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Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland
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Seminar (EN): CFO Forum - Challenges in tough times, Warszaw/Poland, organized by HBR Poland

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Presentation slides for HBR seminar in Warszaw in May 2009.

Presentation slides for HBR seminar in Warszaw in May 2009.

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  • I suggested something very similar called cell based organizational model back in 2007. It fundamentally suggested that there is a critical mass beyond which an organization needs to subdivide into two cells and then again into four cells, each cell a part of a whole but acting in harmony with the whole. When an organization has matured into a collection of specialized cells, the organization is born. From that point on it will function to perform its charter but without a minority at the top becoming the do all and be all for everyone.
    Thank you for sharing how this can be done effectively down to this level, I look forward to learning from it and seeing what I can apply from it at Johnster.
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  • 1. beyond Make it real! budgeting > transformation network. CFO Forum: Challenges in tough times - the role of the CFO in contributing to the organization´s performance management Why your performance management systems have to change. And how you should approach this Niels Pflaeging BBTN & MetaManagement Group Seminar with HBR Poland, Warszaw . 17.06.2009
  • 2. There are many outstanding cases of companies that have applied a “new” management model. This is a selection 2 2 Seminar – Beyond Budgeting 2 © BBTN – All rights reserved
  • 3. Seminar – Beyond Budgeting 3 © BBTN – All rights reserved
  • 4. The world has changed: outlining today's critical success factors Industrial age ends: Knowledge economy advances: high ”Supplies have the power“, ”Customers have the power“, Evolution of mass markets: strong competition, individualized demand: Taylorism as the superior model decentralized and adaptive model is superior! Now, all these factors are equally important! Here, only efficiency Competitive mattered, really! Characteristics success factors (CSF) Dynamics 1. Discontinuous change - Fast response and 2. Short life cycles - Innovation complexity 3. Constant pressure on prices Operational excellence - Characteristics 4. Less loyal customers - Customer intimacy • Incremental change 5. Choosy employees - Great place to work • Long life cycles 6. Transparency, - Effective • Stable prices societal pressure governance • Loyal customers High financial - Sustained superior • Choosy employers expectations value creation/fin.perf. • „Managed“ results low 1890 Most organizations still use a management model that was designed 2030 1980 1990 2000 2010 2020 Seminar – Beyond Budgeting for efficiency, while the problem today is complexity. 5 © BBTN – All rights reserved
  • 5. Seminar – Beyond Budgeting 6 © BBTN – All rights reserved
  • 6. Seminar – Beyond Budgeting 7 © BBTN – All rights reserved
  • 7. Our journey since 1998, within the international Beyond Budgeting movement Beyond budgeting (1998-2002) Beyond command and control (2003-2007) Beyond incremental change (2008-) Seminar – Beyond Budgeting 8 © BBTN – All rights reserved
  • 8. A new brand. A new network. Make it real! The first “open source“ movement in the management arena – worldwide! Full membership free of charge – visit www.bbtn.org Seminar – Beyond Budgeting 9 © BBTN – All rights reserved
  • 9. There is a “new” model, which is supported by science and practice Sciences: Practice: Stafford Beer Thought leaders Margareth Wheatley Industry leaders (selected) Niklas Luhmann (selected) W. Edwards Deming Kevin Kelly Ross Ashby Joseph Bragdon … Douglas McGregor Chris Argyris Complexity Jeffrey Pfeffer theories Reinhard Sprenger Industry Stephen Covey Howard Gardner Viktor Frankl Social sciences … and HR Retail Peter Drucker Tom Peters Leadership & Services Charles Handy change John Kotter Peter Senge Strategy & Thomas Davenport Governments Peter Block Performance & NGOs … management Henry Mintzberg Gary Hamel Jeremy Hope Michael Hammer Thomas Johnson Charles Horngren Seminar – Beyond Budgeting … 10 © BBTN – All rights reserved
  • 10. Industria Distribuição Serviços • Innovators: A crises within their industries or firms caused them to change radically Governo • Mavericks: Exceptional leadership models & ONGs • Performers: Superior competetive success It´s the coherence of the leadership model that matters! Seminar – Beyond Budgeting 11 © BBTN – All rights reserved
  • 11. The problem observed initially by the Beyond Budgeting movement James O. McKinsey, 1922 “Budgetary control… is urgently needed, as a foundation of control exercised by executives, and as a way to coordinate the activities of functional departments.” Dr. Jan Wallander, 1997 “Budgetary management is an unnecessary evil” Seminario Beyond Budgeting - Conferencista: Niels Pflaeging Seminar – Beyond Budgeting 12 © BBTN – All rights reserved
  • 12. Seminar – Beyond Budgeting 13 © BBTN – All rights reserved
