 So I'm based in a Norwegian energy company called Stathol, I'll come back to the company in a minute I joined that organization back in the early 80s and at that time it was a smaller company than what it is today And most small organizations, they want to grow, they don't dig and some succeed Many discover that we have not only become big, we also become slow, rigid, bureaucratically lost a lot of that Agility, the expeditivity we have as a smaller organization. I find an interesting parallel here to the aging process of man Of course, as we grow older, we do lose a bit of that agility we have as teenagers And I'm starting to get some practical experience here. I don't know what I'm talking about When it comes to man, we have no choice. You know, in the end age takes us all Organizations, however, they have a choice if it's written nowhere as far as I've seen Of course, you are big. You should be rigid, bureaucratically and slow when all is included So our journey at Stathol has very much been about trying to find our way back to that agility we have as a smaller organization Without losing the benefit of new things. Our big question, how can we be small at the same time? The question for small organizations should be how can we grow without ending up with the same misery So, what I would like to share with you today is first the bad news, but you know Traditional management is broken The good news is that there are solutions. You also know that beyond budgeting is one such solution It's actually a somewhat misleading name. The purpose of beyond budgeting is not necessarily the bit of budgets The purpose is to create these organizations which are more agile, more youth In order to do that, we have to blow up traditional management And what can we find at the core of traditional management? Budgeting forces and the budgeting funds That's what the name is coming from, but this is about business agility Hopefully the name we would have picked if you could not have done this over yet Then I want to share with you how we are trying to do this at Stathol. We started off in 2005 So certain years ago, I want to share with you what that story is about I don't want to stand here and pretend that it's all perfect and just sunshine It's hard, we made mistakes, we've stumbled, but that is what we've changed about We've changed this never-estroyed straight line from A to B, but you know that as well I'd like to continue with a quote from a vice-man As today you're going to talk about, he's a director Most of what we call management is about making it difficult for people to do the job And I would very much agree. Sometimes the problem is that we manage too much Performance management, a label I don't like. We don't manage performance. There will be no performance I don't think that's true. I'll come back to you Imagine an organization that a hundred years ago invented a fantastic machine, state-of-the-art Crucial for the success of this organization 50 years ago, this machine started to make some trouble It didn't work that way. Today, this machine is completely broken. It looks like this And you will all understand that this is not a true story In real life, this will not have happened In real life, already 50 years ago, smart people would have gotten together To fix this, to invent something better Because we all love innovation, right? Innovation is great We want to be leading it, unique in the forefront Yes But that enthusiasm for innovation seems to be limited to A technology product, maybe services to innovation But there is also something called management innovation It's about exploring new ways of leading In today's business realities Management innovation, that is not great, that's scary Kicking out the budget, are you crazy? What's the consequence of this? The consequence is that it's very crowded here at the left-hand side Everybody is into technology product, services to innovation, all are competitors On the management innovation side, that is not yet the crowded place because it's scary But that is good news for brave companies who dare to embrace also this kind of innovation Because you can get just as much performance competitive advantage out of management innovation As you can from technology product innovation And there are organizations out there who say that we have no competitive advantage whatsoever When it comes to technology products, we find it in the way we lead and manage I have a few examples for you a bit later So it's all about performance defined in the right way I would like to talk a little bit more about that important growth performance But now in a slightly different setting than business or corporations And some of you know that I like to use traffic as a metaphor Because it's traffic and we are out driving We would also like to experience good performance My definition would be a good flow By the way, I never understood why they call it rush hour traffic There's no rush at all, those cars are starting dead still But you know, there's so much I don't understand So anyway, I think traffic authorities want the same And here is something you often need to talk about traffic authorities to create a safe and good flow Two questions, who is the control here and based on which information This is a good old fashioned traffic light, there's no height, there's no sensors So the one who is the control here is the guidance program decides Where is that person as you said waiting for that green light Somewhere else And which information would this program be based on? It would be based on historic events It was a forecast that it was not the entire fresh information As you said they're waiting for that green light But again, the best of intentions trying to create a safe and good flow Then there is a very different solution with exactly the same purpose The roundabout traffic circle or whatever Who is the control, we are as drivers Based on which information, based on fresh, free time theory and now information So it could be, since we arrived at so very different offices It could be that we could