Outperformance
International Center for
Beyond-Budgeting-OCW
Dialog-based Leadership

Beyond-Budgeting-OpenCourseWare
Dialog-based leadership
“'Everyone an entrepreneur' is not fact claim, but the description of a task:
a call, that the age demands from everyone.”
“Dialog-based leadership is no soft-alternative [to command-and-control leadership].
It does challenge one more than command-and-control leadership.”
Karl-Martin Dietz, 2008
“Leadership means most of all: to create awareness with the goal, to bring as many as possible employees
into an entrepreneurial disposition.”
“The only legitimate goal of leadership is self-leadership”
Goetz Werner, Founder and CEO (1973-2008)
dm drogeriemarkt, 2002
Course overview
This course aims to give a detailed description of the dialog-based leadership style which is since 1991
made real at dm drogeriemarkt, Germany's second biggest drugstore chain and a true Beyond-Budgeting-
Pioneering organization. In overall this course describes both the first in the English language available
publication on the dialog-based leadership style, the first in the English language available description of the
transformation of dm drogeriemarkt using dialog-based leadership and the first in the English language
available publication of the “Value Creation Calculation”, dm drogeriemarkt's modified ABC calculation to
create transparency throughout the entire organization. Beyond-Budgeting-Principles that are referred to
within the dialog-based leadership culture are customers, responsibility, autonomy, and transparency. The
“Value Creation Calculation” itself comprises all 12 Beyond-Budgeting-Principles.

Beyond-Budgeting-OpenCourseWare
Dialog-based leadership
Table of Contents
Course overview...............................................................................................................................................2
Dialog-based Leadership .................................................................................................................................4
Definition......................................................................................................................................................4
Elements......................................................................................................................................................6
Overview.................................................................................................................................................6
Agreement..............................................................................................................................................6
Advice.....................................................................................................................................................6
Dialog-based culture within organizations...................................................................................................7
Practical requirements............................................................................................................................7
Security...................................................................................................................................................7
Unity of the organization..............................................................................................................................8
Processes....................................................................................................................................................8
Realization ................................................................................................................................................12
Organizations applying the dialog-based leadership culture...........................................................................13
dm drogeriemarkt............................................................................................................................................14
Short company overview...........................................................................................................................14
Dialog-based leadership at dm drogeriemarkt...........................................................................................15
Value Creation Calculation..............................................................................................................................18
References ....................................................................................................................................................22
About Beyond-Budgeting-OpenCourseWare..................................................................................................23
License...........................................................................................................................................................23
Version 1.1: April 2009 (version 1.0: October 2008)

Dialog-based Leadership
Definition
“Dialog-based leadership creates a culture, in which the autonomy of the individual is both expected and
fostered. It enables spiritual productivity and encourages the engaged with self-leadership.”
Karl-Martin Dietz, 2008
Dialog-based Leadership or “dialog-based culture” is not an accumulation of management techniques or
tools, but an own company culture in which employees act with their own insight and responsibility as own
entrepreneurs, which can only be made real, if all necessary information is openly available.
The most important task and role of dialog-based leadership is to bring others into a disposition to create
their own an independent views and awareness of the reality. It is in this understanding also most importantly
a way from the foreign determination of bosses to the self-determination and self-leadership, in which the
customers pulls from the outside-in. In this way traditional control as a management techniques is substituted
by self-control and control from the market. Hierarchal structures are not only replaced by autonomy of single
employees but of collaboration throughout the entire organization. Identification with former supervisors is
substituted by identification with the sense of the work. The final aim of dialog-based leadership is that every
person involved creates and advances the awareness and abilities to act independently and autonomous as
an entrepreneur in the sense of the entire organization. The “gab” between leaders and lead gets smaller as
more people involved advance their awareness and abilities.
A dialog-based culture is therefore not focused to single hierarchical layers and can therefore only made real
by all people within the organization on all levels. In this sense, it must be lived by all people within the
organization.
As Dietz/Kracht, the founders of the dialog-based leadership at Friedrich Hardenberg Institut für
Kulturwissenschaften, Heidelberg, Germany, point out “Leadership is therefore also self-leadership: Work on
the frontiers of the own person. Dialog-based leadership furthermore not only to develop these abilities
oneself, but give other persons the change for self-leadership.” “ Dialog-based leadership does not call pre-
planned activities, but fosters the awareness, which enable others, to include own ideas to to find oneself the
right measurements. Individual acting happens from intrinsic motivation – another characteristic of
entrepreneurship.” This awareness is not only related to the present, but also the future.