  • 13. Traditional management processes keep teams from strategic thinking, and motivate counterproductive or unethical behavior Financial problems • Process takes too long Vision • Plans become obsolete quickly • Plans are of little or no use Targets and strategic guidelines Strategic problems Profitability in petrochemical industry in Europe 600 500 • Target negotiation 400 Fixed • Definition of incentives 300 Fixed • Activity planning 200 performance performance • Resource allocation 100 contacts and contacts and • Coordination of plans 0 0 1984 1986 1988 1990 1992 1994 1996 1998 2000 Source: Chem Systems “keep on track” “keep on track” • Approval Behavioral problems Budget Performance control (plan-actual) Bonus (vs. targets) Source: BBRT ... Seminar – Beyond Budgeting 14 © BBTN – All rights reserved
  • 14. Management processes in command and control organizations are “straight jackets” Strategy “Fixed” performance contract Strategic • Period [Fixed] learning cycle • Targets [Fixed] • Compensation [Fixed] Annual plan Fixed • Plan [Fixed] Performance Contract • Resources [Fixed] Budget • Coordination [Fixed] • Control [Fixed] Management • Agreed through [Negotiation] control cycle • Signed by: [Manager/Director] Control Tayloristic management works like this: As centralistic-burocratic hierarchies, held together through a regime of fixed performance contracts! Seminar –BBRT Budgeting Source: Beyond 15 15 © BBTN – All rights reserved
  • 15. Current practices are misaligned with the Critical Success Factors of today's competitive market places Six “Critical Success Factors” Six examples of misalignment • Fast response Annual planning process retards it • Innovation Centralized bureaucracy stifles it • Operational excellence ‘Spend it or lose it’ mentality fights it • Customer intimacy Short term targets prevent it • Best team Extrinsic ‘motivators’ undermine it • Ethical behaviour Dysfunctional, even unethical behaviour conflicts with it • Value creation • Inferior financial results When pressure is applied, misalignment Seminar – Beyond Budgeting gets worse! 16 © BBTN – All rights reserved
  • 16. Organizations need a different, trust-based form of “future-directed thinking”, not command and control! The secret of success is not to foresee the future. But to build an organization that is able to prosper in any of the unforeseeable futures. Michael Hammer The problems with traditional planning and control are merely symptoms of a much deeper problem. Seminar – Beyond Budgeting 17 © BBTN – All rights reserved
  • 17. Beyond Budgeting means: From fixed to adaptive management processes. Traditional model New model (fixed performance contracts, (relative performance contracts, negotiated in advance) assessed with hindsight) Relative strategy performance contracts Changing Fixed performance processes Dynamic contracts coordination control • Fixed, annual processes • Dynamic, continuous processes • Fixed targets and incentives • Relative targets/compensation • Centralized and • Self-control, transparency and bureaucratic control peer pressure Seminar – Beyond Budgeting 18 © BBTN – All rights reserved
  • 18. Seminar – Beyond Budgeting 19 © BBTN – All rights reserved
  • 19. Seminar – Beyond Budgeting 20 © BBTN – All rights reserved
  • 20. Outlining the ‘industrial age’ model and its pitfalls “command and control“ • Too centralized • Too inward-looking • Too little customer-oriented • Too bureaucratic • Too much focused on control • Too functionally divided • Too slow and time-consuming • Too de-motivating • … film ‘Modern Times’ with Charlie Chaplin, 1936 From the Seminar – Beyond Budgeting 21 © BBTN – All rights reserved
  • 21. How markets govern organizations “from the outside in” Periphery Mar ke t Center Information Decision Command Centralist command and Impulse control “collapses“ in Reaction increasingly complex environments Source: Gerhard Wohland Seminar – Beyond Budgeting 23 © BBTN – All rights reserved
  • 22. Beyond Budgeting means: From hierarchy to network structure. Traditional model New model (centralized functional hierarchy) (decentralized leadership network) Changing leadership and structure • “Bosses” rule! • “The market” rules! • Top-down • Outside-in command and control sense and respond • Top management • Front-line teams are always is always in charge in charge • Centralized leadership • Devolved leadership Seminar – Beyond Budgeting 24 © BBTN – All rights reserved
  • 23. Our modern management tools conflict with the old model and are not able to solve the underlying problems. ERP systems and Rolling data warehouses forecasts Provides Focuses on year information to end and distorts the hierarchy information Economic Benchmarking value added Supports Deemphasizes short term Central Local external stretch control comparisons targets Supports Creates ‘Make & Sell’ multiple Customer strategy Supports contracts relationship central decision Balanced management making Scorecard Activity-based management Seminar – Beyond Budgeting 25 © BBTN – All rights reserved
  • 24. Finance must work on the model, not in the model. Seminar – Beyond Budgeting 2626 © BBTN – All rights reserved
  • 25. What exactly is a ‘management model’? Industrial Age Information Age “Managed stability” “Complex and dynamic“ Leadership culture + General Motors Management Toyota Chrysler processes Honda Ford ... ... + Information systems Organizations with traditional models must eventually transform themselves! Seminar – Beyond Budgeting 27 © BBTN – All rights reserved
  • 26. From the old coherence to a new coherence. Traditional model (supports efficiency) New model (supports complexity) Centralized Decentralized hierarchy, network, “command “sense and control“ and respond“ The old model is not aligned with today’s CSF and it does not support ‘Theory Y’. > We need a new Relative strategy model to cope with performance complexity contracts > We must change Fixed the whole model! performance Dynamic contracts coordination Fixed Dynamic processes processes control Seminar – Beyond Budgeting 28 © BBTN – All rights reserved
