Statoil

Case Summary:

This case describes the innovative, even radical, management systems of a company that combines the major elements of Beyond Budgeting and Balanced Scorecards into an approach called "Ambition-to-Action." The Ambition-to-Action approach involves the replacement of a unitary budgeting process with three processes that separate the major purposes of budgeting: planning, resource allocation, and performance evaluation. It also involves the use of key performance- indicator scorecards that, interestingly, do not cascade tightly from the top to the bottom of the organization. They cannot be consolidated into corporate-wide measures, and they are not even all updated at the same time.Statoil'sapproach also involves the use of relative performance evaluations where suitable external performance standards can be identified.

Case Questions:

1. Describe the new processes thatStatoilimplemented to replace the budget. What are its strengths and weaknesses?
2. The "Beyond Budgeting" approach is still relatively rare outside Europe. Why? Is there something about non-European cultures that limits its applicability, or are other companies just slow to catch on to an innovation that has started in Europe?