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Why Budgeting Kills Agile And Innovation by Steve Denning

Budgeting, as most corporations practice it, should be abolished.”

—Jeremy Hope and Robin Fraser, Harvard Business Review, 2003
The budget often constitutes one of the last—and largest—stumbling blocks to creating a truly Agile organization.
Budgeting as practiced in most large organizations today is cumbersome, expensive, time-consuming and wasteful. It often cripples innovation. It is riddled with gaming-the-system. It encourages unnecessary spending and fosters sub-optimal targets. It hides accountability. It is demoralizing to the participants, inefficient, ineffective, built on fictions, and fundamentally at odds with the dynamic of business agility.
None of this is new. Way back in 2003, Jeremy Hope and Robin Fraser wrote as much in Harvard Business Review. Yet traditional budgeting remains entrenched in big organizations, even those implementing Agile. Why? A key reason is that budgeting interlocks with other aspects of the internal bureaucracy.
Budget & The Interlocking Matrix

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