ABSTRACT

This chapter provides an overview of the beyond budgeting model and introduces to readers a Japanese company, Disco, that abolished budgeting systems. It explains three main tools of beyond budgeting: relative goals, holistic approach to rewards, and rolling forecast. The chapter examines why Disco abolishes the budgeting system and how to manage its operations without the budgeting system. Goals must be set as relative goals. Generally, managers set goals or targets by the beginning of the new financial year based on their forecast of the coming year. It is generally said that companies use the pay-per-performance system in many countries. This system leads managers and employees to dysfunctional activities because they intend to set easy targets (lower targets) for themselves. In this context, rewards mean a bonus. Rolling forecasts are a forecasting system in which companies "continuously look five or six quarters ahead" or 12 months ahead.