The role of former more hierarchical leaders change within the dialog-based culture from a “boss” to an
“advisor”, “critics” or “service provider” and resembles the view of “natural leadership” (Bill Gore, Terri Kelly,
Ricardo Semler) or “reverse accountability” (Vineet Nayar, Gary Hamel). The leaders main task is to create
awareness for self-leadership. Consultation is not ordered, but requested from employees.
As Dietz/Kracht point out: Employees seek the 'mirroring' of their supervisors, because their autonomy gains
security”.
Key ingredient of dialog-based leadership is the “dialog”, which is by Dietz understood as a renewal of the
organizational culture, which therefore differs from “discussion” and which is characterized by the following
points:
• to develop together a link to the reality
• to reach unity in the underlying reasons
• to understand feelings and emotions
• to advance an issue or topic together
• to be open for the unprepared
In this way, dialog is the means to bring in the “I” and the issue into the dialog room. Moreover within a
dialog-based leadership style, targets will be set in accordance with individual employee's targets to foster
them. As Dietz/Kracht point out: “The other will not be planned and treated, but recognized und considered
within acting as an individual counterpart, as a you. Therewith the dialog gets the center”.
Final aim of the dialog-based culture is to bring individual's goals and development and the organization's
goals and development into accordance.
The dialog-based leadership is itself able to cope with the main problems of command-and-control
leadership:
• Dialog-base leadership is able through dialog to minimize scattering losses between the “center” and
the “periphery”
• Dialog-based leadership fosters cross-departmental cooperation through contact, transparency and
the acting of the employees in the sense of the whole organization
• Dialog-based culture focuses the entire organization on market-pull and not on hierarchical
relationships

Elements
Overview
The two central elements of a dialog-based culture are agreement and advice and are explained in the
following two sub chapters. Besides agreements and advice exist work directions for issues with a high legal
character or standardization e.g. software tools or accounting systems. But usually dialog-based leadership
demands “tools” which empower employees.
Agreement
With an agreement both parties work out together their dialog results and the required action after a
consultation process in which parties can express their point of view on this issue. If one of the involved
persons would like to change the agreement, he or she has to contact the other(s). An agreement is the final
state of a dialog process in which several persons made contact, both opinions and abilities are considered
and ends with the insight of both persons, and is part of a consultation process.
Advice
Contrary to an agreement, an advice comprises no agreed action or decision but usually an consultation.
Instead the advice leaves open the decision and empowers the receiver to create awareness of the situation
(to start awareness processes) and to make his or own decision, who is in return responsible for the result,
even if he or she takes over the advice from the sender. The sender has to make transparent his or hers
advice, the receiver has in return the responsibility to receive as much transparency as possible to make his
or her decision. If the receiver changes to advice and makes his or hers own decision he or she has also in
return make transparent his decision to the sender and to take on responsibility for the change. If a change
of the advice is made, no work direction can further change or substitute the new decision.

Dialog-based culture within organizations
Practical requirements
• An advice is successful if the receiver of the advice makes a different decision or action, which is not
stated within the advice and the sender gains insight, that this different decision or action is better
than his or hers advice.
• To finalize agreements or advices, necessary information is required in advance and each party
needs preparation time (of about one week).
• If critical decisions are met, extra time is also needed by all parties to finalize them
• An active will is a necessary requirement to both consult and receive advice.
• Transparent information on all issues is required and also the necessity to question them
Security
Insecurity is an integral part of the dialog-based culture. Despite all involved parties have to know, what they
are about at all, the following contribute to:
• All parties have a same understanding, what “work direction”, “agreement”, and “advice” means
• There could be some issues for which work direction are in place. These issues comprise usually
legal obligations or standardization issues
• A law-driven security can also be achieved by transparent communication which kind of element
(work direction, agreement, advice) is intended.
• If no consensus arises, decision can be postponed
As a conclusion transparency and simplicity are an integral part of the dialog and strongly depend on the
abilities of the involved persons, not on a (centralized) structure.

