Beyond budgeting - when to change?

Traditional budgeting has for a long time been criticized for encouraging counterproductive behaviour, hindering growth and wasting time on useless excercises. In recent years the Beyond Budgeting methodology has gained ground as an alternative. Being a general management philosophy to a large extent Beyond Budgeting plays down or altogether eliminates the annual budget as a management tool, shifting the focus to rolling forecasts and non-budget related KPI's, often based on the Balanced Scorecard principles.

There are other alternatives as well. Some companies have succeeded with a zero-based budgeting model. Others have moved towards rolling forecasts without really adopting the Beyond Budgeting management principles. Others still have not found the need to change the model at all.

The point is, there are many ways to deal with the shortcomings of the budgeting model, and no single size that fits all. What matters is to base changes and improvements on thorough understanding of the critical success factors the company must achieve in order to reach its goal, and which obstacles stand in the way of achieving them. If the budgeting process and related management practices are an obstacle they must be changed. But if they are not, change may be less important, or even not needed at all.