The budget is the last thing most companies would give up, because it feels like the spine of control. That intuition is worth taking seriously, and the research on the firms that actually dropped the annual budget is more interesting than either the reformers or the defenders admit.
Removing the budget does not remove control
The cleanest evidence comes from inside a company that did it. Ostergren and Stensaker (2011) conducted a field study at a large oil and energy company, Statoil, after it abandoned traditional budgets, examining the corporate level and two business units. Their central finding is the one that should calm the nervous executive: removing budgets did not remove control. New control mechanisms emerged in the budget's place, built on rolling forecasts, relative targets, and clearer accountability for results rather than for hitting a fixed annual number. Control was not deleted. It was re-formed into something more responsive to conditions.
The founding case of the movement makes the same point at a longer time scale. Svenska Handelsbanken abandoned formal budgets around 1970 under Jan Wallander, as a response to crisis, and replaced them with radical decentralization (Lindsay and Libby, 2007). In the accounting literature the bank stands as the exemplar that a large organization can run successfully, and arguably more successfully, without a budget, because decentralized units are measured against peers and each other rather than against a number negotiated a year in advance.
The mechanism: from comfort zone to stretch zone
What replaces the budget is not laxity. Bourmistrov and Kaarboe (2013), studying two multinationals applying these ideas, described the shift as moving managers out of the comfort zone of a fixed budget target and into a stretch zone, where targets are relative and set from the outside in, benchmarked against competitors. That change forces more interaction with the environment, more negotiation, and more learning, precisely the behaviors a static annual target suppresses. The control is real. It just points managers at the market instead of at an internal ceiling they learned to game.
The honest caveats: hybrids and quiet reversions
Here the literature earns trust by refusing to romanticize. In an empirical study comparing 80 organizations that adopted Beyond Budgeting with 121 that did not, Matejka and Merchant (2021) found adopters did use more decentralization, more flexible resource allocation, and more relative targets, but also that many struggled to actually let go of the fixed annual budget for decisions and of financial metrics for evaluation. Intention outran practice. The gradualism is itself a finding: studying industrial firms adopting these ideas, Henttu-Aho and Jarvinen (2013) showed that moving beyond the budget happens through institutionally mediated, hybrid transitions rather than a clean switch, with rolling forecasts and residual budget practices coexisting for years. A recent case study pushes further, showing that rolling forecasts can quietly take on the functions of the budget they replaced, so the boundary between forecasting and budgeting is far more fluid than the rhetoric suggests (Bukh, Ringgaard and Sandalgaard, 2024).
And the abolitionist story is not the majority path. Surveying North American budgeting practice, Libby and Lindsay (2010) found that most managers regard their budgeting system as value-added rather than something to scrap, and continue to use it for motivation and performance evaluation. The dominant trend is to improve the budget, not to abolish it. Any leader told that serious companies have simply deleted their budgets is hearing a movement's marketing, not its evidence.
The practical read
The useful question is not whether to abolish the budget. It is which jobs the budget is secretly doing, forecasting, resource allocation, target-setting, motivation, evaluation, and whether each can be done better by a mechanism suited to it. The field evidence is clear that control survives the removal of the budget, reappearing as rolling forecasts and relative targets that push managers toward the market (Ostergren and Stensaker, 2011; Bourmistrov and Kaarboe, 2013). It is equally clear that many organizations backslide into hybrids and that most never abolish anything (Matejka and Merchant, 2021; Libby and Lindsay, 2010). Treat Beyond Budgeting as a redesign of control rather than its removal, and the fear that started this piece answers itself.
Sources
- Ostergren and Stensaker (2011). Management control without budgets: a field study of Beyond Budgeting in practice. At Statoil, removing budgets did not remove control; new mechanisms based on forecasts and relative targets emerged. https://www.tandfonline.com/doi/abs/10.1080/09638180903487842
- Lindsay and Libby (2007). Svenska Handelsbanken: Controlling a Radically Decentralized Organization without Budgets. The founding case showing a large firm can run successfully without a budget via decentralization. https://www.researchgate.net/publication/247875136_Svenska_Handelsbanken_Controlling_a_Radically_Decentralized_Organization_without_Budgets
- Bourmistrov and Kaarboe (2013). From comfort to stretch zones. Replacing fixed budget targets with relative, outside-in targets pushes managers toward the market and toward learning. https://doi.org/10.1016/j.mar.2013.04.001
- Matejka and Merchant (2021). An Empirical Investigation of Beyond Budgeting Practices. Adopters use more decentralization and relative targets but often struggle to fully drop the fixed budget. https://doi.org/10.2308/JMAR-19-010
- Bukh, Ringgaard and Sandalgaard (2024). Moving beyond Beyond Budgeting. Rolling forecasts can take on budget-like functions, blurring the line between forecasting and budgeting. https://doi.org/10.1080/09638180.2024.2362681
- Libby and Lindsay (2010). Beyond budgeting or budgeting reconsidered? Most managers see budgeting as value-added; improving the budget, not abolishing it, is the dominant path. https://bpb-us-w2.wpmucdn.com/u.osu.edu/dist/8/36875/files/2016/12/Libby-Lindsay_budgeting_survey-17bvsph.pdf
- Henttu-Aho and Jarvinen (2013). A Field Study of the Emerging Practice of Beyond Budgeting in Industrial Companies. Adoption is gradual and institutionally mediated, with hybrid transition practices rather than an instant switch. https://doi.org/10.1080/09638180.2012.758596