[EN] Beyond Budgeting Implementation Case Study: Telenor (English)
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[EN] Beyond Budgeting Implementation Case Study: Telenor (English)

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[EN] Beyond Budgeting Implementation Case Study: Telenor (English) [EN] Beyond Budgeting Implementation Case Study: Telenor (English) Document Transcript

  • Telenor. Going Dynamic. International Center for Page 1 Outperformance
  • Telenor. Going Dynamic. quot;Going Dynamic is more a philosophy, it is an overarching framework of what Telenor expects to do. We are not so revolutionary that we break with all that have been. We see the change more as an evolution and an adaptation of management within a new, more dynamic market. We are well perhaps as a company, related to tasks, something different from Handelsbanken and StatoilHydro. It means that we must find our own way to do this, which fits in the complex world we are in. We operate in dynamic and rapidly changing markets, which means that companies today are acting very independently. That is, we must find a model that provides the company management at the same time that companies have room for action.quot; Kenneth Hauge Table of Contents Introduction to the Case Study..........................................................................................................................3 About Telenor....................................................................................................................................................4 The Beyond-Budgeting-Implementation...........................................................................................................5 Organizational scope...................................................................................................................................5 The reasons for moving Beyond Budgeting.................................................................................................5 Implemented Beyond-Budgeting-Principles.................................................................................................7 Success factors for implementation.............................................................................................................8 Resources.........................................................................................................................................................9 License.............................................................................................................................................................9 Version 1.0: March 2009 Page 2
  • Introduction to the Case Study In Autumn 2006 Telenor started with the advice from the BBRT its Beyond-Budgeting-Initiative “Going Dynamic” under the project leader Kenneth Hauge. Contrary to the consultative transformation approach of the BBTN, Telenor presents a typical evolutionary BBRT Beyond Budgeting implementation. However it is an interesting case of one of the largest Beyond-Budgeting-Transformations nowadays besides StatoilHydro's journey Beyond Budgeting. It is to note that Telenor's Beyond Budgeting Implementation is very young and under development. From our point of view currently the following principles have been implemented: resources, planning, goals, controls, autonomy, responsibility. The following material on Telenor has been mainly excerpted from Håkon Mathias Rønning's and Andreas Lysne Ervik's master thesis “Implementering av Beyond Budgeting - En kvalitativ studie av Handelsbanken, StatoilHydro og Telenor sin implementering av Beyond Budgeting” with a kind contribution from our voluntary translator who made it possible to share the Norwegian master thesis the first time in the English language. The complete material originally is based on a personal interview with Telenor's Beyond Budgeting Project leader Kenneth Hauge and further with Else Hermansen from Telenor on 07.04.2008 by Håkon Mathias Rønning and Andreas Lysne Ervik. Page 3
  • About Telenor Norwegian Telenor is the world's 7th largest, and in the Nordic region the leading provider of mobile communications. The service and product offerings include telephony from fixed-line to mobile or IP telephony , Internet and broadband, TV services and mobile content and telecommunication-related services. With about 38.000 people it operates in 13 countries – Norway, Denmark, Sweden, Finland, Ukraine, Serbia, Montenegro, Hungary, Russia, Pakistan, Bangladesh, Malaysia, and Thailand. The Telenor Group is listed on the Oslo Stock Exchange, with headquarters in Oslo, Norway. and was ranked top performer by the Dow Jones Sustainability Indexes in 2007 and 2008. Telenor started out as a public company in 1855 and builds on more than 150 years of telecommunication experience now reaching a global turnover of NOK 111 billion in 2008. The Telenor group itself has financial control over its vast amount of member organizations, which like e.g. Telenor Broadcast act as a group within the Telenor group comprising several subsidiaries with different business areas. Page 4
  • The Beyond-Budgeting-Implementation Organizational scope The implementation started with an assessment of the existing leadership model accompanied by a vision of the new model. Three companies and the corporate group within Telenor had been selected in the beginning of the initiative as pilots. The complete Telenor group is going to implement Beyond Budgeting in 2009. Because the corporate group has been included into the pilot phase, no consolidated budget was used in 2008. The reasons for moving Beyond Budgeting quot;In Telenor we have historically seen that the budget process is time-consuming for those who are involved. Nevertheless, we will say that to remove the budget itself is not necessarily time-saving. The difference is that the future will be used in a completely different way than previously. We are still to plan ahead, and the time that was previously used in the budget process, and opinions about why we do not always deliver on budget, is now used to assess how Telenor can best adapt to the future competition and customer needs. Our background is thus that we do not think we dedicate significant time out of the devices by freeing us from the budget, but we use time more wisely, and focus on what we can influence, rather than explain the story.quot; Kenneth Hauge, Telenor Page 5
