naivety scene

Every year organisations have a tradition where they create a naivety scene, a seasonal activity called

budgeting.

It comes in the form of a tug-of-war between those who crave high income figures and low cost estimates so they look good and can keep up the pressure on their underlings - and the forces who fight for more leeway and less pressure so they can have an easier life next year.

May the best man win.

Then the finished budget is declared the map for the coming period, a dream designed into reality, stuff that a kid would appreciate.

Measurable results is the cornerstone of the command-and-control structure, the rallying cry for "good" management. But measurable has no meaning unless you have something to measure against, thus the budget - the naivety scene of the future.

Real life corrective measures using a fictitious map - what value does that have? None whatsoever of course.
Worse, it becomes a pacifier, an ersatz reality, naivety embodied.

But budgets have another purpose beyond process correction - facing lead-times you need to allocate resources early enough to get them in place.

Again, if the map is fictitious and you act upon that to borrow funds, hire people and build plants you must be a strong believer - in that you can alter reality by believing in your own imagined future.

There must be alternatives.

And there are, albeit only as snippets that hopefully one day can make a complete and practical alternative.

Just-in-time, agile methods, build-to-order, extreme business planning, real-time reporting and of course my pet peeve - a shift to the delivery of your Business Model per command-and-control structures to malleable IT delivered models.

Awast ye scurvy budgets!

I can hear the protests already in this jolly season of budgeting... :)

[UPDATES:

Thanks to Thomas Otter who in the comments points to a well of links on this matter - and might I add, making me feel slightly so sheepish not having done my proper homework! :/

Start with the Panel discussion: Beyond Budgeting – breaking free from the annual fixed budget from 2003 (!) that Thomas points to and check out what more Juergen Daum writes! Juergen is another SAP chap just like Thomas and my respect for that firm just increased again.

Then visit the Beyond Budgeting Round Table site, yes, nothing less!

My favourite quote from there would of course be:

"Budgeting, as most corporations practice it, should be abolished. That may sound like a radical proposition, but it is merely the final (and decisive) action in a long running battle to change organizations from centralized hierarchies to devolved networks."

Excellent!

And now Dennis pipes in here! :D ]

Comments

[The Bus Driver]

Using Agile, you feel insecure (-ish, especially if you’ve not tried it before) at the start of a project, and satisfied at the end. Using Waterfall you feel good at the start and crap at the end. If there is an end.
(http://confusedofcalcutta.com/2006/12/10/another-sideways-look-at-agile-passing-waterfalls-on-the-way/)

[John Dodds]

We're dealing here methinks with the difference between financial paramaters which are all about control and economic parameters which are informative and useful.

[sig]

Still, as long as the parameters are for the future they still requires guessing, dreaming, wanting, hoping, lying, cheating, crystal ball gazing... the best you could do is to cloak all that with some commonly accepted methodology to make it all palatable... or what? :D

[Thomas Otter]

Sig,
Happy new year.
You may find this discussion interesting..
http://www.juergendaum.com/news/05_02_2004.htm