We fund Value Streams, not Projects

Traditional Project-based, cost-center budgeting creates overhead and friction. Let’s explain this with a story from the real world. Please note that the names have been changed to protect the innocent!

Story from the real world

I was working for a ferry company whose financial year was from January to December. The budgeting cycle was 3 months; it started in August and ended in October so that it could be approved by our single shareholder in November and then loaded onto the ledgers in December so that we were ready to “rock n roll” in January.

Starting a budgeting cycle in August is not great because many people are on holiday vacation; the busiest time of the year for this ferry company was the last 2 weeks of July and the whole of August because of the school holidays / summer vacation.

So, I never started the budgeting cycle in August and waited until September.

I would then visit all the directors in turn...