research behind them. You can view his lecture on YouTube at http://www.youtube.com/watch?v=pK9U_9XHRmM.
1 October 2013
Managing Without Bosses
A recent posting by Ryan Carson explains how Treehouse in the USA removed managers in June 2013. At Treehouse employees have 100% control of their time and they decide what they will work on each day. This is yet another example of organizations that are becoming self managed. The Beyond Budgeting Institute views this as the ultimate expression of Empower and Adapt. At the BBRT meeting in Oslo in March 2013, Doug Kirkpatrick explained how Morning Star in California went beyond empowerment to self-management over 20 years ago. Ryan Carson refers to WL Gore Associates, which has always operated with a very flat structure and is another case that was presented by Ulrich Loth at a BBRT meeting in London oin October 2010.
To read Ryan Carson's posting click HERE.
7 January 2013
Beyond Budgeting come out top again - twice!
Beyond Budgeting and the BBRT have featured strongly in the 2012 top ten and tope five lists from CFO Magazine and MIX:
1. CFO Magazine
The CFO Magazine article "Freed from the Budget" features at the head of the list of top ten articles to which readers of CFO Magazine referred in 2012. This article features Steve Player, BBRT Director North America, Paul Hensley, HOLT CAT, Bjarte Bogsnes, Statoil, Richard Magnuson, Group Health Cooperative and John Hrudicka, Elkay.
To see the list of the CFO Magazine top ten and link to "Freed from the Budget"click HERE
In the top five Hacks: "The End of performance management (as we know it)", by Bjarte Bogsnes, Statoil and BBRT Chairman
In the top five stories: "Taking reality serioulsy - towards a more self-regulating management model at Statoil" by Bjarte Bogsnes
28 November 2012
How do you lead a large organization to act like a small one?
That’s the trillion dollar question posed by Peter Bunce. He’s a founder and director of the Beyond Budgeting Round Table. And over the last fifteen years they have honed a set of twelve principles executive leaders can apply to teach their elephants to dance.
Christopher Avery (international speaker, author, and business advisor on responsible leadership, teamwork, and change) recently got five minutes on camera with Peter at the LESS 2012 conference in Tallinn, Estonia. Watch the video at this link:
29 October 2012
The MIX* Hacakthon hasmoved onto its next stage,
Synthesis. Bjarte Bognsess would like share his synthesis of the hackathon
Read Bjarte's synthesis post >>
He is encouraging people to add their thoughts to his in the comments section below the post.
So what's next? Several of the people who contributed have offered to develop their definitions into full hacks for the MIX. And a short report is being developed capture the results of the work.
*The Management Innovation eXchange (MIX), started by Gary Hamel is an open innovation project aimed at re-inventing management for the 21st century. The premise: while “modern” management is one of humankind’s most important inventions, it is now a mature technology that must be reinvented for a new age.
25 September 2012
BBRT Chairman, MIX* community member and M-Prize winner Bjarte Bogsnes recently challenged management mavericks everywhere to rethink the practice of "performance management." The conversation was so compelling that MIX decided to stage an experiment: they're expanding the conversation into a hackathon designed to engage anyone frustrated by the status quo in a collaborative (and time-constrained) process to invent a viable alternative to performance management. Help BBRT and MIX to hack Performance Management. Learn more here »
*The Management Innovation eXchange (MIX), started by Gary Hamel is an open innovation project aimed at re-inventing management for the 21st century. The premise: while “modern” management is one of humankind’s most important inventions, it is now a mature technology that must be reinvented for a new age.
5 September 2012
Össur Features at 2012 Paralympics
BBRT Member, Össur featured recently on the BBRT Breakfast show, when their Clinical Specialist Prosthetist, Richard Hirons discussed the issue of the length of prosthetic running blades and described how they work. Össur are a global leader in orthopaedics and prosthetics and make many of the running blades used by athletes in the Paralympics, including those for Oscar Pistorius and Alan Fonteles Cardoso Oliveira. For more information about Richard Hirons and Paralympics technology go to: http://eandt.theiet.org/magazine/2012/08/paralympic-technology.cfm
8 August 2012
Statoil ranked most transparent company globally
Transparency International, in its latest study titled “Transparency in corporate reporting: Assessing the world's largest companies”, ranked Statoil as the most transparent company among the world’s 105 largest publicly traded companies. The rankings were based on the companies’ disclosure of information important for investors, such as where they pay their taxes, their corporate structures and their anti-corruption programmes.
Beyond Budgeting Principle #3 is Transparency: make information open and transparent; don't restrict it. This is a cornerstone of any Beyond Budgeting implementation. These results from Statoil, a long-standing BBRT Member and an implementer and advocate of the Beyond Budgeting principles, demonstrate that this works in practice.
