Budgeting Beyond Budgeting : A Tool for Management, Surprise Avoidance, Trust Creation and Organizational Learning

While for quite a long time the budget was considered one of the crucial management tools, it has always been subject to criticisms, which have become stronger in the last couple of decades, under the commercial name of “Beyond Budgeting”. In this article, we review the history and foundations of budgeting, to show how typically, the criticisms to budgeting have to be addressed to a bad management style, and not to the technique itself. Then, I use an example to show how budgets can be used to the firm's advantage in many fields, but mainly in being able to avoid unpleasant surprises, create trust between the different hierarchical levels of the firm, and enhance learning in the positive sense. This allows the firm to avoid vicious circles that are often found in the practice of budgeting because of bad management, not because of the budgets themselves