Unity of the organization
To provide a unity of the entire organization all employees are involved into the organization goal setting
process. In this manner vision and mission work becomes an integral part of operational daily work and
therefore lived and developed within each dialog, consultation, and decision.
Processes
Dialog-based leadership comprises four different processes – individual contact, transparency, consultation
and decision. These four processes have no fixed order, but interact with each other all the time.
Individual contact process
The process individual contact aims to not see a person as an individual human and not to see he or she
only within his or her role or function within the company. Finally the “I” and “you” should create an “us”.
Success factors for individual contact are internal attitudes and not external factors.
The process individual contact can develop within four different stages: interest for the human (What does he
or she think?), understanding of his or hers point of view, (Why does ho or she thinks this?), the human
within his or hers personal development (How will he or she develop in the future?), and human dignity.
Referring to the purpose of the individual contact, Dietz points out: “Individual contacts does not end with
concrete results, but more with secrets: by the challenge of individuality, by the secret of the being human,
and the puzzle of the destiny-contact.”

Transparency process
Transparency aims to provide all relevant information in order that employees can finally make their
decisions independently and can lead themselves (self-leadership). Transparency comprises the following
stages: information (What is the case?), understanding (which means to create a shared view from single
views, Is my view enough?), own insight (Why it is so?) and essentially (What is the point?) As Dietz explains
with reference to own insight: “Own insight has for the daily business directly practical consequences: What
is recognized and in sighted on its own cannot be ordered! Otherwise own insight does result at one in a
standstill. Instead of work directions does stand the dialog-based leadership culture with encouragement of
own transparency.”
Consultation process
Key of the consultation process is the collaboration to advance a task or the organization. Goals and
mission/vision statements happen by themselves. Final goal of the consultation process is to foster ideas
and their realization.
Decision process
Before the decision process, the individual contact process, the transparency process and the consultation
process have to be taken place. The four stages of the decision process include: overview, decision, creation
(to carry out the decision), and responsibility.
By living the four mentioned processes of dialog-based leadership also invests into trust (without any trust
building activities):
• Individual contact: trust in other people
• Transparency: trust in processes
• Consultation: trust in shared goals
• Decision: trust in the trust ability of others

The four processes of dialog-based leadership can be described by the following colors and metaphors:
Transpareny
Consultation Individual contact
Decision

Transpareny:
Light
Consultation: Individual contact:
Water Warmth
Decision:
Earth

Realization
“To change the leadership culture fundamentally
is like a tire change during the drive.”
Dietz, Kracht
It is clear, that in accordance with the consultative Beyond-Budgeting-Transformation approach using the
Double Helix Transformation Framework (2008) a dialog-based culture cannot be implemented using
traditional and tayloristic transformation approaches. This insight was curiously already presented by Dietz
and Kracht in 2002, that the development or realization of a dialog-based culture happens also by dialog.
Nowadays it would be more practically to use the Double Helix Transformation Framework to transform the
complete leadership- and steering model to Beyond Budgeting, but to complete this publication, all original
thoughts of Dietz and Kracht are listed only for completeness. To foster a dialog-based culture according to
Dietz and Kracht the following requirements, which are also part of the Double Helix Transformation
Framework, are necessary:
• a collaboration of all company levels by self-organizing
• the process itself and its development are made transparent
• As Dietz/Kracht point out: “Dialog-based culture can by nature not only “top-down” lived or serve as
a model (but when this also a stays a requirement), but every person within the organization in every
place within the organization contributes to its realization; e.g. as example by demanding advice,
demanding explanations and so on, on which he or she can make his or hers own decisions.”
• Development of abilities within individual and team workshops and seminars
• on-going dialog about the leadership model – critic and self-awareness
• for realization it is necessary that oneself has to ask if he or she fulfills the requirements or how he or
she can develop them
• “As Dietz/Kracht point out: “Dialog-based leadership can not only be “organized”. Organization is
part of the process, but as a consequence and not a course. Who strives for dialog-based leadership
is first confronted with him- or herself, not others are objects of his or hers change will.”
• “Everyone can only develop himself or herself – and only if he or she wants it”