  • 27. The case of a radically decentralized organization: Handelsbanken – an extraordinary leadership philosophy The most important objective within Handelsbanken Group: “Higher Return on Equity than the average of comparable banks in the Nordic region and Europe.” Made real through: • Radical decentralization, which in turn leads to… • Best customer service • Lowest cost Alexander V Dokukin Consistently – over a period of 30 years – one of the most successful banks in Europe, measured by almost all key performance indicators (e.g. ROE, TSR, EPS, Cost/Income, customer satisfaction, …) ROE = Return on Equity, TSR = Total Shareholder Return, EPS = Earnings per share Seminar – Beyond Budgeting 29 © BBTN – All rights reserved
  • 28. For more than a decade, this bank has been customer satisfaction leader among its peers, constantly Handelsbanken 75 Avrg. in sector 70 65 Data from 2005: Sweden: Corporate and Private – Best among big 60 and national competitors. Denmark: Private market – best. Norway: Corporate market - best. 55 Private market – 2nd place after substantial improvement. Finland: Corporate market - best, 50 Private market – best. 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Private Customers, Source: Svenska Kvalitetsindex Seminar – Beyond Budgeting 30 © BBTN – All rights reserved
  • 29. Comparison between the major publicly listed universal banks in Europe universales in Europe. Jan-Dec 2005, after credit losses. * Refers to loans to the public or deposits if deposits > lending 1,0 Cost/Total loans*, % Danske Bank Handelsbanken FöreningsSparbanken DnB Nor 2,0 Nordea Bank of Ireland SEB HypoVereinsbank Allied Irish Banks Banco Santander KBC 3,0 Credit Agricole Royal Bank of Scotland Bank Austria Commerzbank BBVA Unicredit Lloyds TSB San Paolo-IMI Standard Chartered 4,0 Erste Banca Intesa Capitalia ABN Amro Monte dei Paschi di Siena Barclays HSBC 5,0 Deutsche Bank BNP Paribas HBOS Société Générale UBS CS Group Cost/Income ratio, % 6,0 90 80 70 60 50 40 Source: Deutsche Bank: European Banks - Running the Numbers, Spring edition. Seminar – Beyond Budgeting 31 © BBTN – All rights reserved
  • 30. How “radical decentralization“ is being reflected in the company´s organizational structure and decision-making Principles Customers Customer intimacy A large network of self-managed teams with full responsibility for 600 branch managers (Profit Centers) customer results Freedom and capability to act 12 regional Fast, open “Winning“ culture, combined with the managers Fast, open (Invest Centers) information information freedom and ability to act systems systems Governance and transparency CEO, Framework for decision making with product firms, clear values, limits and relative treasury, IT etc. targets, plus transparency Leads to maximum customer satisfaction! Source: BBRT Seminar – Beyond Budgeting 32 © BBTN – All rights reserved
  • 31. Relative target definition through “league tables“ (rankings) – instead of planned, fixed targets and internal negotiation Strategic „cascade” Bank to bank Bank to bank Return on Equity (RoE) Return on Equity (RoE) Region to region Principles Region to region Return on Assets(RoA)etc. 1. Bank D 31% Return on Assets(RoA)etc. 1. Bank D 31% Branch to branch 2. Bank JJ 24%1. 2. Bank Branch to branch 24%1. Region A 38% Cost/income ratio etc. Region A 38% Cost/income ratio etc. 3. Bank I I 20%2. 3. Bank 20%2. Region CC 27% Relative targets and Region 27% relative compensation 4. Bank BB 18%3. 4. Bank 18%3. Region H 20%1. Region H 20%1. Branch JJ 28% Branch 28% 5. Bank EE 15%4. 5. Bank 15%4. Region B 17%2. Region B 17%2. Branch D 32% Branch D 32% Continuous 6. Bank FF 13%5. 6. Bank 13%5. Region FF 15% 3. Region 15%3. Branch EE 37% Branch 37% 7. Bank CC 12%6. 4. Region EE 12% 4. Branch A 39% Branch A 39% planning/control 7. Bank 12%6. Region 12% 8. Bank H 10%7. Region JJ 10%5. 10%5. Branch I I 41% Branch 41% 8. Bank H 10%7. Region 9. Bank GG 8% 8. Region I I 7% 6. 7% 6. Branch FF 45% Branch 45% “On demand“ flow of 9. Bank 8% 8. Region 7. Branch CC 54% 10. Bank AA (2%)9. 10. Bank Region G 6% 7. (2%)9. Region D (5%)8. Region G 6% Branch 54% resources/ 10. Region D (5%)8. Branch G 65% 10. Branch G 65% dynamic coordination 9. 9. Branch H 72% Branch H 72% 10. Branch B 87% 10. Branch B 87% Result & value contribution Leads to lowest operational cost! Seminar – Beyond Budgeting 33 © BBTN – All rights reserved
  • 32. Flexible coordination and resources “on demand“ - instead of allocations and budgets Headquarters/ Headquarters/ Region Region Branches acquire resources through internal markets Resources Resources Customer Customer Branch Branch (IT, HR etc.) (IT, HR etc.) demand demand Branches Branches alone are Branches decide over responsible for efficient observe necessary use of resources customer resource levels demand Leads to eradicating and avoiding waste! Source: BBRT Seminar – Beyond Budgeting 34 © BBTN – All rights reserved
  • 33. How preparing for action and forecasting (continuous previews) are used in this model – instead of centrally coordinated planning Regional managers and HQ challenge monitor check Teams close aim act to the customer (branches) plan Forecasts Leading to fastest possible reaction to change! Seminar – Beyond Budgeting 35 © BBTN – All rights reserved
