Bjarte Bogsnes Beyond Budgeting Breakfast Briefing – Key Ingredients

Last week I was lucky enough to take part in Bjarte Bogsnes ‘Beyond Budgeting’ Breakfast Briefing organised by Ivar Jacobson International and Rally Software.

A lot of the ground covered in the talk can be found in these articles which I thoroughly recommend reading:

Here I’d like to share what I took away from the event, how I think it relates to the work of other management thought leaders and why it matters to me.

Why Beyond Budgeting?

The problem beyond budgeting seeks to address is the slowness and lack of agility that comes to business that have grown over time. They become ‘sad places to work’.

Bogsnes likened this to the ageing process of man. Whilst ‘age takes us all’ as he put it, it does not have to be the case for business.

The methods and learning he presented showed a way to counter this whilst, critically, keeping the benefits of being big.

Why Start with Budgets?

There is a lot more to Beyond Budgeting than an alternative to traditional, periodic, budgets but the reason to start there is that a budget is often what gives the remit for work to take place.

To do this it conflates a target, a forecast and permission for resource allocation.  The problem is, these are three things that have conflicting purposes.

Bogsnes counters this by splitting these three facets out into:

  • Target
  • Forecast
  • Resource

This immediately made me think of John Seddon‘s:

  • Purpose
  • Measures
  • Method

This comes from Seddon’s book, Freedom from Command and Control. Tellingly, the full title of Bogsnes Talk was “Beyond Budgeting from Command and Control to Empower and Adapt”.

What I like about Seddon’s language is that he starts with ‘Why’.  A Target may set direction but it doesn’t tell you why you are going in that direction.

What I like about Bogsnes ‘Forecast’ is that it casts the measures as explicitly forward looking. It is stating the probable outcome, like a weather forecast.

It is the forecast that gives you a direction of travel.  As Bogsnes says “They might for instance show that we are heading in the wrong direction, towards places that we absolutely don’t want to go.”*

Measure and Forecast come together in the work of Troy Magennis.  He uses “historical cycle time data to answer questions of forecasting and staff skill balancing“.  Check out his Keynote from Lean Kanban Central Europe 2013.

Finally, it is from method that we determine what resource we need, that is what type of capabilities we need to pull in.  These will be different depending on the method we have chosen. For example, we might have a goal of gaining a thousand new customers, we will measure that goal by the number of new sign ups we get but the method for achieving that might be through marketing, through IT or some other means.

Human After All

At the heart of Bogsnes talk was an understanding not only of the complexity of the organisation but also of the complexity of us as humans.

This is a theme that comes up again and again in the Lean/Kanban community and Bogsnes was of course a keynote speaker at this year’s Lean Kanban North America.

I have to admit that I am only just now coming round to the significance of this and Bogsnes talk really helped clarify my thinking on it.

In my appetite for Systems Thinking, seeking to understand “how to act on [the] organisation for improvement”**, to manage the work, not the workers, I have paid less attention to “The Human Side of the Enterprise” – a phrase used by Bogsnes and taken from the book of the same name by Douglas McGregor.

The author whose work I’ve found most useful on this subject has been Daniel Kahneman, channeled through the work of David Anderson.

Anderson’s closing keynote from Lean Kanban Central Europe 2013 is a good introduction to Kahneman and why his work is significant to modern management methods.

Kahneman models the way human process information by way of two systems, that word again.

The differences between System One, intuition, and System Two, reasoning are enumerated in this Wikipedia article.  For the full story read Kahneman’s Thinking fast and Slow.

Why I find this useful is that it is acknowledging the fact that our experience of the world, and so the world of work is mediated through what makes us human.

To discount it, to talk only of the system in which we humans operate is to remove the very thing that enables us to engage with it and make it better.

It’s why language, and choice of language is so significant. A good example of this in Bogsnes work is his use of the word “translate” rather than “cascade” for how information is disseminated through the organisation.

Think for yourself

Bogsnes talk took the form of an experience report.  He told the story of what happened and is happening at Statoil.

He was offering experience, not a management recipe.  As Bogsnes says, with a management recipe, someone has done the thinking for you.

What I take from thought leaders like Bogsnes, Anderson, Magennis and Seddon are method and ingredients.

You can adapt method. You can substitute ingredients, choose how much of them to use and when to use them.

There is a risk that when taking the ingredients from one recipe and putting them in another you end up with something inedible.

Get your use of ingredients right and the results will taste good.

You need to think for yourself.  Experiment.  Think about language.  If it isn’t working, change it.

 

http://www.mixprize.org/story/taking-reality-seriously-towards-more-self-regulating-management-model-statoil
** Freedom from Command and Control a better way to make the work work, John Seddon, 2003 p.14

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