Companies that take this radical approach to budgeting can reawaken their ownership mindset and align resource allocations closer to strategic goals.
Some go further, undertaking what we call zero-based redesign (ZBR), a blank-sheet approach that realigns the operating model, reengineers processes and workﬂows, and unlocks the potential of digital productivity.
But not everyone is satisﬁed with the results. Less than half of all large companies (with sales greater than $2 billion) report success from their efforts.
However, the numbers get more interesting when you look at what led to positive outcomes. Companies that used zero-based budgeting as part of a comprehensive effort were nearly twice as likely to say they were satisﬁed or very satisﬁed with the results as their counterparts who pursued limited initiatives.
The most successful outcomes use zero-based budgeting in concert with zero-based redesign. Successful programs typically reduce costs by at least 25% for the targeted functions and processes. In contrast, companies that deploy zero-based budgeting solely for the lure of cost cutting run a double risk: They can cut into growth muscle and hurt the customer experience