Organizations applying the dialog-based leadership culture
Currently the three German Beyond-Budgeting-Pioneers dm drogeriemarkt, Alnatura and Weleda made real
the dialog-based leadership style. Further within Germany and Switzerland several Waldorf Schools:
Backnang (Germany), Rudolf Steiner Schule Nordheide (Germany), Basel (Switzerland) made it real. The
dialog-based leadership style is also applied by the Friedrich Hardenberg Institut für Kulturwissenschaften,
Dietz and Kracht institute and main research center of the dialog-based leadership style.
6 1. Hardenberg Institut, Heidelberg
2. Alnatura, Bickenbach
3. dm drogeriemarkt, Karlsruhe
4. Weleda, Schwäbisch Gmünd
5. Waldorfschule Backnang, Backnang
2
6. Rudolf Stiener Schule Nordheide,
1 Kakenstorf
3 4
7. Waldorfschule Basel, Basel / Switzerland
5
7

dm drogeriemarkt
Short company overview
Dm drogeriemarkt was founded in 1973 in Karlsruhe, Germany and is mainly today influenced by German
humanist Rudolf Steiner, which can e.g. seen in its main marketing slogan: “Here I am Human, here I buy” or
within the “Value Creation Calculation” in which no “HR costs” exists, but “employee income”. Further the
term “apprentices” is replaced by the noun “learners”.
With a turnover of about 4.7 billion €, 31.000 employees and over 2000 branches it is Germany's second
biggest drugstore chain. About 1.012 branches are situated within Central- and South Europe. The main
competitors comprise Schlecker and Rossmann. In this highly competitive market, dm drogeriemarkt's
growth is today both organic and external. From the finance point of view, dm drogeriemarkt is the market
leader in KPIs like turnover by branch or turnover by employee and has the highest customer satisfaction.
The retention rate is very low, whereas employee satisfaction is high. In 2006 dm drogeriemarkt was
awarded the best trading company in Germany.
Today Goetz Werner, one of the founders and year long CEO (1973 – May 2008) and now member of the
board of directors, is an icon of the European movement for a basic renumeration for each people which is
not linked to any work or other conditions. In 2005 he was awarded in Germany as “Entrepreneur of the year”
and is today professor at the University of Karlsruhe with an own institute for entrepreneurship. Today former
CIO and long year employee (16 years) Erich Harsch continuous Goetz Werner's lifetime achievement at dm
drogeriemarkt.
“Some, who newly come from strictly hierarchic organizations to dm, have problems with the unexpected
trust and the linked to own responsibility. The customer is important not the boss. And thinking on your own
is key. “But then most recognize the change, to find themselves within the work and get infected by this spirit.
But some still need a boss, who says: “Do this and than this.” says Harsch. But those soon leave the oasis
Gruenwinkel after several months.”