compare a bit more these two ways of managing So let's do that And I've got a few leading questions for you here Which is normally most efficient, normally Which is most difficult to drive in Of course there's the roundabout And going back to our organization for a minute Everything we are trying to leave behind this catalog of traditional management Is from a leadership point of view, much easier than the stuff that we know about Our guiding start cannot be to go for what's easy Because it's easy, we have to go for the stuff that includes performance Aren't in the right place Leadership is actually not meant to be easy Final question here Is it relevant to talk about values in this setting up? In Stator we have something called the Stator Book It's our most important document Talks about who we are What we believe in, how we work And it's not a coincidence that I'm holding a printed version in my hand Of course it's available online But that is on purpose And this book talks a lot about values-based management The opposite of value-based management We can maybe call rule-based management Because traffic light is a good example of rule-based management Red is stock, green is drive Blue is yellow, but beyond that Very simple rule-based proposal If for us a value set, a mindset Among drivers waiting for that Green light, which is about me first I don't care about it That mindset is not a big problem To talk about light But indirectly about me first Don't care about the rest That's actually a big problem What's in the roundabout We are much more dependent From everybody having a Common positive purpose Of wanting this to go well We have to help each other We have to make all intentions visible Interpret other people's intentions We have to interact with people In a very different way That we need to do with the project at night Two other important words Before we leave traffic Trust Head of that traffic light That's before it is I'm not trust to us to make decisions They do in the roundabout The other important word is transparency The head of that light The only thing you need to see In order to make your decisions Dock for Drive Is in theory the colour of the light It's obvious In the roundabout You need to see everything Not in the project But transparency is key I don't like that label Performance management For different reasons It's very negative words But there's highly relevant When you talk about the traffic light That's exactly what traffic is What the audience are doing Managing performance very actively The roundabout Is about something else That is about enabling performance Creating conditions for great performance Like this And this is more than playing with words These are two phenomenally different ways Of thinking about these important issues And the static work You no longer contain The word performance management Run You talk a lot about enabling performance The relevant performance management So the roundabout is a more Self-regulating way of managing Self-regulation is another important word here And I would argue When we now leave traffic And we move to our organizations That in today's business realities Organizations need more Self-regulating management For at least two reasons The first reason has to do with all the Move crowd there Volatility and certainty and complexity and ambiguity If we take that move now seriously It should have implications For how we design our management models Compared to if there was no move crowd there And when I joined Stathol And had my first management job Back in the early 80s It was a lot less move crowd than the local industry By the way, my first management job in Stathol Was the head of the corporate projects So I know what I'm talking about And I share with you how stupid it is So that is a reality we need to reflect on The other reality is not external It's internal, has to do with people Asking ourselves What kind of people do we generally believe That we have in our organizations And one language for that important discussion Was developed by good old Douglas McGregor Like in 1960 Great Britain Human Society of Enterprise Theory X and Theory Y These two were posting views of people What most of the people Theory X A very negative view A view that most people in an organization Is a bunch of potential teachings What the management might be If you have control of each instance of the block We can know what will happen For whatever reason There are a lot of stupid things That are really likely to run in sales Theory Y Very much the opposite view And the opposite of what most of the people view I mean a view that beyond all the education And confidence that most people actually want In a good job There won't be involved There won't be lessons in what is treated as adults We don't see this as a degree so far Where our sympathy lies X or Y I have no hopes But it should be very easy to agree That if we may not believe in Y The implication of our management model Must, will be very different from that Really, if we may not believe in this That should be a no one building If we combine these two realities It should look like this And I would argue that traditional management Plies in this lower left hand corner The conscious or unconscious assumption That the world is still a quiet planable place And that the public should leave this on the On the outside If you disagree with that That is not the place to leave And we need to move up to that upper right hand corner What we need to leave behind Is traditional management Rigid, detailed, annual, very rules-based And all the vital management Sent to us from our control Of secrecy and a strong belief In sticks and carots As ways to thrive for moments Maybe there was a time When this worked Maybe there still are some places where this worked But for us and stuff on that discussion Is very uninteresting But we know that our business environment Is up here To a lot of people And we believe that most people In Statoil, it's on the My side and off the X side But not everybody Every time I talk about X and Y Same