THE CASE: The Fiction Budget
Rajan spent 4 months on the annual budget. Beautiful spreadsheets. Endless negotiations. Executive presentations. By Q2: market shifted, new competitor emerged, budget obsolete. Fighting for "approved" spend that no longer makes sense.
60% of budgets obsolete within 6 months (Deloitte). Traditional budgeting: backward-looking, time-consuming, rigid. Rolling forecasts + outcome-based budgeting = 30% more agility.
The Evidence
60% obsolete by Q2 (Deloitte)
4-month average budget cycle (CFO Survey)
Rolling forecasts: 30% better agility (McKinsey)
Outcome-Based Budgeting
Instead of: "How much do you need?"
Ask: "What outcomes will this budget deliver?"
- Link every ₹ to measurable outcome
- Quarterly reallocation based on performance
- Kill zombie projects faster
The Experiment
For one department, try rolling quarterly budgets. Reallocate based on Q1 outcomes. Measure: Less waste? Better results?
Sources
- Deloitte. Death of Annual Budgets. 2023.
- McKinsey. Rolling Forecasts and Agility. 2023.
Key Takeaways
- 60% of annual budgets are obsolete by Q2
- Link every ₹ to measurable outcomes
- Rolling quarterly budgets enable faster reallocation