  • 34. Creating a “virtuous circle”– a common factor among “Beyond Budgeting” pioneers Better to do business with Better for society Better to invest in 4. Customer intimacy – Highest 5. Ethical & social standards – 6. Sustainable value – (independent) customer satisfaction Support the long term interests of Beats peer group every year scores in sector year-after-year; the bank and society. on ROE and cost-to-income lowest customer complaints; ratio; highest total monitors customer shareholder return in sector; acquisitions/defections. devolved adaptive organization is key driver of 3. Operational excellence – success. Lowest costs of any bank in Europe; lowest bad debts; cost reduction culture; flat organization (half a Better to work for head office person per branch versus five for rivals); internal 1. Best people – SHB is first choice financial services market exerts constant pressure on company in Sweden for central services. graduates; employee 2. Innovation – SHB voted joint turnover is lowest in sector; best Internet bank in Europe in challenge, personal 2000; any competitive products responsibility and freedom to and solutions are fed back from run their part of the branches to product development. Virtuous circle business; group-wide profit sharing scheme. Text relates to Svenska Handelsbanken Seminar – Beyond Budgeting 36 © BBTN – All rights reserved
  • 35. Seminar – Beyond Budgeting 37 © BBTN – All rights reserved
  • 36. But there is a further challenge. Which is why most theories about leadership, as well as most advice from consultants, are flawed... One cannot talk sensibly about leadership, or people management, nor design decent management processes, unless we clarify beforehand our beliefs with regards to what people in organizations are like. We have to arrive at a shared understanding of human nature and of the consequences of that for our organizations. Niels Pflaeging, Leading with Flexible Targets Seminar – Beyond Budgeting 38 © BBTN – All rights reserved
  • 37. vs. Douglas McGregor Seminar – Beyond Budgeting 39 39 © BBTN – All rights reserved
  • 38. The industrial age management model not only fails because markets have changed. It is also misaligned with human nature. Theory X (0%) Theory Y (100%) Attitude People dislike work, find it boring, People need to work and want to take an inte- and will avoid it if they can. rest in it. Under right conditions, they can enjoy it. Direction People must be forced or bribed People will direct themselves towards to make the right effort. a target that they accept. Responsibility People would rather be directed than People will seek and accept responsibility, accept responsibility, which they avoid. under the right conditions. Motivation People are motivated mainly by money Under the right conditions, people are moti- and fears about their job security. vated by the desire to realize their own potential. Creativity Most people have little creativity - except Creativity and ingenuity are widely distributed when it comes to getting round rules. and grossly underused. Based on Douglas McGregor, ‘The Human Side of Enterprise’, 1960 Seminar – Beyond Budgeting 40 © BBTN – All rights reserved
  • 39. Seminar – Beyond Budgeting 41 © BBTN – All rights reserved
  • 40. Seminar – Beyond Budgeting 42 © BBTN – All rights reserved
  • 41. Seminar – Beyond Budgeting 43 © BBTN – All rights reserved
  • 42. Seminar – Beyond Budgeting 45 © BBTN – All rights reserved
  • 43. Do you BELIEVE in Theory Y? Firmly? Good. Because then we can be sure that you would never, ever practice (or support, or tolerate) HR processes and tools that treat people like children, or animals, or worse. Right? Such as performance appraisals, individual target setting, incentive compensation, “meritocracy”, control of work-hours, … Seminar – Beyond Budgeting 46 © BBTN – All rights reserved
  • 44. W.L.Gore. The best-led “innovation machine“ in the world? • Consistently successful, for more than 40 years • “Most innovative company in the U.S.“ (Fast Company) • For the 8th year in a row among the 100 best employers in the U.S. (“Fortune“ – best medium-sized employer). Best employer in England for the third consecutive year. Among the best companies to work for in the EU and Germany. • All employees participate in the firm´s success and become “virtual“ shareholders. • No job titles. Little hierarchy. No job descriptions - instead: “job sculpting“. • Highly empowered teams. “Temporary leadership“ • “Since 1958, Gore has avoided traditional hierarchy. Instead, we have practiced a team-based environment that stimulates personal initiative, innovation and communcation between all our Associates.” • “The fundamental belief in the people in our organzation and in their ability continues to be the key to our success.“ Seminar – Beyond Budgeting 48 © BBTN – All rights reserved
  • 45. It s a different mental Seminar – Beyond Budgeting 49 © BBTN – All rights reserved
  • 46. The 12 principles of the Beyond Budgeting model are in fact a full set of “design principles“ for the new organization type. Principles Do this! Not that! Customers and Customer/outside focus Focus on the boss responsibility Responsible teams (“cells”) Centralization, functional division Leadership Performance and Performance culture, beat the market Inspired by the past, burocratic 6 “devolved freedom Autonomy and responsibility Adherence to fixed plans leadership” principles Governance and Clearly defined objectives and values Impose objectives from above transparency Open and shared information Restricted information Goals and Goals related to continuous improvement Fiscal year, fixed goals rewards Rewards related to organization results Reward local, fixed goals Processes Planning and 6 “adaptive management Continuous and inclusive planning Top-down annual planning controls processes” principles Compare performance against actuals Variations against fixed plans Resources and Resources “on demand” Annual (budget) allocations coordination Coordinate dynamic, market-like interactions Departmentalization, hierarchy Seminar – Beyond Budgeting 50 © BBTN – All rights reserved