faces are popping up in my head I can see those guys right now Those faces belong to colleagues on my next Statoil But I maybe would put it on the X side I'm not saying they are crooks But you understand what I mean But that is not the point There might be some places Popping up in your heads as well, no Because these people You typically find in most organizations That is not the question The question is Do they represent the majority More than the minority If they exist That represents the minority Then we can look that minorities thrive To the sign of our management models And we need to start with Our majority view And if that is why That must thrive The sign And then we need to find other ways To deal with these guys on the X side This is just like in a free society Let's not put everybody in jail Somebody has done something wrong Like we are all free citizens of Statoil So what do we need to do? Address both dimensions On leadership More values based than rules based This does not mean that we shouldn't have rules It simply means that the stronger we are On the value side of the newer rules Which we begin with More autonomy Where's Yulka World? There isn't time for nine floors So get that position And with these people on board It's a specific city Very often they can take away positions For example We need more transparency So that the important world is coming back And this is good news for all the scared managers I've met over the years Who are afraid of leaving That's not a comfortable corner down here On the left Because they are afraid of losing What do you prepare for losing? Control And that fear is real I can see it in the right It's made more than they have understood It's not that control is nothing but delusions of control Fear is real But here's some good news for scared managers Transparency can actually not be affected But control is real Social control There is a reason why most These traditional leadership groups Start to operate at night And I'd love to share this nicely in a story That you might have heard about From the WOSH It's this almost important company Quite traditionally managed That they did a very interesting experiment Along with capital costs Kicked out in a pilot Kicked out of a private budget Work was happening with regulations Replaced it with full capital With a few exceptions Everybody could see everything If you traveled Where? Lives need to be cheaper Yes, what happened with capital costs That's a really good question This was achieved through a very self-regulate Regulating control mechanism This was a question of tearing off cases And finally, in turn, intrinsic motivation And I probably don't need to tell you What research is telling you About that important issue When it comes to knowledge work And knowledge organizations Where individual bonus Is not the most powerful for that kind of work It's eaten clearly By a lot of other things Including mastery purposes Belonging economy And things that have one thing in common Beyond the fact that they are free They are about leadership It takes a bit more effort To motivate the leadership With the dangle that they got Coming up to their nose Saving this and get that So, instead of We have always tried to be a values-based Deep-oriented company I'm not saying we're perfect But it's always been important for us This book talks a lot about it But our challenge was maybe more That as we were growing We were adopting more and more Management processes That had a different message Because it doesn't help To have these theory-wide Leadership visions If you have theory-ex management processes Like, for instance, traditional work And in a lot of organizations That is the case Based on creating poisonous gaps In what we preach and what we practice So what we have tried to do On the management process side Vertically here is To change these management processes Is to better reflect What they're saying about people In that book What we mean about people Why, at the same time Making these management processes So here are the examples Of things that typically Typically we have two examples With the traditional budget Forget that this is a dipty Unless you challenge the budget In the process Graphically But either way You can go or you can be Graphically changed But specifically This is when we set target goals To help you set the method And think more on the benefit Of course, the health that we Hit 29% In addition is Actually, because 30% or 35% We need more dynamics Into our processes Stuff we're talking about here Why should all of that Circulate how generated That is an official Period Of the business point of view The picture We need to organize these processes More on a business With an event With a written Static calendar Finally Form a generation But not about something more Sharing two numbers Like two That is to narrow To simple We need a holistic Form a generation And we go back to what that is And this Dear friends Crash course in Beyond budgetary Not beyond budgetary But addressing Both leadership And management processes In a coherent, consistent way In order to become more agile And more unique Not necessarily I think grown in itself This is what it takes For peace In a positive sense Today's business And people can help us There's a number of companies On this journey today In some form or shape Here are some of them And I could have talked the rest of the day And tomorrow about Fantastic management innovation Take it easy And you probably know Many of these organizations I'm going to quickly limit myself To companies And let me have two more 45 minutes It's a long time Right I'm sorry about the rush here But the big story It's a short time So Let's begin Let's start in Norway On the left-hand side Put it up Reach an IT company Called Mayas As people In Norway And in India Miles No budgets No targets Are in nothing Or what we call Traditional numbers They're just a lot Of fantastic process And enormous growth And In every one process This test is very important And I think A lot of emphasis on Recruitment Recruitment