The Beyond Budgeting Round Table gathers finance leaders and academics who share a heretical premise: that the annual budget, far from being the spine of control, is often a brake on it. Before the next session, it is worth setting the movement's conviction against the field studies of companies that actually tried it.
Removing the budget did not remove control
The cleanest evidence comes from inside a company that abandoned budgets. Ostergren and Stensaker (2011) studied the large oil and energy firm Statoil after it dropped traditional budgets, examining the corporate level and two business units, and reached the finding that should reassure any nervous CFO: removing budgets did not remove control. New mechanisms emerged in the budget's place, built on rolling forecasts, relative targets, and clearer accountability for results rather than for hitting a number negotiated a year in advance. The founding case makes the same point over a longer horizon: Svenska Handelsbanken abandoned formal budgets around 1970 and replaced them with radical decentralization, standing in the accounting literature as proof that a large organization can run successfully, perhaps more successfully, without a budget (Lindsay and Libby, 2007).
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 managers moving out of the comfort zone of a fixed target and into a stretch zone, where targets are relative and set from the outside in against competitors. That forces more engagement with the environment and more learning, the behaviors a static annual target suppresses. This is the positive case the Round Table exists to advance, and it has empirical support.
The honest caveats the Round Table should not skip
A movement's own conference is where inconvenient findings are easiest to omit, so they are worth naming. Comparing 80 organizations that adopted Beyond Budgeting with 121 that did not, Matejka and Merchant (2021) found adopters did use more decentralization and 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. And the abolitionist framing is not the market norm: surveying North American practice, Libby and Lindsay (2010) found most managers regard their budgeting system as value-added and continue using it for motivation and evaluation, with improving the budget, not abolishing it, the dominant path. Beyond Budgeting is a real and evidenced redesign of control. It is not a revolution most companies have joined.
The practical read
The Round Table's central claim survives the evidence: control does not die when the budget does, it re-forms into rolling forecasts and relative targets that push managers toward the market (Ostergren and Stensaker, 2011; Bourmistrov and Kaarboe, 2013). But the same evidence keeps the movement honest, showing that adopters often backslide into hybrids and that most organizations never abolish anything (Matejka and Merchant, 2021; Libby and Lindsay, 2010). The useful frame to bring to the meeting is not budget or no budget. It is which jobs the budget is quietly doing, forecasting, allocation, target-setting, motivation, evaluation, and which of them a better-suited mechanism could do instead.
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 forecast- and target-based mechanisms emerged. https://www.tandfonline.com/doi/abs/10.1080/09638180903487842
- Lindsay and Libby (2007). Svenska Handelsbanken. 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 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 but often struggle to fully drop the fixed budget. https://doi.org/10.2308/JMAR-19-010
- Libby and Lindsay (2010). Beyond budgeting or budgeting reconsidered? Most managers see budgeting as value-added; improving it, 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