  • 47. There are two different ways of working on the model – evolution and transformation Sustaining and deepening of the Integration decentralized model, Evolution phase through generations within the decentralized model (culture of Transformation empowerment and trust) through radical decentralization of decision-making Stagnation within the tayloristic model Bureaucratization through growing hierarchy and functional differentiation Pioneering phase High degree of decentralization/ empowerment Foundation Time scale: organization's age Several decades old Seminar – Beyond Budgeting 51 © BBTN – All rights reserved
  • 48. Seminar – Beyond Budgeting 52 © BBTN – All rights reserved
  • 49. Seminar – Beyond Budgeting 53 © BBTN – All rights reserved
  • 50. Why traditional management with “fixed performance contracts“ regularily fools us: We have lost control a long time ago… Fixed targets Relative, self-adjusting targets Target: absolute ROCE in % (here: 15%) Target: relative ROCE in % (to market) Plan Actual Target Actual Comparison: Comparison: Market-Actual Plan-Actual Most Target: „ROCE Most important in % better important Market competitor than market Market competitor (25%) (28%) average” (25%) (28%) Actual Actual Plan (21%) (21%) (15%) [independent [expected from expected market Ø: 13%] market Ø] • Interpretation within the plan-actual- • Interpretation within actual-actual compa- comparison: Plan was outperformed by 6 rison: Performance was 4 percentage points percentage points > positive interpretation below competition! > negative interpretation • Better ROCE of the market average and the • Absolute assumptions at the moment of most important competitor remain unnoticed! planning don´t matter. • Targets always remain updated and relevant! Source: Niels Pfläging Seminar – Beyond Budgeting 54 © BBTN – All rights reserved
  • 51. Simple and relevant: creating reports without actual-plan- variances, fixed targets, or plans! Company KPI Regions KPI Compe- last Same Same Ø Ø month month month last 12 Competitor A 31% Region G 7% titor A last prev.. 12 prev. Our year year mnths mnths Competitor E 24% Region E 7% unit A Competitor C 20% Region B 6% KPI 2 Us 18% Region F 4% Compe- Competitor B 13% Region A 3% Us titor B Indicators Competitor D 12% Region D 3% Our or Competitor G 10% Region C 1% unit B Groups of accounts Competitor F 8% Region H 0% KPI 1 Ranking (League table) ext./intern. Snapshot (static) with benchmarks Accouts/KPIs vs. Previous periods (A) Maximum Tolerance levels Us (B) Gliding average KPI KPI KPI Us Competitor A Curve with variance Time (Actuals) Time (Actuals) Time (Actuals) Trend with tolerance Trend with benchmark Trend with references Seminar – Beyond Budgeting 55 © BBTN – All rights reserved
  • 52. Relative target definition through “league tables“ (rankings) – instead of planned, fixed targets and internal negotiation Strategic „cascade” Bank to bank Bank to bank Return on Equity (RoE) Return on Equity (RoE) Region to region Principles Region to region Return on Assets(RoA)etc. 1. Bank D 31% Return on Assets(RoA)etc. 1. Bank D 31% Branch to branch 2. Bank JJ 24%1. 2. Bank Branch to branch 24%1. Region A 38% Cost/income ratio etc. Region A 38% Cost/income ratio etc. 3. Bank I I 20%2. 3. Bank 20%2. Region CC 27% Relative targets and Region 27% relative compensation 4. Bank BB 18%3. 4. Bank 18%3. Region H 20%1. Region H 20%1. Branch JJ 28% Branch 28% 5. Bank EE 15%4. 5. Bank 15%4. Region B 17%2. Region B 17%2. Branch D 32% Branch D 32% Continuous 6. Bank FF 13%5. 6. Bank 13%5. Region FF 15% 3. Region 15%3. Branch EE 37% Branch 37% 7. Bank CC 12%6. 4. Region EE 12% 4. Branch A 39% Branch A 39% planning/control 7. Bank 12%6. Region 12% 8. Bank H 10%7. Region JJ 10%5. 10%5. Branch I I 41% Branch 41% 8. Bank H 10%7. Region 9. Bank GG 8% 8. Region I I 7% 6. 7% 6. Branch FF 45% Branch 45% “On demand“ flow of 9. Bank 8% 8. Region 7. Branch CC 54% 10. Bank AA (2%)9. 10. Bank Region G 6% 7. (2%)9. Region D (5%)8. Region G 6% Branch 54% resources/ 10. Region D (5%)8. Branch G 65% 10. Branch G 65% dynamic coordination 9. 9. Branch H 72% Branch H 72% 10. Branch B 87% 10. Branch B 87% Result & value contribution Leads to lowest operational cost! Seminar – Beyond Budgeting 56 © BBTN – All rights reserved
  • 53. Seminar – Beyond Budgeting 57 © BBTN – All rights reserved
  • 54. Seminar – Beyond Budgeting 58 © BBTN – All rights reserved
  • 55. To evaluate performance in an adaptive and dynamic way, the basis of Performance Measurement must shift Against plan Against time • Prior periods • Progress towards achievement of medium-term (2-3 years) targets Internal focus External focus • Internal peers • Competitors • Benchmarks/Stretch Annual focus Trends and “as needed” Financial measures Few key indicators Closed systems Open information systems for all Pure measurement Mixed approach meajuring/judging “Indicators only indicate“/ there is no “truth”in the numbers – living systems cannot be evaluated just by Seminar – Beyond Budgeting 59 measuring! © BBTN – All rights reserved