10 July 2012
BBRT Chairman Bjarte Bogsnes wins the Harvard Business Review/McKinsey M-Prize for Management Innovation
The Management Information Exchange (MIX) launched the Harvard Business Review/McKinsey M-Prize for Management Innovation nearly a year ago. At the MIX Mashup held in San Francisco on 19 June they announced the grand prize winners as well as the “Management Innovator of the Year” Award. The BBRT Chairman, Bjarte Bogsnes from Statoil was the winner of the Beyond Bureaucracy Challenge with his paper “Taking reality seriously – towards a more self-regulating management model at Statoil”. The other prize winners are also mentioned below.
- The Management 2.0 Challenge
- Special Mention: Jim Lavoie (Rite-Solutions) Nobody’s as Smart as Everybody—Unleashing Individual Brilliance and Aligning Collective Genius
- Winner: Paul Green, Jr. (The Morning Star Company) The Colleague Letter of Understanding: Replacing Jobs with Commitments
- The Beyond Bureaucracy Challenge
- Special Mention: Pam Weiss and Todd Pierce (Appropriate Response and Salesforce) Growing People: The Heart of the Organizational Transformation
- Winner: Bjarte Bogsnes (Statoil) Taking reality seriously - towards a more self-regulating management model at Statoil
- The Long-Term Capitalism Challenge
- Special Mention: Juan Carlos Rojas Serrano (DaviPlata) DaviPlata: "Self-Service" Financial Inclusion
- Winner: Valeria Budinich (Ashoka) Ashoka’s Hybrid Value Chain: Revving the Engine of Sustained Global Prosperity and Social Value
- Management Innovator of the Year Award
- The Morning Star Company Morning Star web site
11 May 2012
A recent article by Raj Sisodia on the MIX (Management Information Exchange) web site explores conscious capitalism. He and his colleagues have been studying companies that seem to defy conventional wisdom on cost management. Instead of maximising their gross margins they pay their employees much better that their peers, have profitable suppliers, invest heavily in their communities, pay taxes at a higher rate, provide terrific customer service, invest in making their operations more environmentally sustainable and do not externalize costs onto society. They have found out that these companies dramatically outperformed the market over a 10-year period by a 9 to 1 ratio.
These companies knowingly operate with lower gross margins, but are still able to achieve higher net margins than their traditional competitors. They live and operate on the other side of complexity.
To read the full article click HERE
23 February 2012
According to The Times (16 February 2012) Handelsbanken is the bank that time forgot where old-fashoned values have sparked a rise in profits. It is a bank that shuns executive bonuses and does not reward its staff according to sales targets. Its "church spire" lending principle means that branch managers personally approve alomost every loan. It has just reported a 66% rise in UK operating profits to £61.4 million on a 29% increase in revenues to £163 million. Compare this with Royal Bank of Scotland's loss of £2 billion in 2011, up from a loss of £1 billion in 2010. That's why Handelsbanken has always been a star case and example of Beyond Budgeting.
To read the full article go to: http://www.thetimes.co.uk/tto/public/profile/Miles-Costello. Unfortunately you will have to pay.
17 February 2012
You can read the MIX announcement and Bjarte's excellent paper on "Taking reality seriously - towards a more self-regulating management model at Statoil" by clicking on this link: http://www.managementexchange.com/blog/m-prize/announcing-winners-beyond-bureaucracy-challenge
6 December 2011
The Management Information Exchange (MIX) has a section devoted to “stories”, which are real-world case studies of management innovation.
Recently Bjarte Bogsnes, Vice President of Performance Managemtn DEvelopment at Statoil and chairman of the BBRT has sumbitted a story to MIX about Statoil's developments towards a self-regulating management model. Here are some quotes from the story by the CFO and CEO of Statoil:
- CFO Torgrim Reitan: "We could easily put in place a cost program instructing all business areas to reduce costs by a given number. However, I believe such a measure would work against our efforts to build a cost-conscious culture. If we want to become more fit, a crash diet does not work. It takes a change of lifestyle. I believe Statoil is made up of competent, responsible and commercially oriented people who will make the right cost decisions. This means always working hard to reduce bad cost, while protecting good cost. You know better than me what these are and where they are".
- CEO Helge Lund: "We have a management model which is very well-suited to daling with turbulence and rapid chnage. It enables us to act and re-prioritize quickly so that we can fend off threats or seize opportunities. This is much more difficult in a traditional 'budget world'."
