I’ve been reading “Implementing Beyond Budgeting” by Bjarte Bogsnes. Finance is sometimes a neglected area in terms of Agile Transformation and Bogsnes’s book offers rock-solid advice. The first element is the set of leadership and process principles.There are 6 of each:
- Customers. Focus everyone on improving customer outcomes, not on hierarchical relationships.
- Organization. Organize as a network of lean, accountable teams, not around centralized functions.
- Responsibility. Enable everyone to act and think like a leader, not merely follow the plan.
- Autonomy. Give teams the freedom and capability to act; do not micromanage them.
- Values. Govern through a few clear values, goals, and boundaries, not detailed rules and budgets.
- Goals. Set relative goals for continuous improvement; do not negotiate fixed performance contracts.
- Rewards. Reward shared success based on relative performance, not in meeting fixed targets.
- Planning. Make planning a continuous and inclusive process, not a top-down annual event.
- Controls. Base controls on relative indicators and trends, not on variances against the plan.
- Resources. Make resources available as needed, not through annual budget allocations.
- Coordination. Coordinate interactions dynamically, not through annual planning cycles.
These are difficult principles to live by without trust, transparency and simplicity in your organization. Adopting these principles takes time and effort, and a rather gargantuan mind shift. Eventually you’d want them all, but if you had to start somewhere, which principles would start acting on tomorrow?
Can we apply Pareto to the budgeting process, focusing on the top 20% of financial decisions and issues aligned with the Product Backlog?
Decisions on what to STOP doing are as important as the decision on what to START doing. Are you making the hard calls? Can you apply Pareto to both decision types? What will we fund? What will we kill?
More to follow on this topic in a future post.