The earth is flat, elephants are carnivores and budgets are necessary for managing a company.

Aufklärung
You disagree, fully or partially? 2000 years respectively 250 years ago the former two statements were conventional wisdom, the latter still is. Aufklärung made it possible that more and more people realized that their knowledge from the past needed updating. However, Aufklärung does not come for free. It means that everyone has to invest a lot of time to learn, to ask questions, to be skeptical. It means that everyone should not be satisfied with the solutions presented by someone else, such as media, governments or any other "big shot".

Survival of the fittest
2009 is an excellent year to update our knowledge as we will celebrate the 200th anniversary of Charles Darwin's birth. This year will be full of praises that rightfully commemorate his epochal and revolutionary work. Together with Alfred Russel Wallace, Darwin put the foundation for a truly scientific theory of evolution. Nowadays genetic research – genes were unknown to Darwin – forces us to reformulate some of his assumptions. Most and foremost the historically ill-laden postulate of the “survival of the fittest” gets a severe knock. Besides that this saying is nothing than a tautology i.e. the winner has won, genetics suggest us to replace it with “survival of the luckiest”. Putting it in today's perspective what makes JP Morgan or Deutsche bank better than Washington Mutual or UBS, if it was not that some are closer to the inner power circles or that some sold at the right moment a large chunk of their toxic assets? What about the hedge funds that ran massive short positions but had to close them because the expected crash took too long happen?

Riding the wave
Since August 2007 we were riding the wave of success. We got the chance to experience cross-border cooperation under heightened stress. The P&L even skyrocketed in 2008 until the doomed weekend in September when the US Government and the FED let Lehman go bust. On Monday morning, September 15 the world was not the same anymore. The wave came and hit us hard, very hard. Within a week we lost an enormous amount of deposits. The battle for survival started. Against all odds and by joining forces we surmounted numerous critical moments. How many new things did we learn during those days and how fast! I can assure you, I’m really proud to be part of this team. .

Overshooting
Now it’s quite ironical that despite such an awful year, that despite the friendly, but expensive help from the central banks, we still managed to make a huge profit, overshooting the budget by a whopping 700%. I doubt that the variable part of our remuneration will get the same increase. What else may such an overshooting tell us? A) The budget was too low. B) This was an exceptional year as have been all the other years before. No one can predict the future. Overshooting and undershooting is the rule. C) We should question if conventional wisdom about budgets and budgeting is still valid. The first two answers are from an intellectual point of view insufficient and lead us nowhere. Could the third answer be the route to follow? High performance companies such as Google, W. L. Gore or Svenska Handelsbanken have since long revamped their organisational framework and have broken with conventional wisdom. Is there something in for us?

Complicated versus complex
I see that the world is changing ever faster. Customers, us included, get continuously more demanding. Markets react faster, products have shorter life cycles, technology allows for more features. Complexity in every domain is increasing fast. Just try to be one day without mobile phone and the internet. In case some remember, this was the norm 15 years ago. We have to think if the way we think and act is still appropriate to the fundamentally changed environment. Change is not the exception, but the rule. Take as an example a complex product such as a computer. For my father it is complicated. My daughter on the other hand is exploring fast and intuitively any new features of her Nintendo.

A new mind set
Evolutionary theory shows us that complexity has grown considerably and is highly likely to grow exponentially. No one can predict which way it goes. Under such circumstances I believe it is preposterous to assume that we can do business with the same methods than 10 or 20 years ago. I truly think that time has come to open our mind. We should replace the mechanistic, linear and rational way of thinking which is predominantly ruled by Newtonian physics by a mind set that allows for non-linear, intuitive, unexpected or irrational events and which is based on quantum physics.
I'm encouraging everyone to let himself get acquainted to the idea that planning in an ever more complex environment leads to suboptimal results and bears a huge risk. We are blind for the black swan and its myriads of other opportunities.

Randomness is here to stay
So instead of putting all our efforts in trying to plan THE solution for the future, we should invest more in our competencies, and that may enable us to thrive in ANY given future. Just the way we did this autumn and winter, where we marched successfully through unknown territory. We didn't have any plan. Under those circumstances we based our actions on experience and competence and did the necessary things first

I'm writing this to you at the beginning of this new year because I believe that our desk, based on last year's achievements has built up sufficient reputation to be allowed to challenge conventional wisdom and that it should be permitted to ask inconvenient questions.
Should we really continue to fix new and higher budgets? Do we really need fixed short term objectives that jeopardize the long term survival to the bank? Past experiences have shown that budgets foster power play and internal fights. They are too detailed, take too much time to elaborate and require a lot of resources. They obstruct innovation and creativity. They favour unethical behaviour by putting wrong incentives. On this note I like to remind you that there is only one living organism that strives for the same unconditional growth: the cancer cell.

In opposition to the doomsayers who call for more command, control and regulations, I can assure you that the high performers have given themselves an organisation that is primarily based on communication, cooperation and creativity. These pioneers have adopted an organisation that allows for trial and error instead of precision to the last digit, which allows for randomness and intuition instead of certainty, which nurtures a climate of trust instead of control, which builds on transparency instead of asymmetrical information or secrecy.

Let our world make its circles around the sun.
Let the elephant become a peaceful herbivore.
Let budgets be used for reliable and finite events only.
Let us explore what is beyond budgeting.