Most important, budgets can actually work against performance. Dr. Steve Morlidge offers a simple explanation for this in The Little Book of Beyond Budgeting. “Budgets also sub-optimize performance by forcing the business to use the same set of numbers for competing purposes.29 On the one hand, good targets need to include an element of stretch, but forecasts need to be realistic, while cost budgets need to be ‘tight’ in order to constrain spending. It’s simply not possible to fulfill all three purposes using the same number.”
Check book
