Beyond Budgeting arrives in most executive conversations dressed as an inevitability, the future of management, the tool the agile era will finally retire. It is worth setting that rhetoric against a fact the research keeps reporting and the movement keeps underplaying. Most companies are not abolishing their budgets, do not intend to, and largely believe their budgets are worth keeping. Any honest account of budget reform has to start there, because a reform that misreads its own adoption rate is a reform that will keep being disappointed.
What managers actually say about their budgets
The clearest read on this comes from Libby and Lindsay (2010), who surveyed budgeting practice across medium and large North American organizations precisely to test the abolition thesis. The result was a rebuke to the reformers. Most managers considered their budgeting system value-added rather than something to abolish, and budgets remained widely used for motivation and performance evaluation. The dominant trajectory was not abandonment but improvement: fix the budget's failings, do not throw it out. Abandonment, in their data, was simply not the majority direction of travel.
That finding is inconvenient for the movement and clarifying for everyone else. It means the interesting question is not whether budgets are theoretically flawed, they are, but why organizations that acknowledge the flaws still choose to keep and repair the tool. The answer is that the budget does real coordinating and motivating work, and that no manager wants to remove a load-bearing wall on the promise that a better structure will appear.
Even the adopters do not fully commit
Look at the firms that do adopt Beyond Budgeting and the caution deepens. Matejka, Merchant and O'Grady (2021), in the strongest empirical study in the field, compared 80 organizations that had adopted Beyond Budgeting with 121 that had not, from a survey of 201 organizations. Their most honest finding was that many adopters have real difficulty letting go: they struggle to abandon the fixed annual target for decision-making and financial metrics for performance appraisal, even after declaring themselves converts. The label changes faster than the behavior. What people call Beyond Budgeting is frequently a partial, hybrid arrangement in which the old budget logic quietly persists.
This is not hypocrisy. It is the sound of an organization discovering how many functions the budget was silently performing. Ostergren and Stensaker (2011), studying a large energy company that did abandon budgets, found that removing the budget forced new control mechanisms and new dependencies to emerge. If abandonment simply relocates the control work rather than eliminating it, then a firm that keeps and improves the budget is making a defensible bet: the devil it knows may be cheaper to manage than a set of new dependencies it has never run before.
The reform worth having
None of this rescues the budget as it is usually practiced. The same research that documents the budget's stubborn survival documents its real defects: the gaming, the negotiation for slack, the annual rigidity that fits no market. Bukh, Ringgaard and Sandalgaard (2024) add a final caution against the fantasy of clean abolition, showing that even reformed forecasts drift back toward budgetary behavior, so that a firm which declares victory over the budget often finds it has merely renamed the problem.
The practical implication is a more mature reform than the slogans allow. For most organizations the goal is not to kill the budget but to strip it of the jobs it does badly: uncouple it from the reward system so people stop gaming it, loosen its annual rigidity with rolling updates, and add relative benchmarks so the target cannot be negotiated soft. That is closer to what Libby and Lindsay (2010) found managers already reaching for, improvement over abolition. In a decade obsessed with disruption, the unglamorous truth is that the winning move for the median company is not to burn the budget down. It is to demand far more honesty from it, and to stop asking it to be things it can never be.
Sources
- Libby, T. & Lindsay, R. M. (2010). Beyond budgeting or budgeting reconsidered? A survey of North-American budgeting practice. Finds most managers view budgets as value-added and pursue improvement over abolition, establishing that abandonment is a minority path. https://bpb-us-w2.wpmucdn.com/u.osu.edu/dist/8/36875/files/2016/12/Libby-Lindsay_budgeting_survey-17bvsph.pdf
- Matejka, M., Merchant, K. A. & O'Grady, W. (2021). An Empirical Investigation of Beyond Budgeting Practices. Compares 80 adopters with 121 non-adopters and finds even adopters struggle to abandon fixed annual targets and financial appraisal, showing partial commitment is the norm. https://doi.org/10.2308/JMAR-19-010
- Ostergren, K. & Stensaker, I. (2011). Management control without budgets: a field study of Beyond Budgeting in practice. Shows abandonment relocates control work into new mechanisms and dependencies, explaining why keeping and repairing the budget is a defensible choice. https://www.tandfonline.com/doi/abs/10.1080/09638180903487842
- Bukh, P. N., Ringgaard, A. & Sandalgaard, N. (2024). Moving beyond Beyond Budgeting: A Case Study of the Dynamic Interrelationships between Budgets and Forecasts. Shows reformed forecasts drift back to budgetary behavior, cautioning against the fantasy of clean abolition. https://doi.org/10.1080/09638180.2024.2362681