The Annual Performance Trap: Why the Budgeting Process Must Change

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The traditional budgeting process consumes too much time while adding too little value.

Fortune magazine reported, around 70 percent of companies surveyed were poor at executing strategy—a massive indictment of the performance management capabilities of budgets. It turned out that most companies were characterized by incremental thinking, sclerotic budgeting processes, centralized decision making, petty operating rules, and controllers who demanded answers to the wrong questions.

We need an alternative management model that supports the goals of businesses in the twenty-first century. But achieving this vision requires more than fixing broken budgets. It requires a new set of management processes, and a new style of leadership. Moreover, it requires a new coherence among these management processes and leadership principles to liberate the full potential of the organization and its people.


  • Do away with budgets to save money, and create create a more ethical and profitable company.
  • How an adaptive process lets managers focus on continuous value creation instead of arbitrary budget goals.
  • Why a radically decentralized organization is a high performance organization.
  • How to realize the full potential of modern management models.

Download the article from Havard Business Review “The Annual Performance Trap” now.

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