Indeed Simply philosophy If you get it right That recruits the rest of us When might this interview They never take less than 10 references When management really needs to use The quality to use What the candidate has done Which I don't talk about in a little bit They need checking Rightly competence To scale like if these people are there or not And by the way They have a veto right If they say no It will go It's not going to happen Amazing compromise If you work for miles Your PC is important And it's important to attend conferences And courses to maintain And develop the confidence If you work for miles You can buy whatever PC you want As expensive as you want And replace it as often as you want No PC but You can attend whatever conference you want Wherever the world And often as you want No travel budget For complex projects The only thing behind this Is that when you have work at least You can learn from that Seminar And play with it You have to post on the internet What you did And it goes with it It's the only thing that could come of it And our only small concern Another big concern is Could it be too much And people try and find good enough pieces Are they taking enough time? Isn't that the luxury problem? It is nicer to encourage people Buy better stuff Take more training And do the opposite Okay, nice Wonderful example But the veteran here Is the company in the middle on the top Swedish bank for hundreds of pounds That today has around 800 launches Of Europe With the fastest growing bank in the UK This bank has no budgets No targets No nothing again And they have been doing this for a long time They kicked off the budget And a lot of other stuff Only the veteran in 1970 Well, that's interesting But the big question is then Is it good for performance? Look at the facts Hunters can't have been performing better Than the average of the veterans Every single year It's the most cost effective Universal bank in Europe Without cost budgets And they've never needed a lot Of the authority in the industry Not to be a coincidence There are a lot of different management models A lot of decentralization A lot of autonomy A lot of transparency A lot of central benchmarking No individual bonus Only common bonus here Really Very different from how Of course other banks are Hunters and some other companies They inspired what they can Known of the standard budgeting That they announced it And yes We were a few years ahead of The agile management But the point is that we can Work roughly at the same time And there's a lot of similarities Between two As you will see We haven't before on the top In 2012 But again It has read both leadership And management courses And I don't have to I'm going to do this in a bit Even though I have talked a little bit about On the leadership side Both the style of news And quality transparency But I'll come back to A few of the things of the management course side And we know Two staff and a few minutes But a few important messages Around these principles These principles do not Represent any kind of strategy They are principles That just provide guiding information Of what they should need In order for organization Pense for that organization Business Work growth history And that's the way it should be I don't like management recipes And there are a few of them out there Need also in the agile community And I don't like those recipes Because in the management recipes Somebody has done all the thinking for you Your only job is to implement Other people's thinking I find that it quite boring And also quite hateful You have to think to yourself What is it for you This is also an attempt To create coherence between what we preach On the left-hand side Of the tech Two classical examples of leadership Doesn't help We on the left-hand side Talk loud and warm about How fantastic deep we have Although this is The executive talking How fantastic deep we have That we would be talking And be frustrated about it It's not that much Moving to the management processes Since the 10 travel budgets Are you crazy taking out the travel budget Just imagine what would happen Right or wrong I'm just saying that this is the focus Beachy won't be impacted another time Another classic example Does help that we talk equally loud and warm Left-hand side about Me and us and together in team And everybody in the same boat All right What do you think the management processes Prindle all about the leading focus Right or wrong The opposite Finally, as we understand That's a little bit of an understanding About the other budgeting Something we think is just another way Of managing the focus Yes, it is Principal thinking that there Has never been other principles Secondary system What do you think to that principle The leading budget Costs will be bought And I understand what I'm saying Sorry, guys Costs are still important All these constraints This is about how can you optimize In a more intelligent and effective way Within the constraints And what then the 100-year-old Management peculiarity can offer That situation is But it is The path of 100 years So let's leave beyond budgeting And let's move to Spathory This is also in a nutshell Oil, gas and renewables Can help you start this company We are getting bigger and bigger Within the new renewable energies Simply because we are not a knowledge Diamond change And we know we are a problem We know we can take a kind of solution For short term and long term And that is why we are leveraging Our engineering competence To build offshore wind farms They are good at the big stuff And we have built the first Float in wind in part of the world The case of rakes And it has been these wind farms Looked up other areas That's our management process It's called ambitious action And has three purposes It's about translating strategy And we also include this management into this It's called pure agility And it is about activating What we say in this book It's about people's well-being And there are some steps in this process That as they appear They might not seem to be very unique But