Dialog-based leadership at dm drogeriemarkt
Dialog-based culture was nor invented or implemented at dm drogeriemarkt in Germany. Moreover it evolved
firstly from single measurements and was than made more and more aware and than afterwards developed
within seminars, workshops and group meetings. At the beginning of this process in 1991 and even earlier,
nobody knew where the dialog-based culture would develop. Even today in 2008 the dialog-based culture of
dm drogeriemarkt is still evolving.
A single reason why dm drogeriemarkt transformed itself from Taylorism to Beyond Budgeting is not known
by founder an year long CEO Goetz Werner. The first milestone was a conversation with a marketing agency
in 1977 when dm drogeriemarkt had about 30 to 40 branches asking: “How runs your company, what are you
doing, why are you doing this and how do you consider that it is communicated to customers and
employees?” Werner views these questions as the origin of the dm drogeriemarkt way. In 1978 dm
drogeriemarkt's massive organic growth was the second milestone. During a seminar on organizational
development Werner met ten Siethoff. In 1978 dm drogeriemarkt decided on a series of workshops and
seminars with ten Siethoff on organizational development. Central milestone was at that time the famous
three phases of organizational development – the pioneering phase, the differentiation phase and the
integration phase. “There where verbal supports to realize what happened at dm drogeriemarkt in order to
judge: Where stand we today? And what might the future would look like if the current development are
recognized? At that time a food magazine published an article with the title: “Branches to power”, which
became the main slogan of the further transformation journey. Within the organic growth phase (the
differentiation phase) dm drogeriemarkt became more and more bureaucratic with typical departmental
problems with its at that time around 1979 350 branches, a new management layer, the so called “area sales
managers” were implemented (in overall two management layers were between the board of the CEOs and
the branch managers). The additional management layer accompanied with new cosmetics consultants, who
acted more as controllers and not as consultants, fostered further the differentiation phase.
The turnover and the start of the transformation happened in 1991 in Bingen, Germany during a meeting in
which was decided that the current organizational structure would not the future development of the
organization and that the organization had to enter into the integration phase. The leadership seminars with
ten Siethoff were in the Bingen meeting linked to the organizational structural problems: Goetz points
out:“How do we have to treat each other in order to leave an old-fashioned leadership model, that is nor
practical nor is related to the needs of the employees? And then the second question was linked to: How do
we an ever handle a complex getting organizational structure?” “The development was placed on two

different tiers: the first was presence: It is not enough to be successful, but you also have to understand why
you are successful in order to develop it – that was the time when the collaboration with Hellmuth ten
Siethoff started, where we actively thought and trained about leadership. That was the first layer. The other
but was that we still had the opinion: It depends on that was we think at the company what we want, that this
is implemented in each branch. That is another tier.[...] But we were initially convinced, that an organization
is something hierarchically structured. At the top, thinking takes place, at the bottom it is carried out.” Soon
dm managers realized that these two tiers could not be combined in practice. The complete leadership
training with ten Siethoff aimed to improve the tayloristic-functional-hierarchic structure to make sure each
branch would like look each branch, which was actually not possible because the branches itself varied in
size, employees, turnover, customers and competitors. The more branches were opened, the less could they
be controlled. An on the other side dm managers debated about the sense of life, work and collaboration,
team work, creativity, decisions and entrepreneurship.
With the turnover meeting in Bingen in 1991 the mentality of top-down management was replaced by an
outside-in mind-set. Formerly discussions turned around to standardize branches, now they turn around how
the branches can be supported to create their self-awareness on what to do and what already existing can
be used in the right way for the branch. With the new leadership approach, formerly unavailable information
were made available though the value creation calculation. In 1991 the branch manager function was mainly
in the focus of the transformation journey. In 1991 one entire management layer was abandoned to make dm
drogeriemarkt thin, flat and easier and the responsibility was passed to the branches. Internal market places
to ask for advice any person on all levels and to foster collaboration on all levels were e.g. made real in the
following years.
Nowadays the transformation had shifted from the branches, the the HQ to all employees. The internal
revision at HQ was for instance abandoned and delegated to the branch managers. The HQ's function is
today to be a service provider for the branches and not to manage them.
With the over ten years collaboration with ten Siethoff, humanistic aspects (mainly from German humanist
Rudolf Steiner) were made real within work, organizational development and leadership. Over a time period
of five years (1988 – 1993) the value creation calculation was refined and it still today the main tool create
transparency throughout the entire organization despite the original purpose to serve a centralized-tayloristic
tool.
It is clear that the transformation process itself did not success over night. Actually it was a year-long process
which coped with internal resistance and old hierarchic-functional-tayloristic mind-sets. Gradually employees
learned to share information and “the arrogance of the HQ was expelled” as today's CEO Erish Harsch calls
a spade a spade.