  • 56. Seminar – Beyond Budgeting 60 © BBTN – All rights reserved
  • 57. Question: How often do the systems, especially the HR systems, get in the way of change, transformation, vision and strategic thinking? Answer: Far too often. History often leaves HR people in highly bureaucratic personnel functions that discourage leadership and make altering human resource practices a big challenge. Seminar – Beyond Budgeting Kotter, Leading Change, p, 110-111 Source: based upon John 61 © BBTN – All rights reserved
  • 58. The problem with “incentives”: How traditional management systematically forces people to cheat Bonus Variable Bonus Common practice: hurdle area limit “Ceiling” „Pay for performance“ compensation Salary/ Reduction Maximization Reduction incentive: profile with fixed bonus incentive: Lower incentive: Anticipate postpone results to performance contract: result even more results next period Creates maniuplation incentive in any situation! Base salary 80% 100%: 120% Performance as % of target target of target of target realization Linear compensation curve without breaks: A better model: Result variable compensation becomes oriented compensation decoupled from targets profile with relative Salary/ Free from performance bonus incentive to manipulate contracts: No incentive to manipulation. Actual Actual Actual Performance in Source: Michael Jensen result #1 result #2 result #3 relative evaluation Seminar – Beyond Budgeting 62 © BBTN – All rights reserved
  • 59. Let´s leave compensation myths behind! We found no systemic pattern linking executive compensation to the process of going from Good to Great. Jim Collins, From Good to Great, 2001 Individual incentive pay, in reality, undermines performance – of both the individual and the organization. Jeffrey Pfeffer, Six Dangerous Myths about Pay, HBR 1998 Spending time and energy trying to “motivate” people is a waste of effort... The key is not to de-motivate them. Jim Collins, From Good to Great, 2001 Seminar – Beyond Budgeting 63 © BBTN – All rights reserved
  • 60. 1 very simple principle: Always disconnect compensation from targets. Always. Seminar – Beyond Budgeting 64 © BBTN – All rights reserved
  • 61. An example: “motivation”, or “threat”? What compensation systems really do... System with no System with variable compensation variable compensation (bonus, incentive, etc.) 30% Variable compensation 100% Base salary 100%: Total 70% compensation Base salary Is this an “energizing expected by promise”, or is it employee. just a pitiful threat? “We have a conservative pay “We have an aggressive pay philosophy. philosophy: 30% of your total Your base salary equals your total compensation will be paid in form of compensation, which is USD a bonus. The total is USD 100.000,00.“ 100.000,00, by the way.“ Seminar – Beyond Budgeting 65 © BBTN – All rights reserved
  • 62. 1 very simple principle: Pay the person. Not the position. Always. Seminar – Beyond Budgeting 66 © BBTN – All rights reserved
  • 63. Social scientist Alfie Kohn says: I am arguing against….. (1) attributing more importance to money than it actually has, (2) pushing money into people's faces and making it more salient than it needs to be, and (3) confusing compensation with reward (the latter being unnecessary and counterproductive). The problem isn't with the dollars themselves, but with using dollars to get people to jump through hoops. Seminar – Beyond Budgeting 67 © BBTN – All rights reserved
  • 64. And: Pay-for-performance is an outgrowth of behaviorism, which is focused on individual organisms, not systems - and, true to its name, looks only at behaviors, not at reasons and motives and the people who have them. I tell Fortune 500 executives (or at least those foolish enough to ask me) that the best formula for compensation is this: Pay people well, pay them fairly, and then do everything possible to help them forget about money. How should we reward our staff? Not at all! They are not our pets. Pay them well, respect and trust them, free them from disturbance, provide them with all available information and support to perform on the highest possible level. 1. Pay people well 2. Pay people fairly 3. And then do everything possible to take money off peoples minds! All pay-for-performance plans violate that last precept! Seminar – Beyond Budgeting 68 © BBTN – All rights reserved
  • 65. 1 very simple principle: Never use bonuses and incentives. Use profit sharing and/or shareholding concepts instead. Seminar – Beyond Budgeting 69 © BBTN – All rights reserved
  • 66. Seminar – Beyond Budgeting 70 © BBTN – All rights reserved
  • 67. Employing resources dynamically: A typical way of doing it, as practiced by Sydney Water, Australia Resources Income as “total (expected) available resources over time“ - forecasted as “limiting factor“ Yet uncommited resources – work actively on available Already approved investments - “options for a better future“ actively handled as “dynamic portfolio“ Operational resources – controlled by Key Performance Indicators (KPIs) – activities are focused on continuous improvement! Projected period (e.g. 5 quarters) Source: Sydney Water Seminar – Beyond Budgeting 71 © BBTN – All rights reserved
  • 68. 1 3 2 Seminar – Beyond Budgeting 72 © BBTN – All rights reserved
