1. What is Beyond Budgeting? Bjarte Bogsnes Vice President - Performance Management Development Chairman - Beyond Budgeting Round table Europe1-

2. Managing traffic performance - one alternative Who is in control? Based on which information?2- 3. Managing traffic performance- another alternative Who is in control? Based on which information?3- 4. Which is most efficient?Which is most difficult? In which are values most important?4- 5. The world has changed what about the way we lead and manage?Businessenvironment DynamicTraditional Stablemanagement XY People 6. We must change both processes and leadership ProcessesRelative and directional goalsDynamicDynamic planning, forecastingand resource allocationHolistic performance evaluationBeyond BudgetingRigid, detailed and annual Values basedStableRules-based micromanagementAutonomyCentralised command andTransparencycontrolInternal motivationSecrecy, sticks and carrots X Y Leadership 7. 7Some of the companies on a similar journeyEuropes mostcost effectiveuniversal bank 8. The Beyond Budgeting principles Change in leadership Change in processes 1. Values - Govern through a few clear values, goals and 7. Goals - Set relative goals for continuous improvement,boundaries, not detailed rules and budgets dont negotiate fixed performance contracts 2. Performance - Create a high performance climate 8. Rewards - Reward shared success based on relativebased on relative success, not on meeting fixed targetsperformance, not on meeting fixed targets 3. Transparency - Promote open information for self9. Planning - Make planning a continuous and inclusivemanagement, dont restrict it hierarchically process, not a top-down annual event 4. Organization - Organize as a network of lean, 10. Coordination - Coordinate interactions dynamically, notaccountable teams, not around centralized functions through annual planning cycles 5. Autonomy - Give teams the freedom and capability to 11. Resources - Make resources available as needed, notact; dont micro-manage themthrough annual budget allocations 6. Customers - Focus everyone on improving customer12. Controls - Base controls on relative indicators andoutcomes, not on hierarchical relationships trends, not on variances against plan8 - Classification: Internal 2011-08-15 9. Simple is not the same as easy 9- 10. Implications for leadership More autonomy and flexibilitybut also higher accountability for results Use your autonomydont delegate upwardslet it pass on to your teams Dont give up if someone misuse trustbut react firmly on those who do 10Classificati on: Internal 11. Questions or comments - now or later? Bjarte Bogsnes bjbo@statoil.com + 47 916 13 843 Twitter @bbogsnes Beyond Budgeting Round Table www.bbrt.org11 - 12. Want to hear more? 1. The problems with traditional management 2. The Beyond Budgeting model 3. The Borealis case 4. The Statoil case 5. Implementation advice Out on Wiley (US) Available from e.g. Amazon.co.uk (Now available in Russian and Japanese)12 -