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Who Needs Budgets?

by Jeremy Hope and Robin Fraser

Reprint r0302j
TOOL KIT

Modern companies reject centralization, inflexible


planning, and command and control. So why do
they cling to a process that reinforces those things?

Who
Needs
Budgets? by Jeremy Hope
and Robin Fraser

B
udgeting, as most corporations they marshal the power of computer
practice it, should be abolished. systems to uncover mind-numbing lev-
That may sound like a radical els of detail and, using the budget as a
proposition, but it would be merely the benchmark, demand to know why a sales
culmination of long-running efforts to team has rung up higher-than-normal
transform organizations from central- telephone charges, for instance, or why
ized hierarchies into devolved networks it has underspent the quarter’s enter-
that allow for nimble adjustments to tainment allowance. And where is “all
market conditions. Most of the other the authority of the chairman”when the
building blocks are in place. Companies team finds it can’t meet the budget’s
have invested huge sums in IT networks, sales targets? Fearing the consequences,
process reengineering, and a range of the team will lean on customers to order
management tools including EVA (Eco- goods they have every intention of re-
nomic Value Added), balanced score- turning. And if by some chance the
cards, and activity accounting. But they team thinks it will exceed its targets, it
have been unable to establish a new will press customers to accept delivery
order because the budget and the com- in the next fiscal period, delaying valu-
mand and control culture that it sup- able cash flows.
ports remain predominant. In extreme cases, use of the budget
Senior executives have been heard to to force performance improvements
proclaim that their people have all the may lead to a breakdown in corporate
authority of the chairman. In practice, ethics. People who worked at World-

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Com, now bankrupt and under criminal portunities is a much more adaptive meeting short-term promises to im-
investigation, said CEO Bernard Eb- organization. proving our competitive position year
bers’s rigid demands were an over- But that’s not to say these companies after year. The result is much more ac-
whelming fact of life there.“You would abandon their high expectations. They curate interpretation of our results and
have a budget, and he would mandate don’t naively assume that everyone who news flow, meaning less volatility in our
that you had to be 2% under budget,” is given more autonomy will improve shares. Analysts like and respect our ap-
said a person who worked at WorldCom, his or her performance. In fact, they re- proach. They no longer ask for numbers-
according to an article in Financial quire employees to do something much based forecasts.” The willingness of the
Times last year. “Nothing else was ac- tougher than meet a fixed target. They company’s investors to live without
ceptable.” WorldCom, Enron, Barings ask them to chase a will-o’-the-wisp, to such promises has inspired UBS to shift
Bank, and other failed companies had measure themselves against how well its focus from detailed plans to trend
tight budgetary control processes that comparable groups inside and outside analyses and rolling forecasts.
funneled information only to those with the company will turn out to have done
a “need to know.’’ in the same period, given the economic Breaking Free
In short, the same companies that conditions prevailing at the time. Be- from the Budget Vise
vow to stay close to the customer, so cause employees won’t know whether Though the first companies to reject
that they can respond quickly to pre- they’ve succeeded or by how much until budgets were located in Northern Eu-
cious intelligence about market shifts, the period is over, they must use every rope, organizations that have gone be-
cling tenaciously to budgeting – a pro- ounce of their energy and ingenuity to yond budgeting can be found today