  • 69. A case study – the organizational structure looked like this And whe re does the mer fit in her e? CEO custo Director Director Director Director CFO International Production Technology Sales Germany Region Region Region Region Branch Branch Branch Branch 1&2 3&4 5&6 7&8 I II III IV Admini- HRSales Control- Marke- Production Sales Cont. Admini- Material Cont. Marke- Assistant IT Assistant ling Assistant Quality Engeneers, stration OEM education tingOEMSales stration Sales education ting/ CI Region Region Region Region Leader SalesPlanning Developers Sales 9 & 10 11 & 12 13 & 14 14 & 15 Accoun- Work Sales After-Sales Customer Customer Central sales TelephonistsAssistant Internal sales Region Region Region Pro- Services ting Region Assembly planni Logistics office Services Services support services duction 23 16 & 17 18 & 19 20 & 21 22 & ng Sales large Region Region Region Sales large Technical Region Technical Projects & Projects & ProcessComplaints Toolings & Complaints Purchasing & systems 26 &Hotline 28 24 & 25 27optimization 29 equipments Hotline ProposalsDesign Offers Maintenance Disposition Seminar – Beyond Budgeting 73 © BBTN – All rights reserved
  • 70. Why isn’t everyone decentralizing decision-making power to the periphery? “We have known for nearly half a century that self-managed teams are far more productive than any other form of organizing… productivity gains in truly self-managed work environments are at minimum 35% higher than in traditionally managed organizations. … [People] are asking for more local “Through extensive field tests, the autonomy… There is both a desire to participate more [US] Army has discovered that when individuals have information [about and strong evidence that such participation leads to what’s occurring in the battlefield] the effectiveness and productivity we crave… With and know how to interpret it because so much evidence supporting participation, why isn't they know the ‘commander's intent’, everyone working in a self-managed environment right they can make decisions that lead to now?” greater success in battle.” Margaret Wheatley, Author of “Leadership and The New Science”, Margaret Wheatley, Leadership and the Goodbye, Command and Control, Leader to Leader, No. 5 Summer New Science, Berret-Koehler Publishers 1997 Do mangers not want to devolve power? … or do they not know how to do it? … or both? Seminar – Beyond Budgeting 74 © BBTN – All rights reserved
  • 71. Some questions that we need to respond, if we want to decentralize decision-making power in an organization How can we create oben dialogue and “How can we end “Centralized” “Devolved”/descentralized transparency between 100% of the the arrogance of people in the organization? the corporate center (HQ)?“ What will be those teams close to the customer (“cells“) like, in our organization? How do we link periphery and center of the organization – leading, not managing? People are divided by function and Leadership is devolved (within defined How do we create an environment in which the between ‘doers’ and ‘thinkers’. boundaries) to the frontline – 95% of good people within our organization can customer Consequently, many decisions have as close as possible to the to be taken centrally after as entrepreneurs - the way and todeserve?people act being they as many passed up the hierarchy. and with as much autonomy as possible. Seminar Beyond Budgeting - Niels Pflaeging Seminar – Beyond Budgeting 75 © BBTN – All rights reserved
  • 72. The power of visionary leadership: dm-drogerie markt, transformed during the 1990s f( D x V x S )> R The results: • More successful than its competitors in all relevant performance indicators. • One of the most respected companies in Germany. Strong organic growth. • Almost without hierarchy, since the late 1990s. “Branches rule“, leadership happens “by dialogue“. • Doesn´t manage “cost” or “plans”, but shows employees how value creation flows through the organization, through internal value creation accounting system D = Dissatisfaction V = Vision S = Strategy/Steps R = Resistance Seminar – Beyond Budgeting 76 © BBTN – All rights reserved
  • 73. The best-led technology firm in the world? Semco, from Brazil – transformed at the beginning of the 1980s • Consistent performance during the last decades, inspite of deep crisises in Brazilian economy • Transformed after deep crises in the early 80s, 3.000 employees today • “The fastest-growing company in Latin America” (strategy+business) • One of the most admired companies in Brazil. • “The most democratic company in the world” (HBR) • Lowest staff turnover among competitors • All people participate in their business unit results • Employees choose their own bosses and set their own salaries • No formality – minimum of meetings, memos and approvals. Everybody knows the numbers. What they don´t need at Semco! • Fixed work hours and time control • Org charts • “Strategic plans” • HR department • Mission statement • Rigid plans and fixed targets • Obligation to participate in meetings • Fixed work places • Job and budget cuts • Conflict with syndicates/unions • ... Source: e.g. Ricardo Semler, „The Seven-Day Weekend“, 2004 Seminar – Beyond Budgeting 78 © BBTN – All rights reserved
  • 74. Coherence is the critical issue Seminar – Beyond Budgeting 79 © BBTN – All rights reserved
  • 75. Is transformation possible? “I don´t know if it is possible. What I know: It is necessary.“ Tom Peters Today we already know for sure it is possible. And we have also learned how it can be done. Seminar – Beyond Budgeting 80 © BBTN – All rights reserved
