What belongs to the Operation Model
The organizational model typically includes
- Organizational model: how the activities in the value chain and supporting functions are interconnected.
- Information and overall control: how information flows, processes, and activities that transcend the structure of the organization are controlled.
- Employee model: what kind of employees does the organization want to attract, pay and incentives, responsibilities and values.
- Implementation of decision rights: How are the decisions (whose principles are defined in the management model) lived in practice?
- Management rhythm: in which meetings and how often are goals, plans and results reviewed?
- Location policy: where to locate work and assets
- Business partners: Which organizations are more part of the ecosystem, which are transactional suppliers, and what do the relationships look like
Target Operation Model
Accordingly, the Target Operation Model is the target picture of the organization at a high level of abstraction.
It allows to develop an overall view of the upcoming changes.
Budgeting
Beyond Budgeting
Beyond Budgeting is an approach to thinking that, in a narrow sense, explores the overcoming of conventional budgeting and, in a broader sense, offers a basis for thinking about the design of modern organizations.
Beyond Budgeting emerged as a management model in the late 1990s and developed from practice in several European and US organizations. It is an alternative to traditional command and control type management models, which are usually based on budgetary and similar control mechanisms.
The purpose of Beyond Budgeting is not necessarily to eliminate budgets, but to create more agile and human organizations that can cope not only with more dynamic and unpredictable business environments, but also with knowledge workers’ new and different expectations of leadership and management; BB relates strongly to “Theory X and Theory Y” [McGregor 1960].
At the operational level, BB separates three aspects of the budgeting process
- Goals – what want it to happen
- Expectations (forecast) – what do we expect
- Resource allocation – what resources do we need to allocate to make it happen.
This separation makes each individual aspect much more transparent. In particular, there is no longer a conflict of interest between goal achievement and expectations, which often makes traditional budget discussions a nightmare.
The founder is considered to be Bjarte Borgsnes, who introduced the model many years ago at the Norwegian Statoil. The Beyond Budgeting Round Table is a global network based in London.