As a consequence of the transformation, each branch is today an independent network cell that is fully
autonomous and responsible for HR and personal development, products listed, pricing, marketing, and
branch design. Transparency is created by the “Value Creation Calculation” that each employee receives
each month. Instead of centralized and fixed goals, branches nowadays use relative targets in comparison to
other dm drogeriemarkt branches using all possible KPIs like e.g. turnover, travel costs etc. The only
centralized development program include culture trainings, further each branch can independently decide in
training activities.
As already mentioned dm drogeriemarkt calls its “apprentices” “learners”. Not only differs the title from
traditional professional training programs, but also does the training itself and includes e.g. several trainings
weeks in which the “learners” are fully responsible for a management of a complete branch without help from
employees. During these weeks, the “learners” change roles and can e.g. experience to be the branch
manager. Other special trainings include tasks e.g. the planning of a new branch incl. location search, or a
tertiary planning using the “Value Creation Calculation”. During these special trainings, the “learners” only get
some advice from their trainers and complete the tasks on their own. Furthermore an other special training
workshops includes a real drama workshop to prepare presentations.

Value Creation Calculation
The Value Creation Calculation (VCC) was developed from 1988 – 1993 at dm drogeriemarkt, Germany. But
dm drogeriemarkt is not the only user worldwide. Other Beyond-Budgeting-Pioneers use similar systems.
Svenska Handelsbanken e.g. uses a similar internal calculation called “transfer prices” and “internal markets”
since 1971 with about 2000 internal transfer prices. Recently a Logoplaste plant in Brazil made a similar
calculation real during their transformation to Beyond Budgeting. German trading and Beyond-Budgeting-
Pioneer Alnatura made a VCC project in 2002 and introduced the VCC in 2003. Weleda, Germany also
introduced the VCC recently.
The VCC is itself a reporting tool and is not based on hierarchical or functional relationships but on the value
creation stream that the external customer pulls outside-in into the organization and to the internal
customers. In this way, it enables each branch cell and even the HQ cells to be seen as an independent and
virtual organization within the entire organization. As prices no plan figures are used, but real market prices
without profits to create an internal market. The Value Creation Calculation does both reflect the
organizational structure as also the processes of the organization and comprises two key elements: the
performance catalogs and the value reporting. At dm drogeriemarkt both performance catalogs and value
reports are part of the SAP System. Each month about 300.000 value reports are drawn from the central
data warehouse.
Within a performance catalog each network cell does autonomous and fully responsible list its performances
or “products” to other internal network cells or external customers and the market is thus brought into the
entire organization outside-in. Internal prices are usually internal transfer prices, only profits to external
customers are applied. Usually a performance catalog is kept simple and does not as a usual ABC
calculation addressed processes and there relevant costs, but to serve as a company wide information
system to create transparency and to empower all employees as leaders and entrepreneurs to make their
own and independent decisions. Neither it is a control tool. Instead of “costs” “performances” are used within
the ACC, neither no “costs” are managed or even cut, but value creation streams are made transparent and
are improved. The expression “personal or HR costs” is furthermore replaced by the term “employee
renumeration” that is further placed within the value creation and not as a profit cutting position. Furthermore
Goetz Werner adds with reference the employee renumeration: “the handling of the numbers does also
reflect the attitudes towards humans”.

A sample performance catalog for a people cell might look like this:
Performance Description Customer Price
Applicability management Announcement, pre- All cells 1.000 € per applicant
selection, personal
interview, contract
Analysis Employee number, cash Accounting 500 € per month
flow
Payroll Money transfer, reporting All cells 15 € per month and
to taxation, etc. employee
Source: to lean on Pfleaging/Selters: “Fallstudie zum Beyond Budgeting: „Radikal“ dezentralisierte Führung und flexible
Steuerungsprozesse umsetzen − am Beispiel der Wertbildungsrechnung bei dm-drogerie markt” in aus Dillerup/Stoi (Hrsg.): “Praxis der
Unternehmensführung: Fallstudien und Firmenbeispiele”, Vahlen, 2007
The structure of the value reporting is derived from the performance catalog: from the turnover goods and
material employed (all physical pre-products from the branches) are removed, the marginal return is
obtained. The marginal return does only comprise the complete performance of the cell, but no single
positions and no single employees. Furthermore the marginal return is divided into external service, advance
performance and own performance:
• external services incl. all bought in external services like assurance fees, consulting services, etc.
• advance performance are performance catalogs bought from other internal network cells
• own performance is received after external services and advance performance are drawn from the
marginal return and reflects the value creation stream created by that network cell. Is is the part than
can be consumed by the network cell. It usually comprises employee renumeration, taxes, profits
and interests.
The final profit is dedicated to the enterprise and can be e.g. used for organic growth, for investments or for
the payment of liabilities. Losses are compensated by other branches and may contribute to the overall
company loss.
Furthermore each branch is complete autonomous to decide whether is buys from the internal cells or from
external suppliers or which resources it uses or which products it sells. Each value report is not only made
transparent to the respondent cell, but to all other cells also.

