Deepak Jain: Betting on Zero-Based Budgeting's Trifecta



Companies that take a holistic approach to zero-based budgeting reap greater benefits than those that pursue it solely to cut costs. Deepak Jain, a partner with Bain's Performance Improvement practice, outlines how companies can achieve the zero-based budgeting trifecta: reducing cost, growing revenue and strengthening employee engagement.

Read the Bain Brief: Betting on Zero-Based Budgeting's Trifecta

Read the transcript below.

DEEPAK JAIN: Companies in recent years have come to us and told us that they want to launch zero-based initiatives in coming years. However, as per our experience, only 50% of them have been able to launch these initiatives in a successful manner.

Generally, as per our experience, companies which combine zero-based budgeting with what we call zero-based redesign have been far more successful in doing these initiatives as compared to the others, who have just tried to do zero-based budgeting as a standalone initiative. When companies do these two things together in a holistic manner, they are able to achieve what we call the zero-based budgeting trifecta—that is, they're able to reduce their cost, they're able to grow their revenue, and they are able to achieve a higher level of employee engagement.

In order to achieve that trifecta, there are four or five things that the companies need to do. Number one is they need to bring their leadership team behind these initiatives, so they have the sponsorship spine to launch the initiatives successfully across the organization. Secondly, they need to link these initiatives with their strategic priorities, rather than doing them in a very operational manner. The third thing they need to do is to make sure that they launch these initiatives together in a holistic manner, as I said earlier, and make it an end-to-end exercise. And the fourth thing they need to do is, they need to have a very robust tracking mechanism behind these initiatives, and have the right kind of cadence to ensure that these initiatives actually get implemented.

If the companies do these things correctly, then they are able to achieve the trifecta that I talked about, and they see far higher benefits from these exercises.

Read the Bain Brief: Betting on Zero-Based Budgeting's Trifecta