  • quot;One of the main purposes of implementing the new management is to strengthen operationalization of the strategy down the units and make organization responsible to a greater extent in relation to compliance with the strategic direction and the ambitions set. Many companies are experiencing a comprehensive strategy that ends up in a strategy paper presented to the Board, but which unfortunately is not given sufficient weight when you start work on next year's plans and budget. This is usually more of the conditions changed, for example, can competitive intensity in the market for the past, and the strategy may be set for detailed financial planning. The strategy to integrate backwards in organization is one of the main benefits that we have emphasized by Going Dynamic. We want to Going Dynamic no longer to focus on how we deliver against a fixed budget, but want to focus on how we will deliver in the future against ambitions and strategy. We do reporting to come, and focus on what we will deliver in the coming quarters, and considers this against ambitions. One of the instruments we use is to implement a rolling quarterly forecasts for the five next quarters. We try to facilitate a strategy that contributes to the ambitious goals, but that still is not concrete to be used as a guiding star, and reference. When it comes to follow-up, we want to do this as a relatively as possible in relation to other external actors, or other companies internally. We link input with the output of the goals as set, so that we not only focus on results, but what actually runs the results. Telenor does not stop to report on historical numbers even if we remove the budget, but the focus for historical reporting is to capture for example, trends in costs. We will continue to keep an eye on what we perform in both market and operational. Here, however, it is important to balance outcome of both types of reporting. The operational follow-up further down in organization will probably still use the historical results, but difference is that the devices will no longer measure the actual figures against a budget. We hope that the emphasis will be on the forward looking part of the follow-up. There we see forward in relation to how we are going to deliver, assess what we will initiate the measures to make it better, is what will be the main focus. This is central in Going Dynamic.” Kenneth Hauge, Telenor Page 6
  • Implemented Beyond-Budgeting-Principles Autonomy and responsibility Before the Beyond-Budgeting-Implementation Telenor had already a decentralized organizational structure, but the with the implementation increased responsibility presented something completely new in comparing with the old leadership model. quot;The whole model is based on the local units and departments to gain authority and responsibility for running their area. This delegation of responsibility must be inserted in a holistic perspective where the individual is in agreement with the new framework.” Kenneth Hauge, Telenor Goals and Controls Telenor's Going Dynamic reporting does take place on several levels and along more dimensions than just the capital and includes internal and external benchmarks. quot;On an equal basis with other telecommunication companies, we make extensive internal and external benchmarking. We benchmarked against the corresponding players in each country, in addition to internal benchmarking between the companies where this is natural. We stock not internal league tables corresponding Handelsbanken, but we use benchmarking more as an information base in relation to set targets. However, we will look at opportunities to take the step forward.quot; Hauge, Telenor Planning Telenor is working with a rolling five-quarter forecast that covers both financial and non-financial metrics. The rolling forecast is updated each quarter, accompanied by a three-year outlook that's revised annually. Page 7
  • Resources Instead of a top-down and annual budgeting process, Telenor allocates resources dynamically closely related to the strategic direction the organization choses any time to take on. But much of this mind-set had already been present in Telenor before the Beyond-Budgeting-implementation began in Autumn 2006. quot;We still have authority measures which places limitations on the use and cost using investment committees to consider the significant investments. This is not changed from previous administration. We must still consider the projects and their profitability. Previously, there was never such that the investment committee under the known good projects solely because the budget was used up. Thus one can say that we do not longer operated for a clean budget model, since we had a government that already had elements that challenged the established budget.quot; Kenneth Hauge, Telenor Success factors for implementation quot;We've made us up some thoughts about what will be the success factors for implementation. When it comes to senior anchoring it is important to focus both from the CEO, CFO, HR, in addition to the market and technology, without it so wrong implemented. This is a golden opportunity for companies to renew and adapt their management and the entire leadership must rethink how they can best change their company. We emphasize a holistic and integrated approach in relation to all aspects of management. From strategy and ambitions, to action plans and forecasts, the business reviews, expertise, and to end the incentives and rewards. In addition, we focus on that in the run-through fails to design a management, and that the biggest challenge is that all you need through a attitude in relation to how to continuously make decisions. This will clearly not happen within one calendar year, but perhaps in the longer term. We view this as a continuous change, which also chose the name Going Dynamic as internal resources for the project. This is not solely a financial project to ensure that the implementation does not end up with a quarterly budget disguised in a forecasting process. Finally, it is important to distinguish between what is the strategy / ambition and what is forecast, and it is not easy. These forecasts should not be binding in relation to what is provided, nor is it an acceptance of the demand for future periods. A forecast should be realistic, but the strategy should be ambitious. That to design a model that gets at this in a way is difficult.quot; Kenneth Hauge, Telenor Page 8
  • Resources Online Resources (accessed 27th February 2008): • Rønning, Håkon Mathias; Ervik, Andreas Lysne: “Implementering av beyond budgeting : en kvalitativ studie av Handelsbanken, StatoilHydro og Telenor sin implementering av beyond budgeting”: http://hdl.handle.net/2330/1970 • Jason Karaian (CFO Europe): “Go with the flow”: http://www3.cfo.com/article.cfm/9935438/2/c_2984364?f=archives • http://www.telenor.com (all subpages) Pictures (accessed 27th February 2008): • http://telenor.com/en/resources/images/Telenor-host-ute04_tcm28-30128.jpg (Telenor) License This paper except all logos and the front cover picture (Telenor HQ) is licensed under a Creative Commons BY-SA License. Credit: quot;International Center for Outperformance (www.intco.org): Telenorquot; within the reference list Page 9