To read the full story and comment on it: http://www.managementexchange.com/story/taking-reality-seriously-towards-more-self-regulating-management-model-statoil
11 July 2011
The Management Information Exchange (MIX) has a section devoted to “hacks”. These are boundary-pushing proposals for changing the way organizations work and leaders lead – from setting strategy to allocating resources to designing work to rewarding and compensating individuals. These are not case studies, but radical ideas and proposals.
Recently Michael Gebauer, General Manager at Cardiac Research GmbH and Franz Röösli, BBRT Director DACH submitted a hack on “Wisdom of Crowds to Empower Beyond Budgeting”. We already know that the abandoning of fixed budgets makes organizations more effective. But the new kind of planning required is always dependent on recent forecasts. Wisdom of Crowds with its “tool” prediction markets can provide these data and render the Beyond Budgeting approach even more attractive. In the article Gebauer and Röösli present an alternative, a new and flexible system of controlling with a combination of Beyond Budgeting and information markets.
21 June 2011
Børsen, the Danish equivalent to the "Financial Times" had an article on 13 May 2011 about Beyond Budgeting and the Arla Foods and Coloplast cases, including interviews with both Lene Skole, Colplast CFO and Arla Foods CFO Frederik Lotz.
The article, in Danish can be downloaded by clicking this link:
CFO'en skal af med spædetrøjen.
Our Danish, Norwegian and Swedish follows and anyone else who speaks Danish will be be able to read it.
13 April 2011
In an article in The New York Times on 9 April Gretchen Morgensen features the views of Albert Meyer, a money manager with Bastiat Capital in Plano, Texas. Mr. Mayer, who has a background in forensic accounting, sees high pay as a sign that companies are not putting shareholders first. His research indicates that Executive pay is not only a sign of how a company views its duties to shareholders, Mr. Meyer says, but it is also a crucial tyre to kick when making investment decisions. “When compensation is excessive, that should be a red flag, does the company exist for the benefit of shareholders or insiders?”
Mr. Meyer’s favorite pay-and-performance comparison pits Statoil [a BBRT Member organization] against ExxonMobil. Statoil, which is two-thirds owned by the Norwegian government, pays its top executives a small fraction of what ExxonMobil pays its leaders. But Statoil’s share price has outperformed Exxon’s since the Norwegian company went public in October 2001. Through March, its stock climbed 22.3 percent a year, on average, Mr. Meyer notes. During the same period, Exxon’s shares rose an average of 11.4 percent annually, while the Standard & Poor’s 500-stock index returned 1.67 percent, annualized.
According to regulatory filings, Statoil paid Helge Lund, its chief executive, 11.5 million Norwegian krone in 2010 (roughly $1.8 million at the exchange rate last year). There were no stock options in the mix, but Mr. Lund was required to use part of his cash pay to buy shares in the company and to hold onto them for at least three years. By comparison, Rex W. Tillerson, the chief executive of ExxonMobil, received $21.7 million in salary, bonus and stock awards in 2009, the most recent pay figures available from the company. Mr. Tillerson’s pay is more than double the combined $8.3 million that Statoil paid its nine top executives in 2010. Other aspects of Statoil’s governance also appeal to Mr. Meyer.
He also rejects the argument that sky-high pay is necessary to attract talented managers. “Look at some of the pay at the companies my fund owns,” he says. “They prove that you don’t have to pay nosebleed compensation to attract good people.”
To read the full article click on The New York Times
26 January 2011
UK Government Moving Towards Decentralization?
The UK Coalition Government has just launched its Decentralisation and Localism Bill. To help with understanding they have launched a guide. This guide makes the case for a radical shift from the centralised state to local communities and describes the six essential actions required to deliver decentralisation down through every level of government to every citizen. In particular, its focuses on the Localism Bill which will provide the legislation for change. The six essential actions are:
- Lift the burden of bureaucracy – by removing the cost and control of unnecessary red tape and regulation, whose effect is to restrict local action
- Empower communities to do things their way – by creating rights for people to get involve with, and direct the development of, their communities
- Increase local control of public finance – so that more of the decisions over how public money is spent and raised can be taken within communities
- Diversify the supply of public services – by ending public sector monopolies, ensuring a level playing field for all suppliers, giving people more choice and a better standard of service
- Open up government to public scrutiny – by releasing government information into the public domain, so that people can know how their money is spent, how it is used and ot what effect
- Strengthen accountability to local people – by giving every citizen the power to change the services provided to them through participation, choice or the ballot box
This is not a million miles away from the message that BBRT has been spreading for the past 13 years. But as we all know it will take a lot more than just Acts of Parliament and Essential Guides to changes decades (even centuries) of top-down hierarchical command and control to the a world of empowerment and adaptability. Above all in the public sector it will take trust and a mindset change as many people in Government have no idea about how to operate in this brave new world. They are used to tight budgets and fixed targets. If the UK Government can make this happen, much waste will be cut out and the Holy Grail of ‘efficiency savings’ might be finally realized.
