![]() ![]() Rather, it is a philosophy that infuses a culture of cost consciousness and new ways of working throughout the organization. In fact, at bottom, it is not a method at all. ZBB is not just another line-by-line budgeting method. By modifying the incentives that shape their organizational context, companies can change their mindset, foster new behaviors, and unleash the enduring power of ZBB. Above all, it must instill a new mindset and new behaviors. To succeed, a ZBB implementation must do more than tackle the mechanics of new processes, policies, and systems. ![]() ZBB involves adopting a new way of thinking that permeates the entire organization. But like any other major change effort, transforming a company’s approach to costs requires effective change management. A clean-slate, bottom-up approach to resource allocation, ZBB enables companies to reset their cost base and cost structure so they can redirect funds to advance the company’s strategic priorities. There is a highly effective way to change how companies manage cost: through zero-based budgeting (ZBB). This raises a number of critical questions: How do companies rethink their resource allocation and budgeting process going forward? How can they preserve the tactical savings they have captured over the past year? And how can they harness and translate COVID-related behavioral changes into sustainable savings- and avoid the cost creep that invariably occurs when cost-cutting programs become fixtures? Just consider the dramatically lower spending on travel that has accompanied the shift from physical meetings and events to virtual ones.Īlthough hopes remain high that the pandemic crisis will end soon, heightened volatility and uncertainty are undoubtedly here to stay. Apart from prompting short-term contingency measures-such as cutting back on marketing budgets or IT projects-the lockdowns have spurred cost reductions. Over the past 12 months, the COVID-19 crisis has forced business leaders to double down on cost management, ensure liquidity, and scrutinize budgets. Technology, Media, and Telecommunications. ![]()
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