Summary of Zero-Based Budgeting Comes to Business Functions

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The adage “less is more” has a fresh application. “Zero-based organization” (ZBO), a cousin of zero-based budgeting, can help firms prepare for digitalization or other transformations by winnowing their processes and activities to the essential, says a team of Boston Consulting Group professionals. Mark Austin et al. ZBO is both a mind-set and an approach, the authors explain, and this primer will help you develop both.

About the Authors

Mark AustinKarin von Funck, Gregor Gossey, Christoph Hilberath and Reinhard Messenböck are professionals with the Boston Consulting Group.



Digitalizing processes isn’t always the cost-cutting “slam dunk” that executives anticipate. Companies that aim to reduce costs steeply and swiftly by digitalizing may see their plans crumble because it requires the right preparation. Before you start, you must decide which services are core to your business, “streamline” those and cut the rest. Identify what’s core by using “zero-based organization” (ZBO), viewing each activity through the lenses of “urgency” and “value.” As with its cousin zero-based budgeting, ZBO starts with a “clean slate.” As you assess and sort activities, you’ll understand them in the context of their...

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