the way you do this That is actually the difference Translate strategy Is about objectives You are taught in some books Then we are just risks Not achieving these objectives And then a risk in our business And we identify actions What do we need to do To achieve those objectives And to manage risks Very often that is one of the same thing Then Of measurements Assuring that we are moving towards these objectives Here are the benefits The first is that nothing happens Just to measure As I often say You don't lose weight Since the bike is weighing you I know You got that right And then my wife gave me a very helpful advice You often maybe you didn't stand alone Ah Anyway The point is that nothing happens You need something more That's why it's called ambitious action And last but not least The translation into What does this mean for you and me Let's straight into the HR process here And here is an example of Externating important works in these books Very first works is work on the thought of work The way we deliver As important as what to do With the way we deliver We talk about the values in this book The weighting between the two And all consequences The real thing is 50 50 It's the only thing it could be But that's one area But you are somewhat different Let me share with you a few other areas That one has to do with the Except that kpt might be the best One that's indicative Of course when we talk about kpt is We just forget that the i is the kpt is That's what's called indigene Right That's what's indicative of that But they are not telling the truth They are not called kpt's Kpt's performance keys They are not called kpt's interviews And we can't base our influence On management or communications So as a reflector Before we conclude In a performance evaluation We must take off the measurement glasses So that's a good measurement It's not that specific So it is before Not everything that counts That counts it And not everything that counts Measurement can be good servant But when it becomes a master And we are ready Here's an example of an ambition traction This is actually a status On corporate level The one and I will not See Of course not what's really the retail But See that we Talk to the four elements That talks about the previous slide And the HR code So Going back to this one This is a very integrated Performance process Not a performance management process For this performance framework And it starts with strategy Run via files into HR You look very closely together That it should be seamless To offer Today we have around 800 Of these in the organization And let me just spend a little bit of time On this slide for the ending On two other areas Where we try to do this The first has to do with alignment How do we create the red thread Throughout There's an easy way The wrong way It's called cascading Of sitting up in the corporate center And I simply instructing All the way down These are your objectives These are your APIs These are your targets And you know We find this people That many in my community Love that kind of cascading Because often we can add up All the local numbers on here And it matches the corporate number The corporate number can sleep well Well about Two times together Don't hit a lot of decimal Wow we should do that That's it That's that But it is because That top down cascading In our culture Destroys everything Related to involvement Commitments and engagements Then That the add numbers add up Is kind of At no value Still it's not an anarchy It has to be a red thread We create that red thread Through translation Instead of cascading This is again more than Saying good words Translation is about that This team here Shall make their One of these teams Shall make the wrong Admission selection And we look around Further up As you are aware The corporate left and right That's our Admission selection You need to look right In order to Support those we have a relationship with When it comes to the mission level When it comes to the election If that translation should go wrong It's not a big problem I'll come back to why But of course To never the both of you What you are paid for One reason it isn't the problem is With the few exceptions Of shared sensitive information All of these are Open accessible to all of us Should be no place to hide But it's stupid But that transparency Is not just about Control It's also about learning You won't be able to surf around here And look at what other people are doing And if you get inspired And And The other area Where we try to be different Has to be with Time We used to have Annual versions Of official traction For every orphan These teams Make new open access Wasn't a budget process Not better Still in annual In 2010 We picked out the calendar year Where it's possible Where it exists But today These teams You change Whatever they want On their own ambition traction And where it's needed What's not happened To your own distance apart They can change With the objectives Strategy change They can Change the KPIs Indicators That define the better one For a strategy change They can even change The capabilities Of the targets These targets have not been needed Most of it to achieve But again This is an energy We had a very little To own necklace We found this We But this was introduced Except that they Want to change something That has to be changed You still need it In a prudent On that up With little time You still need it In a prudent That's not a stamp Or a thing We do that In a prudent If your change is small You're still informed On the same level Think of small Always make sure That you inform others And When this was introduced People said great We love it But by the way What's this thing that you can do? Don't walk with us Let's walk with others To define that On the rock of it Impossible But we have left that With your organization itself There might be somebody On the left-hand side here Because it's not a definition Of being explored Somebody on the right hand side That's not so big As long as it's not stored To space Take that to the wrong