Beyond budgeting

Jeremy Hope & Robin Fraser · 2003

Replace the fixed annual budget with rolling forecasts and targets set against actual conditions.

Its place in the frameworkTime Core›Year Wheel

What it does

The case against the annual cycle is that it fixes a plan to a year that has not happened, negotiates resources once, and then rewards hitting a number agreed before anyone knew anything. What replaces it is a rhythm: forecasts refreshed continuously, resources released when needed, and performance judged relative to how the market actually turned out.

Reach for it when: When the annual plan is out of date by March and everyone spends the rest of the year explaining variance against it.
Where it stops: It requires giving up a great deal of central control, which is why most adoptions keep the budget and add the forecasting on top — the worst of both.

Jeremy Hope & Robin Fraser, Beyond Budgeting, Harvard Business School Press, 2003.

Why it sits at Year Wheel

The organisation’s year as it actually repeats: the cycle it runs on, the dates it cannot move, how the load falls across it, and the rhythm in which it looks at itself.

A model is only useful when you reach for it at the right moment. This one answers a question that arises here — so it is filed here, and nowhere else. These are the working areas it serves:

The cycleOperating-rhythm practice, and seasonality analysis applied to the organisation’s own calendar rather than to the market’s.
Fixed pointsCalendar-constraint planning and the distinction between hard and negotiable dates.
Load across the yearCapacity planning applied to the annual horizon, including the effect of leave and reporting periods on available effort.
The review rhythmManagement-control literature on operating cadence as the mechanism that turns a planning framework into a practice.

All of Year Wheel

What it touches elsewhere

Nothing in a business is decided on its own. A conclusion reached with this model at Year Wheel lands in these other cores, whether or not anyone follows it there.

Project managementProject dates have to be set against the year’s real capacity rather than against the calendar.
Market CoreThe content calendar and the seasonal moments sit inside this wheel and compete with everything else in it.
Business CoreFinancial close, budgeting and reporting are fixed points that consume more capacity than anyone plans for.
Goal CoreGoal review rhythm is one of the cadences the wheel has to hold, and it is the one most often displaced.

Filed at the same place

These answer questions that arise at Year Wheel too. Where they disagree with this one, the disagreement is the useful part.

Sales and operations planningOne monthly cycle in which sales, operations and finance agree a single set of numbers for the months ahead.

Elsewhere in Time Core

These are other people’s models, named here so you can go to the source and use them properly. The Omnigoal is not affiliated with their authors and is not endorsed by them; nothing of theirs is reproduced here — no canvas, no diagram, no wording. Each is described in our own words, with the originator credited, because the framework is a place to put thinking, not a replacement for the people who did it. Model names and trademarks belong to their respective owners and are used here only to refer to the work itself.

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