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How binning budgets is being used to unleash transformational change in Bayer

A wind is blowing through the hitherto stuffy corridors of big businesses and we in the Beyond Budgeting community know what is behind it.

As Bill Anderson, the newly appointed CEO of the German pharmaceutical to chemical giant explained in the Financial Times on 17th June, there is an urgent need for large organisations in particular to find ways to cut through stifling internal bureaucracy to liberate latent entrepreneurial potential.

A radically different approach

Bill explains, Bayer needs a “radically different approach to how our work is done, how resources are allocated, how budgets are determined...every person at Bayer needs to have the same level of impact, fulfilment and accomplishment as a sole proprietor” . 

He also wants to “kill budgets” to help scientists and team leaders “drive medical innovation, to thrill customers and to make good use of company resources” by responsibly spending corporate resources.”

To achieve this he wants to axe internal bureaucracy and make individual employees more accountable. He added that this was not about job cuts, but a better way of organising work.

An "unstoppable force"

“I’ve seen it before’ he says, referring to his time at the helm of Genentech: “basically it’s an unstoppable force once you get it going.”  In the first year after budgets were abolished at Genentech, spending “actually went down,” he said, arguing that bad incentives to spend unnecessary resources at the year-end to secure next year’s budget were eliminated. At Roche, it freed up some $3bn a year that could be spent on innovation.

"We hire people from the best universities in the world, the top graduates, and then we have tons of people to tell them what they can and can’t do. It doesn’t make sense”


Amen to that.

A turning tide

Many of us in the community have been frustrated in the past because leaders of our organisations have sometimes failed to recognise how our ideas could help support their efforts to transform corporate performance and culture. This is a particular challenge for those of us working in larger organisations where we have to fight through layers of often conservatively minded organisational hierarchy.

Bayer is just one piece of evidence that the tide is turning in our favour. The doors are no longer locked and barred to us - if they ever were. The world is open to our ideas.

Want to discover more about the approach that is causing such a stir in the pharma industry?

Check us out here and share this link with colleagues and friends who might be interested.


You can read the FT interview in full here . (FT Subscription required).