cess that disempowers the front line, ensure that their performance is better in a range of countries, industries, and
discourages information sharing, and than that of their peers. Business units, cultures. They include two banks, a
slows the response to market develop- plants, branches, and other groupings petrochemicals company, a distributor,
ments until it’s too late. can measure their progress against a car manufacturer, a brewer, a furni-
A number of companies have recog- comparable units within the company ture retailer, a truck manufacturer, an
nized the full extent of the damage done through the use of a few key financial eye-care company, a computer manu-
by budgeting. They have rejected the measures. In order to measure them- facturer, a telecommunications com-
reliance on obsolete data and the pro- selves against external peers, they can pany, a ball-bearings manufacturer, a
tracted, self-interested wrangling over use operational benchmarks based on food producer, and a specialty chemi-
what the data indicate about the future. industrywide best practices. (In some cals company. They range from small –
And they have rejected the foregone cases, companies that have rejected bud- a 250-employee charity dedicated to pre-
conclusions embedded in traditional gets rely on benchmarks collected and venting and curing blindness – to huge
budgets–conclusions that render point- prepared by specialist firms that under- and complex, as in the case of one global
less the interpretation and circulation of stand the particular industry.) As in industrial organization with thousands
current market information, the stock- sports, the objective is to keep improv- of products.
in-trade of the knowledge-based, net- ing your position until you become the At these companies, an annual fixed-
worked company. league leader. performance contract no longer defines
In the absence of budgets, alternative Abandoning budget targets – those what subordinates must deliver to su-
goals and measures – some financial, solemn but ultimately hollow promises periors in the year ahead. Budgets no
such as cost-to-income ratios, and some to investors – frees a business to give a longer determine how resources are al-
nonfinancial, such as time to market – wide variety of emerging information located or what business units make and
move to the foreground. And business its due. Sharing that information can sell or how the performance of those
units and personnel, now responsible form the basis of a new kind of rela- units and their people will be evaluated
for producing results, are no longer ex- tionship with the capital markets. UBS, and rewarded. Some project leaders es-
pected to meet predetermined, inter- the Swiss financial services company, timate that they have saved 95% of the
nally selected financial targets. Rather, hasn’t discarded budgets, but it has time that used to be spent on budgeting
every part of the company is judged on changed how it communicates.“We pro- and forecasting.
how well its performance compares vide very few financial-performance Instead of adopting fixed annual tar-
with its peers’ and against world-class commitments,” says Mark Branson, the gets, business units set longer-term goals
benchmarks. company’s chief communications of- based on benchmarks such as return on
In companies using these standards ficer. “Our experience shows they are capital. The elements or factors mea-
of performance, business units become counterproductive, building pressure sured are key performance indicators –
smaller, more numerous, and more en- for short-term action to save the credi- KPIs – such as profits, cash flows, cost
trepreneurial. Strategy becomes a grass- bility of forecasts. In effect, we show an- ratios, customer satisfaction, and qual-
roots endeavor. The aggregate result of alysts and investors how the business ity. The criteria of measurement are the
many small teams exploiting local op- works. This shifts the emphasis from performance of internal or external peer