  • 76. To transform your organization from “command & control” to “decentralized network”, a double helix change is needed Organizati onal change pr ocess 3. Beginning 2. Neutral Zone 1. 2. 3. 4. Create a Pull 5. 6. Develop Communi- 7. 8. sense of together a Empower Produce change cate for Don't Create urgency guiding under- all others short-term vision and let a new coalition standing to act wins strategy up! culture and buy-in References 1. Ending ual Individ rocess ep chang Seminar – Beyond Budgeting 81 © BBTN – All rights reserved
  • 77. Seminar – Beyond Budgeting 82 © BBTN – All rights reserved
  • 78. This process is systemic and not like “project management“, but it can be guided and “temperature“ can be taken at any time Status of the project 1. 2. 3. 4. 5. 6. 7. Create a Pull together a Develop Communicate Empower all Produce Don´t Phase in % sense of guiding change vision for understan- others short-term let up urgency coalition and strategy ding and to act wins buy-in 1. There is a strong guiding coalition that sustains the transformation. 2. All over the organisation, “profound change“ is considered an issue. 3. Different groups in the organisation (task forces) already work on specific changes. Seminar – Beyond Budgeting 83 © BBTN – All rights reserved
  • 79. How does a decentralized organization work? • The market is the boss. (“Outside“ rules!) Former bosses give up their power. • A network cell is not a department: It is functionally integrated, t functionally divided! • A network cell has clients - external or internal – which it serves. It doesn´t serve bosses! • “Management“ is done inside the cell, not above it! A cell has at least 3 team members. There are three kinds of building blocks of a radically decentralized organization, as follows... Seminar – Beyond Budgeting 84 © BBTN – All rights reserved
  • 80. 1. A “Sphere of Activity“ (this is where “power“ and coherence come from) Seminar – Beyond Budgeting 85 © BBTN – All rights reserved
  • 81. 2. “Network Cells“ (this is where the work is done and where clients are being served) Seminar – Beyond Budgeting 86 © BBTN – All rights reserved
  • 82. 3. “Strings“ (this visualizes the interactions between cells) Seminar – Beyond Budgeting 87 © BBTN – All rights reserved
  • 83. And finally, you have “Market Pull“
  • 84. The case study: From departmental hierarchy to decentralized cell network Central Market Services • Overall Region “Market” Marketing/CI Northeast Region • Training Region Clients: All R-Cells Center Southeast Equipment • Tooling construction P4 P5 • Facility Management Region Region Cells (“R-Cells”) Clients: all P-Cells Region Europe Key Roles of R-Cells P3 P6 • Planning & offers West Central Equipment • Sales Market • After-sales services Services Materials & Logistics P2 P7 Region • Logistics • Sales office Materials & • Hotline Org Logistics America • Purchasing Region Clients: All P-Cells • Complaints Shop North Product Info P8 “Own“ all customers in Cell 1 Shop Product cells (“P-cells”) their regions • Production • Process & work Region “Sphere of planning Org Shop Southwest •…Quality • HR Activity” • Maintenance • Executive board + assistance Info Shop • Production logistics • Central office • IT • Process optimization Clients: All R- and P-Cells • Financial accounting • Material planning • Controlling • Design/R&D Clients: all R- and P-cells Customers: All R-Cells Seminar – Beyond Budgeting 89 © BBTN – All rights reserved
  • 85. “Cell structure“ as a foundation for sensible target definition in a “relative“ way - using league tables Strategic cascade Firm to Firm Firm to Firm ROCE ROCE Region to Region Region to Region 1. Firm D 31% Cost over income Cost over income 1. Firm D 31% P-Cell to P-Cell 2. Firm JJ 2. Firm 24%1. P-Cell to P-Cell 24%1. Region A 38% On-time-delivery etc. Region A 38% On-time-delivery etc. 3. Firm I I 3. Firm 20%2. 20%2. Region CC 27% Region 27% 4. Firm BB 4. Firm 18%3. 18%3. Region H 20%1. Region H 20%1. P-Cell JJ 28% P-Cell 28% 5. Firm EE 5. Firm 15%4. Region B 17%2. 15%4. Region B 17%2. P-Cell D 32% P-Cell D 32% 6. Firm FF 6. Firm 13%5. 13%5. Region FF 15% 3. Region 3. 15% P-Cell EE 37% P-Cell 37% 7. Firm CC 12%6. Region EE 12%4. 12%4. P-Cell A 39% P-Cell A 39% 7. Firm 12%6. Region 8. Firm H 10%7. Region JJ 10%5. 10%5. P-Cell I I 41% P-Cell 41% 8. Firm H 10%7. Region 9. Firm GG 8% 8. 6. Region I I 7% 6. P-Cell FF 45% P-Cell 45% 9. Firm 8% 8. Region 7% 10. Firm AA 10. Firm (2%)9. Region G 6% 7. (2%)9. Region G 6% 7. P-Cell CC 54% P-Cell 54% 10. Region D (5%)8. 10. Region D (5%)8. P-Cell G 65% P-Cell G 65% 9. 9. P-Cell H 72% P-Cell H 72% 10. P-Cell B 87% 10. P-Cell B 87% Value contribution Leads to lowest operational cost! Seminar – Beyond Budgeting 90 © BBTN – All rights reserved
  • 86. Beyond Budgeting: Is this something for only a select few? Just for geniuses and mavericks? Seminar – Beyond Budgeting 91 © BBTN – All rights reserved
  • 87. Industria Distribuição Serviços Governo & ONGs Seminar – Beyond Budgeting 92 © BBTN – All rights reserved
  • 88. are we “It’s not because it’s difficult that we don’t dare to do it: it seems difficult because we don’t dare to do it.” Seneca, Roman philosopher and statesman, 4BC – 65AD Seminar – Beyond Budgeting 93 93 © BBTN – All rights reserved
  • 89. beyond Make it real! budgeting > transformation network. BBTN: www.bbtn.org Niels Pflaeging Gebhard Borck BBTN & MetaManagement Group BBTN & gberatung Al. Santos 1.991 Fritz-Neuert-Str. 13a 01419-002 São Paulo – SP, Brazil 75181 Pforzheim - Germany niels@bbtn.org gebhard@bbtn.org Skype: npflaeging Skype: gborck www.metamanagementgroup.com www.gberatung.de

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