A growing number of companies are challenging the traditional ways of managing their business and their organisations, because they believe “the future ain’t what it used to be”. For many of these, that future is already here.

The budget process is probably the strongest representative of what the old regime stands for. Maybe traditional budgets worked better in the past. But that was a different time. What lies ahead of us is very different from what lies behind us. We are sailing into new and unknown waters. The winds and the currents are shifting faster and much more unexpectedly than before. The weather forecasts and our maps are no longer as reliable as they used to be. Even if our destination lies firm, plans need to change fast when the wind turns or a reef appears out of nowhere. And it does not stop here. We are also expected to sail even faster than before. The ability to sense and respond quickly has never been more critical.

When sailing in these new waters, we need less management and more leadership. We need it because it’s the only way to mobilise the maximum performance from the crew. It is the only way to not just safely reach the next harbour, but also to be there as the first one and not among the battered and beaten last ones.

The answer is not more traditional “performance management”. In fact, I don’t believe performance really can be “managed” at all, at least not in the traditional way so many management theories want us to believe. People are not robots, and organisations are not machines. We can’t just sit in the control room, pull the strings and push the buttons and “manage” performance. The rougher and more unpredictable waters we are sailing in, and the more skills and competence the crew has, the more ineffective those old management practices are.

What we can do, is to create conditions for good performance to take place. We can create an environment of trust, of transparency and support, of motivating challenge and stretch, where people perform because they want to, not because they are told to. But that is all we can do. People are not marionettes. They can choose to respond to these conditions, but they can’t be forced, they can’t be “managed”. But don’t worry. People still appreciate good leadership - direction, guidance, inspiration and support. People long for more leadership, not for more management.

This is what Beyond Budgeting is about. The budget isn’t really the key issue. The budget is just a barrier. It is something that stands in the way and blocks this important journey from management to leadership.

So it’s not just the actual budget as a product we are after. It is just as much the mindset that budgeting represents. It is the myths and those old beliefs we are after, like “unless people are kept in a short leash and tightly controlled, they will all run away and do stupid things”. It is the blind belief that good performance is all about hitting those budget numbers decided fifteen months ago. It is the naivety of believing that if we only describe the future with enough details behind the commas, then we know what will happen and can safely set sail. It is the myth that throwing money at people is the only way to motivate. It is about the belief that as long as we can explain, we are in control.

It is time to radically challenge those myths of the past. Or is it really radical, or is it just common sense?

If these thoughts make you tick and you want to know more, you are welcome to visit the Beyond Budgeting Roundtable at BBRT.org. The Roundtable is a network of companies that are considering, or have started their own journey Beyond Budgeting. These companies meet regularly to share experiences and learn from and challenge each other. The Beyond Budgeting pioneer is actually Swedish. Handelsbanken abolished budgeting already in 1970. And they are doing pretty well, aren’t they?

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"When sailing in these new waters, we need less management and more leadership"

- Bjarte Bogsnes