february 2003 3

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T O O L K I T • Who Needs Budgets?

groups and the results in prior periods. within these ranges, senior executives ter is to make available to operating
Two of the important corporate goals look at the risks and test the assump- units, the obligations made by each unit
at Borealis, a Danish petrochemicals tions of strategic initiatives that require for the coming year, and the commit-
company, have been the reduction of very substantial resources. ments that business or operating units
fixed costs by 30% over five years and a At many such companies, rolling fore- have made to one another, such as a
decrease in time lost to accidents in its casts that look five to eight quarters production unit’s pledge to meet the
plants. However, the company’s busi- into the future play an important role in sales plan. It also states what will hap-
ness units and personnel are measured the strategic process. The forecasts, typ- pen to individuals’ compensation if
and rewarded on the basis of how well ically generated each quarter, help man- targets are missed or surpassed. Over
they reduced fixed costs and improved agers to continually reassess current the course of the fiscal year, each unit
uptime in comparison to best-in-class action plans as market and economic is expected to file regular reports on its
industry benchmarks. conditions change. (For more informa- progress toward meeting the targets.
In an empowered organization, people tion on how rolling forecasts work, see Despite the number-crunching abili-
are free to make mistakes and equally the sidebar “An Ever-Changing View ties of powerful computers, budgeting
free to fix them. Managers have wide of the Future.”) remains a protracted and expensive pro-
discretion in making decisions; as a re- Without budget expectations to worry cess, absorbing up to 30% of manage-
sult, they can obtain resources more about, staff members can do something ment’s time. A 1998 study of global com-
quickly than in traditional companies with the nonconforming customer and panies showed that on average they
and without having to document need market information they collect – other invested more than 25,000 person-days
quite so elaborately, partly because they than hide it. The reporting of unusual per $1 billion of revenue in the plan-
are accountable for the profitability of patterns and trends as they unfold helps ning and performance-measurement
processes. Ford Motor Company is re-
ported to have figured that its total cost
The same companies that vow to respond quickly amounted to $1.2 billion per year. For
to market shifts cling to budgeting – a process that slows companies involved in mergers, acqui-
sitions, spin-offs, and other reorganiza-
the response to market developments until it’s too late. tions, the budgeting workload can be
overwhelming.
their units and can therefore be ex- the business avoid shortages or overages Increasingly, even finance people
pected to shed any excess in the event and formulate changes in direction. In- question the value of budgeting. One
that demand falls. In such a system, the stead of being imposed from above, published report says nine out of ten
“spend it or lose it” philosophy that’s at strategy seeps up from below. think it is cumbersome and unreliable.
work in traditional organizations has no Among their complaints: It takes time
meaning. And employees, because they How the Budget Problem away from activities that add greater
don’t require much supervision, don’t Grew value, such as supplying managers with
need the extensive central services that For most participants, the traditional the information they need to make
most organizations provide. Eliminating budgeting process starts at least four decisions. A 1999 global best-practices
those services has a dramatic effect on months before the beginning of the fis- study concluded that finance personnel
a company’s cost structure. cal year. Operating divisions, business spent only 21% of their time analyzing
Key performance indicators – which units, and departments receive “budget and interpreting the numbers; they spent
tend to be financial at the top of an packs” that include forms asking for the rest doing “lower-value-added activ-
organization and more operational the forecasts of sales, profits, and capital ex- ities” such as gathering and processing
nearer a unit is to the front line – fulfill penditures. The forecasts are reviewed data, often for budget-related discussions.
the self-regulatory functions of budgets. at a high level, and after several rounds Used in a responsible way, budgets
But KPIs don’t need to be so precise. UK of give-and-take, the budget document provide the basis for clear understand-
charity Sight Savers International, for is finalized. ing between organizational levels and
example, has begun to develop target The budget is a vast compendium of can help senior executives maintain
ranges for its KPIs. While managers are details. It lists the capital and opera- control over multiple divisions and busi-
free to devise ways of achieving results tional resources that the corporate cen- ness units. In the wrong hands, however,
budgets can result in “earnings man-
Jeremy Hope and Robin Fraser are directors of the Beyond Budgeting Round Table agement” or even outright fraud. Such
(BBRT), an international management research consortium (www.bbrt.org). Their problems are more apt to occur as the
book Beyond Budgeting is being published this month by Harvard Business School pressure to improve performance in-
Press. Hope can be reached at jeremyhope@bbrt.org; Fraser can be reached at robin- creases, especially when economic con-
fraser@bbrt.org. ditions are deteriorating. Few CEOs want

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T O O L K I T • Who Needs Budgets?

manufacturers’ entry into domestic


T h e N ew Pe r f o r m a n ce Co n t ra c t markets, and the ratcheting up of com-
petition. Business units became preoc-
Companies that move beyond budgeting shift decision-making from cupied with meeting sales targets rather
the core to the periphery. Instead of negotiating, in advance, the targets than satisfying customers. Salespeople
eager to try new tactics were thwarted
managers must reach, the resources they will have, and their reward for
by rules requiring multiple signatures
simply doing what’s expected, these companies trust their managers to authorizing any change in plan.
claim the resources they need to seize the opportunities they see. In Eventually, a few companies realized
short, an ever-changing market, not a dated plan, dictates behavior. And that budgeting played a powerful role in
it’s beating the competition that brings rewards. defining and enforcing cultural norms
that discourage frontline people from
taking responsibility for performance.
These companies decided to take the
Fixed Relative
plunge and dispense with the tradi-
performance performance
tional budgeting process. Two of the
contract contract most enthusiastic adopters of the new
approach are described below.

