UNAIR NEWS – The traditional model of corporate budget management has been applied for centuries. However, many companies are abandoning this model because it is not efficient. In the last decade, there have been innovations to manage corporate management, including the beyond budgeting model.
In a guest lecture at the Department of Accounting, Faculty of Economics and Business (FEB) Universitas Airlangga (UNAIR) , Dr. Sebastian Becker explained the development of the company’s management model. It includes the principle of model innovation beyond budgeting. The guest lecture was held online via Zoom and Youtube on Tuesday, May 16, 2023.
Business model canvas
Organizing the company’s budget requires a mature plan. Generally, companies use the business model canvas to describe their business organization. Dr. Becker said that in the past, the company only moved according to business models, such as transactional and subscription.
“Before the business model canvas mapping method was patented in 2010, it was difficult for the company to describe its operations. Then, the business model canvas develops, making it easier to visualize and describe the company’s business operations,” he said.
Dr. Becker suggests using a model canvas when building a startup. He considers that one can clearly create, capture, and convey business value with this method.
Traditional management model
The management model relates to efforts to regulate the internal organization. Sebastian said, “It relates to the choices of company executives about company goals, motivation and effort, coordination, and resource allocation. The point is about how the company is making its arrangements.”
The management model affects the setting the company’s budget. Many companies use a command and control management model. “This management model starts with budget planning carried out by a team of accountants or financial management.
Then, based on the budget, the company will set its goals or objectives. However, this is a traditional approach and has many drawbacks in terms of ineffective, inflexible, and inefficient enterprise settings,” he explained.
More than just budget allocation (Beyond Budgeting)
Dr. Sebastian explained that the traditional management model had received criticism. For this reason, Jeremy Hope and Robin Fraser proposed an innovation in the management field. They came up with a model that is more than just a budget allocation (beyond budgeting).
“The most important thing is that this is not an innovation focused on accounting and budget allocation but a full management model. Through the beyond budgeting approach, companies will be able to create an adaptive, empowered, humane, environment that provides better performance,” he said.
Principles in Beyond Budgeting
The principles of Beyond Budgeting are divided into two parts: the principles of leadership and management processes. Dr. Sebastian explained, “The two parts are in harmony.”
The principle of leadership is a principle related to human management. On this principle, Dr. Sebastian explained a lot about the process of building the goals and values of the company. Also, form a reliable team.
Meanwhile, the management process is more technical. Dr. Sebastian said the process is more or less adopted from the traditional management model. Nevertheless, there is a more humane value adjustment in it.
Author: Muhammad Naufal Rabbani
Editor: Feri Fenoria
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