About self-regulation We would like this to run Self-regulating as possible Instead of being kind of Micro-managed For the past four past days Many go into rolling four past days We went for something called Dynamic Four Past Days We had no fixed frequency No fixed time horizons We could update your four past days If stuff happens to their own This is reality And we're not going to talk about it And they should not do that Update Or How to help each other They should do it for themselves In order to manage their own targets Why should all targets have a deadline Of How far away those forecasts are going To the common database They still have a global SSE solution So at any time when we need it Focus level We can tap into that Information Just to check our capacity ahead of a Or ahead of a major investor Targets Why should all targets have a deadline And date itself We know why it's like that There's still meanings We would like to see more Natural time horizon If you're just Three months away from home From the place of 18 months Can a band end up Here Targets That should be the exception And talking about targets If you're just going to put Another chapter Of your budget to do After the targets Of course we are asking ourselves Do we need all these targets Or do we need any instances Without We can also just If you say that we need the targets Because of our top targets And that there's no targets We could hopefully not know what to do And you're unable to And I don't know what to do That is not true A target is not the target What we really want to achieve Is the best possible performance Given the circumstances That's what we want to achieve Set the target in one way Of achieving that It's not the only way And it's not necessarily the best So we are not saying We are going to kick out targets Like tomorrow Like some other companies have done But we have to start with that question I'm mentioning this Because this is a journey Just to get braver along the way In five years' time We didn't have discussions We couldn't have had So let me finish off with The holistic performance evaluation And holistic here are these two things First of all 50-50 between what and how And it also means that When we shall evaluate What is delivered in business terms That is defined Through ambitious action Directly or indirectly That evaluation Of what is delivered in business terms Can not be reduced In a stupid and simple Exercise Of counting the number of revenue We are dumping down Something so important Something so stupid In our managers We need two qualifications only To do that job Must be able to count That can't be colourblind And we should have Somewhat higher expectations To our managers And by the way I wouldn't pass I can count But I'm halfway qualified Anyway We might start with confidence And then we need to take off The measurement of these Indicators Are indicators They are not necessarily Setting for storage But we need to pressure test What is measured before we can compute And we do that through some state-of-the-art questions I see that KPI is green But have we really moved towards that And those of you who objected That VN5 I'm having sense How are these some sort of parts Should be Powerful people who stress And they completely make it They have to seem to low-ball Then get a little bit of a way with it Often should do As significant changes in assumptions Failure in such a nature Should it take a little bit What's the rate In earthquake in Japan We think it's a little bit too Better for the going bankrupt I think that says The format of this target Risks which Always risk handled And last but not least Are staining a little This is for putting a big dose of assessment Of the top of your measurement For the future That most discussions Used to result in a rating On a scale of one to five In both dimensions I've never looked at rating I would have thought I have to have that in mind That's it rating There'll still be a link To development plans Rewards That will become a Much more assessment-based And not That rating-based And the starting point For that evaluation Is that Most people in the software Are simply solid Thoughts Nothing has done a very bad job at this What we have some stars We will take care of that Of course we have some performance issues We will take care of that But we shall not be obsessed By kind of upgrading Everybody around the world Lots of people are happy about that So What I want to share with you I'm sorry about the rush You want to discuss later In some of my coordinates You want us to Come into your own location And in the neighborhood Very much like to do that And here on Twitter And I only treat about this stuff For no cats and no dogs And no grandkids with them I promise If you're even more interested Check out our websites Non-publicly wrong page We have our 10th year anniversary This year We're going to have a big stock hold We're coming out in the face And if you're even more interested You have just heard the very short version Where it's a long version And it looks like this I wrote a book about my journey Eight, seven, eight years ago It's just out in the second edition I've only realized that there's so much that happened And even Other stuff that's happening Might be happening But that's not it Thank you very much We have a couple of questions Just show your hand We have a couple of questions Abhiyara Thank you for the session Just a question is that Did the model church play a part of a role In the way you implemented it Because I could see a lot of Nordic games How do you think you know The other cultures Are the other parts of the world really? It's a good question We get it often Yes, we do get some Some tailwind Our culture But this model it was Most settled It's often globally It's just as valid in Angola As I didn't use And our experience is that I mean, take using Or Angola, that's it I mean We This is actually becoming competitive in our culture Because there are This In those places There are enough people Who want to work For a company like us Even if that