To download a copy of the guide go to: http://www.communities.gov.uk/publications/localgovernment/decentralisationguide
28 September 2010
HCL: Employees First, Customers Second
In his recent blog Gary Hamel has brought to our attention the fascinating story of HCL, an Indian IT Consultancy. He describes how the CEO, Vineet Nayar has completely turned the conventional management pyramid upside down in a very similar manner to Handelsbanken. At the end of his blog Gary comments that “It really is possible to change the management DNA in a large, established company—and this is where Vineet’s book really shines. It not only covers the what of management innovation, but also provides deep insights into the how. When you dig into “Employees First” you’ll learn that it’s possible to reinvent management without blowing up the existing management system, without having a detailed master plan at the outset and without taking inordinate risks.”
You can read the whole of Gary Hamel’s blog by going to: http://blogs.wsj.com/management/2010/07/06/hcl-extreme-management-makeover/ [accessed on 23 September 2010]
24 June 2010
What went wrong with Toyota? - According to Prof. Tom Johnson
In a recent article on the Lean Edge web site (http://theleanedge.org) Prof. Tom Johnson, co-author of “Profit Beyond Measure”, wrote a brilliant article about what may have gone wrong at Toyota. In his article “Financial results such as revenue, cost and profit are by-products of well-run human focused-processes”, he postulates that in his opinion the cause of Toyota’s crisis is found in its very recent surrender to Wall Street pressure to grow continuously, as virtually all large publicly-traded American businesses have attempted to do for the past 30 years or more. This includes those that pursue “lean” practices.
He maintains that the flaw in this finance-oriented growth strategy is the belief that profitability improves by taking steps aimed at increasing revenue and cutting costs. Prof. Johnson queries the approach taken by most Western companies to “lean” and the way that they have implemented it. Fundamental to this is differences between Western and Toyota management practices, particularly in the way each group thinks about “cost”. He concludes the article by saying “This is why for years and years I have said that management accounting (and its lean counterpart “lean accounting” is a meaningless concept – an oxymoron in fact. You can use accounting quantities to describe, but never to explain, understand or control.”
To read the full article (it's excellent) go to: http://theleanedge.org/?p=462
13 May 2010
Future Ready - how to master business forecasting
Rolling forecast are often at the heart of the new "control" system in Beyond Budgeting implementations. Yet many managers ahve little knowledge about good forecasting practice and how to make it a truly effective management tool. Steve Morlidge and Steve Player have written a book "Future Ready - how to master business forecasting" that does just that.
30 March 2010
The Toyota crisis and Beyond Budgeting
Toyota is an exemplar case for BBRT, however, the recent crisis at
Toyota may cause you to wonder if it is still an exemplar and if so why.
Firstly, Jim Collins points out in his new book “How the Mighty Fall”,
companies grow great by doing things very well and having great
principles, but they can fail by not sustaining this and going for other
objectives that are not part of their ethos. In Toyota’s case it means
that there is nothing intrinsically wrong with the Toyota Way or the
Toyota Production System, it’s just that they failed to follow this in a
dash for growth
The Lean Institute has recently made us aware that in his latest Lean Management Column John Shook continues to explore Toyota’s quality crisis in an in-depth conversation with author and Professor Takahiro Fujimoto of the Manufacturing Management Research Center, University of Tokyo. Fujimoto is a long-time Toyota observer who conducted research at Harvard Business School with Kim Clark on Toyota’s product development system. John Shook used to work for Toyota in Japan.
In this interview Prof. Fujimoto states that “if there is one primary reason for the crisis, it is that this overwhelming complexity exceeded Toyota’s organization capability.”
The interview is well worth reading and you can do this at: http://www.lean.org/shook/. Look for “Toyota Troubles: Fighting the Demons of Complexity”
It also appears that Toyota became arrogant about its fabled quality and believed that they couldn’t have any quality issues. They also seem to have switched from just focusing on the customer to striving to be the largest car maker in the world, and look where that got GM! Even before the crisis at Toyota, Akio Toyoda, the new CEO was trying to shake things up by telling the staff that Toyota was already at stage 4: grasping for salvation in Jim Collins’ five stages of decline. The recent crisis underlines this.
There are many lessons we can all learn from Toyota, both past and present, but clear one is that trying to be the biggest or the largest can be a fool’s game. The only thing that matters is focusing on the customers to ensure that your return on equity (or profit) is the best it can be and higher than your competitors, then you stand a better chance of a sustainable future.
 Collins, J. (2009) How the Mighty Fall and why some companies never give in. Random House Business Books, London