Zero Based Budgeting

After talking with hundreds of companies either considering ZBB or executing it on day-to-day basis, we've found a few key indicators that ZBB might benefit your company. The most obvious would be if budgets are being built by simply adding a certain percentage to last year. However, other signs include lack of cost category owners at an enterprise level, no formal procurement function, low forecast accuracy (or not forecasting expenses), and persistent challenges funding top priorities.

Zero Based Budgeting (ZBB) run exclusively as a budgeting process doesn't work. This is why we often roll out ZBB as Zero Based Productivity, which puts the necessary conditions for success in place and ensures lasting change.
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If your plan to roll out ZBB is to design a bureaucratic annual planning process, you will more often than not fail.

20% of ZBB failures happen because it wasn't a good fit from the beginning, and an organization leaped into execution without a thoughtful design stage set up by an experienced ZBP practitioner.

The other 80% of failures come from only executing 1 or 2 of the chapters of a best in class ZBP playbook. For example, not setting up a cost matrix, not assigning cost category owners, not using technology to automate the process, or targeting the wrong cost categories or entities to begin with.

Designing a proper ZBB performance management system can be a strategic way to free up dollars and drive growth for you business. With the right system in place, the cost efficient answer becomes the easiest answer.