The Budgeting Illusion: Are We Wasting Time on a Broken Process?

In a world where businesses are expected to adapt at lightning speed, why are we still clinging to an outdated, rigid budgeting process? Let’s face it—traditional budgeting is a time sink, an annual exercise in spreadsheet gymnastics that monopolizes resources, derails focus, and, in the end, often tells us little we don’t already know. If companies claim to be efficient and agile, why are they pouring months of work into a static document that’s irrelevant the moment it’s finalized?

It’s time for a hard look in the mirror. The truth is, budgeting as we know it may no longer be fit for purpose.

The Real Purpose of Budgeting: Do Budget Owners Even Know?
Before diving into the mechanics, let’s tackle a fundamental issue: Many business leaders don’t even know why they budget. Is it for external reporting, to please investors and banks? Is it for internal strategy, to guide decisions and allocate resources? Or is it for operational control, tracking costs, and managing cash flow? These are vastly different objectives, yet companies routinely blend them all in one chaotic, annual ritual.

This lack of clarity leads to incoherent budgets that satisfy no one. Trying to build a budget that serves investors, management, and frontline employees alike is like attempting to cook a single dish that pleases every palate—it’s bound to fail. Without a clear purpose, the budget becomes a catch-all document, bogged down in irrelevant details and ultimately meaningless.

Budget vs. Forecast: Why the Disconnect?
If a budget is supposed to set the year’s targets, why do companies spend the rest of the year “re-forecasting”? Why go through the painful process of hammering out a budget only to keep revising it? The answer lies in the inherent flaw of traditional budgeting: it’s static, while business reality is dynamic. No company can accurately predict the future 12 months in advance, especially in today’s volatile market. Yet, we persist in locking ourselves into rigid annual plans, only to abandon them the moment something changes.

Forecasting is the band-aid that tries to keep the budget relevant, but it’s an imperfect solution. Rolling forecasts, updated quarterly or monthly, are a necessary adaptation, but why rely on a flawed base document in the first place? The budget is supposed to be a roadmap, but it often turns into a weight holding the business back.

The Three-Month Disruption: Why Does Budgeting Take So Long?
Companies love to tout their “efficient” processes, yet budgeting regularly consumes two to three months of the year, mobilizing most of the Leadership and their team in a flurry of number-crunching, only to produce a document that’s obsolete by Q2. Why the waste? The reality is that budgeting is an inherently flawed process, bloated with line items and granular details that add little value.

Imagine a startup founder locked in a room for three months, obsessing over every penny spent before even launching the product. Would that founder survive? Yet, that’s essentially what we’re asking our organizations to do each year. By the time the budget is finalized, the world has already shifted, and the team has lost sight of what matters.

Beyond Budgeting: What Are the Pioneers Doing Differently?
Some companies are bold enough to ditch traditional budgeting entirely. Take Unilever, for example. As a company with a strong emphasis on sustainability and long-term growth, Unilever has embraced elements of adaptive budgeting. Instead of getting bogged down in static numbers, Unilever uses a rolling forecast approach, focusing on strategic priorities that align with its sustainability and growth goals. This allows them to shift resources as market conditions change, maintaining agility without losing sight of long-term objectives.

Another interesting example is Danone, a global leader in the food and beverage industry. Danone has shifted toward a model that combines zero-based budgeting (ZBB) with continuous forecasting. Under this approach, instead of carrying over previous budgets, each department justifies its expenses from scratch, ensuring that spending aligns directly with strategic goals. This allows Danone to reallocate resources toward innovation, R&D, and sustainable initiatives rather than simply “doing things the way they were done last year.”

Netflix also stands out as a company that prioritizes strategic flexibility over traditional budgeting. Rather than setting rigid budgets for content creation, Netflix allocates resources based on projected returns and real-time audience data. If a series or film performs well, Netflix has the flexibility to pour more resources into similar content. This agile approach has helped Netflix stay ahead in the highly competitive streaming industry, allowing them to invest heavily in original content and quickly adapt to viewer preferences.

So, What’s the Alternative?
If traditional budgeting is obsolete, what’s the alternative? Here’s a radical thought: What if we only budgeted for what really matters? Strip away the layers of detail, the endless assumptions, and focus on the essentials—cash flow, key projects, strategic priorities. Everything else can be managed through agile, ongoing planning.

An effective budgeting process should be a strategic framework, not a financial straightjacket. Rolling forecasts should replace rigid targets, allowing companies to course-correct as needed without scrambling to rewrite the entire playbook. Decentralize decision-making, so those closest to the action have the freedom to respond to real-world changes. Let’s kill the sacred cow of annual budgets and move toward an adaptive model that treats planning as a continuous conversation rather than a one-time event.

Key Takeaways from the Innovators
Companies like Unilever, Danone, and Netflix have implemented adaptive budgeting practices. The common thread? Simplicity and flexibility. They set clear objectives but keep the “how” fluid. They emphasize real-time data over year-old assumptions. And they don’t spend three months on an exercise that becomes irrelevant after three weeks.

What are the key lessons from these pioneers?
👉 Purpose-Driven Budgeting: Know why you’re budgeting. Build budgets that serve specific stakeholders—don’t try to please everyone.


👉 Continuous Forecasting: Update financial projections frequently to stay relevant, but don’t obsess over minor variances that don’t impact strategy.


👉 Empower Decision-Makers: Decentralize budget ownership to allow those closest to the ground to adapt and make decisions without waiting for approval from the top.


👉 Streamline and Focus: Only budget for what’s critical to strategic goals. Stop wasting time on granular line items that don’t drive the business forward.

Conclusion: It’s Time to Rethink Budgeting
The question isn’t whether traditional budgeting is obsolete—it’s why we’re still doing it. The world is moving faster than ever, and companies can’t afford to be anchored by outdated processes that disrupt focus and drain resources. It’s time for a shift in mindset. Budgeting should be about aligning on the “what” while staying flexible on the “how.”

If you’re still stuck in the annual budgeting grind, ask yourself: Are we creating value, or just feeding a process that no longer serves us? The companies that thrive in today’s economy won’t be the ones with the tightest budgets but the ones with the agility to respond to change. The budget isn’t dead, but it’s high time we reinvented it.

Is your budget a tool for growth, or just an outdated ritual? The future of budgeting is up for debate—where do you stand?

Frederic Verin