Svenska Handelsbanken
Fixed targets lead to only Relative targets push employees Though not large by international bank-
incremental improvements. to outdo themselves. ing standards – it has 550 branches in
the four Scandinavian countries and the
Rewards based on relative UK and 20 offices in major cities around
Fixed incentives instill
performance give people the the world–this Swedish company offers
fear of failure.
confidence to take risks. corporate finance, home and consumer
financing, life insurance, mutual funds,
Rigid plans focus people Continuous planning focuses and banking by telephone and the In-
on compliance. people on value creation. ternet. Since it abandoned budgeting
in the early 1970s, the bank has outper-
Preset allocation of resources On-demand allocation of resources formed its Scandinavian rivals on just
encourages hoarding. minimizes costs. about every measure, including return
on equity, total shareholder return,
earnings per share, cost-to-income ratio
Decision making by local units
Centralized decision making (or cost-to-revenue ratio, in the termi-
in touch with one another makes
ignores market feedback. nology of other industries), and cus-
full use of market feedback.
tomer satisfaction. It produced an an-
nual total shareholder return of 24%
between 1979 and 2001 – a rate 33%
to miss their earnings targets and risk nies used accounting results not just to higher than its nearest rival. Annual
ridicule by investors and the media. And keep score but also to dictate the actions earnings per share grew at a rate of
few operating managers are willing to of people at all levels of the company. 10.9% from 1990 to 2000. Handels-
be up-front about bad news if it means By the early 1970s, a new generation of banken is also one of the world’s most
incurring the wrath of superiors and for- leaders schooled in the finer arts of fi- cost-efficient banks, achieving a cost-
feiting bonuses. nancial planning had begun to rely on to-income ratio of 45% in 2001; at most
The budgeting process emerged in financial targets and incentives – in lieu international banks, the ratio is over
the 1920s as a tool for managing costs of such benchmarks as productivity and 60%. Few of its loans go bad, largely be-
and cash flows in large industrial or- marketing effectiveness – to drive per- cause the bank has a policy of giving
ganizations such as DuPont, General formance improvement. frontline people responsibility for au-
Motors, and Siemens. It wasn’t until But rigid adherence to annual fixed thorizing loans.
the 1960s that it mutated into a fixed plans and budgets stifled innovation, In the late 1960s, it was a different
performance contract. It was at this hindering the corporate response to the story. The bank was losing customers,
time, according to Tom Johnson, coau- earnings and cost pressures that arose in especially to a smaller rival run by Jan
thor of Relevance Lost: The Rise and Fall the 1980s and 1990s from the demands Wallander. So Handelsbanken invited
of Management Accounting, that compa- of institutional shareholders, foreign him to become its CEO. He accepted on

february 2003 5

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T O O L K I T • Who Needs Budgets?

An Ever-Changing View of the Future

Many of the companies that have gone beyond completed, new data start coming in. Once three
budgeting enrich and accelerate their information months’ worth is in hand, the process begins again.
flow through the use of rolling forecasts, which are A new five-quarter forecast updates the projections
created every three months or so and always cover for the period covered by the previous forecast and
the same period – typically, five to eight quarters. creates a brand-new projection for the quarter
Because these forecasts are regularly revised, they farthest in the future, July–September 2004.
support managers’ ability to fashion strategies that Volvo relies on several types of rolling forecasts.
continuously adapt to market conditions. Every month, it orders up a “flash” forecast that
Rolling forecasts differ from budgets in several looks three months ahead, informing managers
ways. They don’t envision a fixed “finish line” at the about current demand and helping them deter-
end of the fiscal year when income, costs, and other mine whether, for example, price promotions
elements are measured against the budget’s (by should be introduced or curtailed. Every quarter,
now) stale targets. They include only a few key vari- a 12-month forecast updates the managers’ work-
ables, such as orders, sales, costs, and capital expen- ing assumptions about customer behavior and
ditures, which means they can be compiled rela- economic trends. And every year, two additional
tively easily and quickly, sometimes by a single forecasts – one looking four years ahead, one look-
person in a single day. (Budgets and even conven- ing ten years ahead – help managers assess the
tional budget “updates,” by contrast, involve de- company’s market positioning and determine
tailed recompilations of data and require several schedules for phasing out old models and phasing
layers of approval.) in new ones.
Most important, rolling forecasts are more accu- Unlike budget updates, whose forecast period
rate, for two reasons. First, they are constantly re- becomes shorter and shorter as the end of the
freshed by the latest estimates of economic trends fiscal year approaches, rolling forecasts always
and customer demand and by emerging data from look the same distance into the future, allowing
the most recent quarter. Second, no one has a rea- the company to see whether performance is on
son to manipulate or spin the numbers, because a trajectory to meet goals that are a year or more
there are no fixed profit targets – or penalties for away. Rolling forecasts enable finance people to
missing them. Anyone who tried would probably collect and manage the cash needed for tax pay-
fail: Organizations that use rolling forecasts rely on ments and capital expenditures, and they help
information and control systems that allow every- operational managers estimate capacity and thus
one in the company to see the same information at plan for expansions or contractions in demand.
the same time. As managers become more adept at preparing and
Here’s how rolling forecasts usually work. Let’s interpreting rolling forecasts, the CEO is able to
say that in the middle of March 2003, a company anticipate performance changes sooner, thereby
creates a five-quarter forecast that covers the improving his or her ability to establish, well ahead
period from the beginning of April 2003 through of time, realistic expectations in the investment
the end of June 2004. From the moment it is community.

