Beyond Budgets

My friend Jeff McKenna is attending a Beyond Budgeting session at the LESS2010  International Conference on Lean Enterprise Software and Systems conference in Finland. Budgets create inefficiencies and problems. They make it harder to pursue unexpected opportunities. They create waste when budgets are rapidly spent down at the end of the budget cycle in order to make it look like the entire budget was necessary. There are a growing number of organizations that are moving away from having budgets. And very much liking the results.

When Jeff told me about this,  I immediately thought of biomimicry:

Does biology have budgets?
Do budgets exist in biological systems?

Why do I care? Because almost every sustainable complex system that we know of is biological. So if we want to create sustainable complex systems to help solve the vast and growing number of wicked design problems facing humanity, it behooves us to look to biology is a great source of models of how to do things. This is the most common use of biomimicry: using nature’s designs to inspire solutions to human design challenges.

In this case, however, we had something slightly different. Instead of being inspired by designs that exist in nature, my inspiration was about what is absent from nature. About what is abiotic.

Back to my question:

Do budgets exist in biology?

I think the answer is no.

Consider your body. That’s a complex system. Does your body have an energy budget for your left arm? A specific amount of energy that is reserved for use only by your left arm for the next period of time? And a separate budget for your right arm? And so on?

No. It doesn’t. You may have a limit on how much energy you can safely absorb into your body, but once the energy is in your body it flows as quickly as possible toward where it is needed. It is not tagged for a specific use. When there is extra energy, your body may stash  it away for future use in places like fat cells. In lean times, energy is withdrawn from those fat cells and taken, as quickly as possible, to where it is needed. Without any prejudice about which part of your body will use it. Energy ignores planning.

If none of the untold variety of biological systems have anything like a budget, is it wise for us to use budgets?

But we do use budgets in our organizations. Why? They probably were put there for good reason.  What were those reasons? Was it about trust? About a lack of trust that subordinates won’t overspend in a way that the superiors believe is responsible?  Was it ignorance of a better way to proceed?

And given where we are today, given the electronic nature of money today, and our ability to track its flow on a nearly instantaneous basis, and to be notified automatically of unexpected or aberrant spending patterns, do we still need budgets?

When Jeff returns, I look forward to learning about:

What stands between where we are, and where biology is?

About davidsocha

In autumn 2010 after spending 19 years working in a variety of software organizations as a programmer, architect, manager, teacher, ScrumMaster, product designer, change agent, and agile coach, I finally listened to what everyone had been telling me I should be doing and joined the University of Washington Bothell as an Assistant Professor in Computing & Software Systems. My interests are how to create and maintain great teams, particularly those in software development organizations. I am most interested in distinctions that dramatically increase the effectiveness of teams, such as systems thinking, design thinking, biomimicry, and human centered design. I am a pragmatist, a collaborator, and an optimist.
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