A sample value report might look like this:
Position Current In % Preceding In % Difference
month year month
Turnover 10.000,00 9.600,00 400,00
- goods and material employed 4.000,00 3.800,00 200,00
= marginal return 6.000,00 100% 5.800,00 100% 200,00
public services 120,00 2% 110,00 2% 10,00
+ consumable material 340,00 6% 360,00 6% (20,00)
+ electricity 400,00 7% 380,00 7% 20,00
+ telecommunication 60,00 1% 60,00 1% -
+ assurance 80,00 1% 70,00 1% 10,00
= (1) Sum external services 1.000,00 17% 980,00 17% 20,00
personal management 50,00 1% 50,00 1% -
+ IT 90,00 2% 80,00 1% 10,00
+ controlling 30,00 1% 40,00 1% 10,00)
+ logistics 160,00 3% 140,00 2% 20,00
+ area management 70,00 1% 60,00 1% 10,00
= (2) Sum advance performance 400,00 7% 370,00 6% 30,00
taxes 40,00 1% 40,00 1% -
+ investments taxes 200,00 3% 180,00 3% 20,00
+ goods taxes 160,00 3% 200,00 3% (40,00)
+ employee renumeration 4.000,00 67% 3.800,00 66% 200,00
+ liabilities 200,00 3% 230,00 4% (30,00)
= (3) Own Performance 4.600,00 77% 4.450,00 77% 150,00
Source: Pfleaging/Selters: “Fallstudie zum Beyond Budgeting: „Radikal“ dezentralisierte Führung und flexible Steuerungsprozesse
umsetzen − am Beispiel der Wertbildungsrechnung bei dm-drogerie markt” in aus Dillerup/Stoi (Hrsg.): “Praxis der
Unternehmensführung: Fallstudien und Firmenbeispiele”, Vahlen, 2007

With reference to the Beyond-Budgeting-Principles, a VCC does compromise all 12 original Beyond-
Budgeting-Principles:
• Customers: value reports make transparent customer results to all employees and cells
• Organization: value reports make transparent all information to network cells to make their
decisions
• Autonomy: value reports create autonomy through information
• Responsibility: value reports make visible relative team or cell performance and the difference to
other teams or cells
• Values: value reports make transparent goals and values through “sense coupling” and not
command-and-control
• Transparency: value reports create transparency if the information is fast, consistent and openly
available for all employees
• Targets: value reports display actuals and not plan-actuals and therefore enable ongoing relative
improvement
• Rewards: value reports can serve as a foundation for team-based profit sharing
• Planning: value reports can serve as a foundation for ongoing and inclusive planning processes
• Controls: value reports with open information foster peer pressure and self-control and serve as a
basis to control relative goals
• Resources: value reports enable cells or teams to make autonomous and fully responsible
decisions about the use of resources
• Coordination: value reports make real dynamic and market-pull based coordination without central
interference

References
• Pflaeging, Niels: “Fuehren mit flexiblen Zielen”, Campus, 2008
• Dietz, Karl-Martin; Kracht, Thomas: “Dialogische Fuehrung.”, Campus, 2007 (2nd edition)
• Dietz, Karl-Martin: “Jeder Mensch ein Unternehmer”, Universitätsverlag Karlsruhe, 2008
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◦ http://www.flickr.com/photos/sovietuk/10490898/

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