Arla Foods goes Beyond Budgeting
Arla Foods is a global dairy company with growth focus. After several major acquisitions, sales today are over EUR 10 billion and the number of employees is just over 20,000. In 2011, the company decided Arla Foods to leave the traditional budget control when management saw it useless in today's business world.
At the 53rd network meeting within Beyond Budgeting Roundtable which was conducted in Brussels 19-20 March tells Morten Holm Jensen, Vice President Corporate Finance at Arla Foods, about the gains with a changed control and management model.
Arla Foods has in recent years experienced an increasing market volatility in combination with one
extreme consolidation in the industry. In this environment, the budget becomes an obstacle because it is too static, lowers the level of ambition, reduces risk taking and, not least, drains the business on
energy, Morten says.
The work to change the governance and management model began with an analysis of the business environment, which has changed dramatically as a result of deregulation. A growing middle class in emerging economies, a focus on food security, a deficit in milk and an increased volatility in milk prices have also been strong forces in changing the governance model.
Arla Foods The story of a world without a budget involves major changes in the company. The most positive is that the focus has shifted from deviation analysis backwards to more forward-looking analysis of trends and dialogue on measures for improvement. Morten says that in the past discussions in the management group were very much about why they were not delivered. These discussions are now completely gone and the focus is on closing the gap between the forecast and ambitious goals. The reliability of the forecast is analyzed and indicates the quality of how the organization talks about its performance.
On the speaker list in Brussels were in addition Arla Foods also Main Freight, successful New Zealand international logistics company, Bjarte Bogsnes, sought-after inspirational lecturer and chair of BBRT, and professor Trond Bjørnenak from Norwegian School of Economics..
If you are interested in hearing more about the conference, please Beyond Budgeting or the opportunity to become a member of the network, contact Knut Fahlén.
031-761 60 10