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T O O L K I T • Who Needs Budgets?

the condition that the bank agree to According to Wallander, now the hon- is governed by peer pressure exposes
drastically decentralize operations. His orary chairman,“We just communicate free riders very quickly.
years as an economist and nonexecutive to people the average and a ranking that Resources. Each branch manager de-
director of Ericsson, the Swedish elec- shows which branches are above and cides what resources the unit needs.
tronics company, taught him that few which are below. The system works on Managers have had the authority to de-
forecasts are worth the paper they are its own. Managers know what is ‘ac- termine staffing levels since the early
written on. His conclusion was that ceptable’ performance–you can’t linger 1990s, and now they can set staff salaries
“either a budget will prove roughly in the depths of the league table for and negotiate property leases as well. If
right and then it will be trite, or it will be long. Peer pressure plays an important demand falls or new IT systems take over
disastrously wrong and in that case will part in this process. No branch manager functions formerly performed by the
be dangerous.” Here is what Handels- wants to let down the regional team.” staff, it is the local manager who is best
banken looks like today. The head office monitors transaction positioned to decide whether to redeploy
Organization. The bank has only volumes, fluctuations in numbers of cus- employees or let them go. Experienced
three layers–branch managers, regional tomers, customer profitability, branch managers at the company expected an
managers, and the chief executive–and profits, cost patterns, productivity, and increase in the number of workers when
no organization chart. The spans of con- much more. If it notices that a branch is unit heads were given staffing authority,
trol are therefore very wide, precluding underperforming, someone will make but the opposite happened.
micromanagement. The few decisions sure the region’s controller knows about In a traditional budgeting system, in-
that require high-level approval are it. It is then up to the branch to take ac- flexible cost targets can have the per-
kicked upstairs almost immediately. An tion – or not. verse effect of limiting the amount of
answer usually arrives within 24 hours. In a traditional company, teams that business a unit takes on. At Handels-
To promote a sense of ownership and are fighting one another for customers banken, branches have the authority to
accountability among as many people as and resources are unlikely to share data, decide whether the income generated
possible, the bank has created some 600
profit centers, including regions and
branches. Though each branch is free
In companies that have gone beyond budgeting,
to set prices and discounts and decide the “spend it or lose it” philosophy that’s at work
which products to sell, it knows that
costs must be around 40% of income and
in traditional organizations has no meaning.
that this requires every staff person to
contribute to profitability. leads, or insights. Two policies at Han- by, say, opening many new accounts is
In contrast to the approach at many delsbanken keep competition and co- worth the higher costs those accounts
other financial services companies, Han- operation in balance. One requires every will entail.
delsbanken dispenses with a central customer to be attached to a particular Information. Of course, a company
marketing function (except in the case branch; this avoids disputes over who without a budget requires a fast and ef-
of product launches) and sales targets. gets the benefit of a customer order that fective information system capable of
Instead, the individual branches are has been handled by two branches. The monitoring tens of thousands of trans-
given responsibility for reducing costs, other puts a portion of the company’s actions. Handelsbanken has the ability
satisfying customer needs, and boost- profits in a companywide pool from to monitor region and branch prof-
ing income. Because half of Handels- which every employee derives an equal itability on-line and to analyze patterns
banken’s staff has lending authority, share, irrespective of seniority or indi- of excessive discounts, defecting cus-
customers receive answers quickly. vidual performance. Thus, apart from tomers, and unusual transaction vol-
Performance. Regions and branches, securities traders, no one at the bank is umes. Rolling cash forecasts, prepared
in effect, set their own targets on the rewarded for reaching a predetermined every quarter, signal whether cash flow
basis of the improvements they want target–nor are branches even rewarded is improving or declining; if a problem
to make. The company’s 11 regions, com- for doing well in a performance-league looms, they make clear that steps need
peting like teams in a league, try to top table. Individual and unit rewards con- to be taken to ensure adequate liquidity.
one another on return on equity, a mea- sist of peer recognition and praise. Con- The cash forecasts are prepared by the fi-
sure the markets use to judge the bank sequently, branches feel safe sharing in- nance department and seen by the vice
and its rivals. Branches compete with formation about customers. president of finance and the CEO only.
one another on their cost-to-income Some might argue that such a reward “Other banks have access to the same
ratio as well as on profit per employee structure gives a free ride to managers technology, so the difference must be
and total profit. Standings are promi- who produce little in the way of results. down to how we work,” says Arne Mår-
nently displayed in what the company On the contrary, a team-based and open tensson, the bank’s chairman. “We are
refers to as league tables. organization like Handelsbanken that quick to spot any changes in trends

february 2003 7

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T O O L K I T • Who Needs Budgets?

