Change the Budget Process, Change the Culture:
how investment-based budgeting can induce customer focus, entrepreneurship, and teamwork

Abstract

A sensible change in the budget process can have a surprising positive side effect: It can shift an organization's culture toward entrepreneurship, customer-focus, and teamwork.

In traditional budget processes, managers defend their need for staff and money. Then, managers turn away internal customers to meet their budget targets, and customers blame staff when there aren't enough resources to satisfy every demand -- an adversarial relationship. Furthermore, since each group's budget is decided independently, staff may find that peers don't have sufficient resources to support their key projects, undermining teamwork.

Investment-based budgeting (IBB) presents the full cost of the organization's products and services -- of deliverables. Clients defend the budget for their projects; they understand what's funded and what isn't, and come up with additional money if they want more than budgeted resources permit. In this environment, staff can be customer focused and entrepreneurial. Furthermore, since all the participants on a project team are funded at once, there are no resource barriers to teamwork.

This session explains how to implement IBB, and describes both the financial benefits and the cultural impacts of each step.

Outline

* Leadership versus management

* Business versus organizational strategies

* ABC versus ABB

* ABB versus IBB

* How investment-based budgeting works

* The IBB process, and the cultural impacts of each step

* Summary of benefits: financial and cultural

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