This case study is arguing a case for replacing a budget model with something new. It is an enthusiastic statement from a group promoting its own new ideas. Read the case study now but only attempt the discussion points after you have finished studying the chapter.

‘Budgeting has few admirers’

Gaming the numbers is pervasive. One large survey of U.S. companies concluded that managers either did not accept the budgetary targets and opted to beat the system, or they felt pressured to achieve the targets at any cost. This pressure is squeezing the life and spirit out of many organizations and their people. It’s the mentality that says, ‘Do what I say or your future is at risk.’

Beyond Budgeting, a more adaptive and devolved alternative Replacing the budgeting model with a more adaptive and devolved alternative is the solution that organizations need to achieve their goals of becoming devolved networks. Criticizing budgets is not new. But defining a set of principles that guides leaders toward a new lean, adaptive and ethical management model is a new idea – perhaps the first great new idea of the twenty-first century.

Discussion points
1 How can budgets be used for planning and control if managers are ‘gaming the numbers’ as described above?
2 How would a devolved approach reduce the ‘gaming’ by managers?