Zero-Based Budgeting is not a new concept. But when the idea was first brought to light 40 years ago, it was too difficult to manage the process because the technology didn’t exist at the time.
A Method and State of Mind
Most companies today base their cost management approaches on setting budgets based on what happened last year. Against a backdrop of increasing volatility, it’s time to reimagine cost structures based on what’s needed in this new, disruptive environment.
Method: Starting at zero, all numbers must be justified and approved for the upcoming financial period instead of starting from last year’s numbers. The budget is based on current need rather than historical spend.
State of Mind: The method aligns organizational spending with strategic growth plans, resulting in departments driving forward with a common state of mind.
Basing resource demand on what’s needed now rather than on last year’s performance frees up capital that can then be used in ways that will have the most impact on building innovation and fueling sustainable growth.
Strategically shift with the times by applying Zero-Based Budgeting to re-evaluate costs and reinvest savings more thoughtfully, strategically, and efficiently.