within regions and branches, and this vendors if that is expected to save people now have a different approach.
leads to searching questions being asked money. They know how every customer wants
on the telephone. Problems are trans- Because unit managers also have the to deal with us – whether [they’re seek-
parent; they are not hidden within the authority to adjust resource levels in re- ing the] lowest-cost transactions, value-
nooks and crannies of management lay- sponse to changing demand, they now added services, or a closer, more strate-
ers and allowed to fester.” recruit staff or order layoffs as required, gic relationship – and which customers
rather than according to the timing and offer the best profit-making opportuni-
Ahlsell constraints of the annual budget cycle. ties. This is gradually improving our cus-
Since this Swedish wholesaler aban- (Staff turnover is less than 5% per year– tomer portfolio.”
doned budgeting in 1995, its main lines the lowest in the industry.) The func- Rolling forecasts are now prepared
of business – electrical products and tion of the regional leadership, mean- quarterly by staff members at the head
heating and plumbing – have overtaken while, has changed from providing office, who make phone calls to a few
their Swedish counterparts in prof- detailed planning and control to coach- key people over the course of a few days
itability. After suffering through a se- ing and supporting the frontline units. each quarter. Results from the previous
vere business slowdown in the early To help the local units manage them- quarter are available with little delay,
1990s, the company realized it could selves more effectively, the finance staff and employees at every level in the com-
achieve substantial savings and opera- teaches everyone how to interpret a pany see them simultaneously. At the
tional improvements by centralizing profit and loss statement. end of each year, unit managers – there
warehousing, administration, and logis- Key performance indicators are now are now many of them–receive bonuses
tical support while devolving responsi- used to set goals and impose controls. based on how the year’s return on sales
bility to large numbers of profit centers. In the central warehouse, for example, compares with the previous year’s.
At one time, there were only 14 such the KPIs are cost per line item, costs as •••
centers; now, after a series of acquisi- a percentage of stock turnover, stock So long as the budget process dominates
tions, there are more than 200. Business- availability, level of service, and turn- business planning, a self-motivated and
area teams (such as heating and plumb- over rate. The key indicators for the adaptable workforce is a fantasy, how-
ing) within each local unit are now sales units are profit growth, return ever many cutting-edge tools and tech-
niques a company embraces. That’s be-
cause all of the principles and practices
So long as the budget dominates business planning,
of budgeting assume, and perpetuate,
a self-motivated workforce is a fantasy, however many central control. People at the front line
of a top-down operation are hardly
cutting-edge techniques a company embraces.
likely to report bad news if the inevi-
table result is a verbal beating–or to re-
separate profit centers, and they’re on sales, efficiency (determined by di- port good news, for that matter, if their
fiercely competitive with one another. viding gross profit by total salary cost), reward is more ambitious targets.
Detailed sales plans are no longer and market share. In contrast, companies that dispense
made centrally; headquarters commu- In the days when Ahlsell kept bud- with budgets can unleash the full power
nicates only general aims, such as be- gets, it didn’t monitor how profitable in- of modern information systems and
coming number one in electrical prod- dividual customer accounts were or tools. Corporate planning ceases to be a
ucts within two years. The local units what it cost to replace them. Selling was series of breathless sprints and instead
have been freed to develop their own treated as an end in itself, and the com- becomes an endless conversation. Knowl-
approaches in response to local condi- pany simply paid its salespeople for sell- edge flows from frontline people to head-
tions and customer demands. The new ing products. Since the abolition of bud- quarters and back again, permitting the
organization recognizes that customer gets, the accounting system has been full potential of a radically decentral-
relationships are forged by frontline producing information on customer ized organization to be realized.
units, which can now set salary levels profitability. According to finance direc-
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