Zero-Based Budgeting And The Act Of Staying Lean

When you see something organized, it’s probally not mine.

We messed up every now and then. It’s almost unavoidable. What to do then? If you’re like me, most of the time, the solution is not to desperately try to fix them, but to wipe it out and start all over again. Remember that time when you noted furiously about some problems on a piece of paper? Remember what you did when you were stuck and the paper felt insanely cluttered? Well, there’s a high probability that you torn that page off, crumbled up and threw it in the garbage can. Now think about it. No one tells us or teaches us that we should act that way, we do it kinda instinctively. Deep down, starting fresh with a blank piece of paper is much more preferable than working with a cluttered one, even if it would require significantly more efforts. With a blank page, we remove all the limits or constraints that we previously put on ourselves, and that is when we have the most accurate perspective of the problem, as well as what to do the sort things out this time.

Zero-based Budgeting Is About Decluttering

In business management, zero-based budgeting (ZBB) is, explained in a naive way, “building a budget from zero”. What does that mean? It’s a process of budget planning where the organization break down the cost struture, review every single dollars in the annual budget in a detailed, structured and interactive way, in order to increase visibility into cost drivers, which then help the organization to see cost reduction opportunity that would otherwise be obscure. It’s similar to the paper example above in a way that, when things get too cluttered to the point that it makes critical problems obscure, you would better off start fresh, review carefully what we should and shouldn’t put on the paper this time. That being said, ZBB or the process of ripping off that piece of paper is only the fix after the problem has already happened. We, somehow, made things so complicated and/or organized them so poorly in the first place. Where can we look at, so that we can learn to avoid cluttering ourselves next time?

Lean Methodology vs Minimalism

Lean methodology in business originated from lean manufaturing which has a simple purpose - that is to minimize waste and uneeded complication. It does not only mean that we need to get rid of bottlenecks and problems once it’s already occured. It means that along the way, any acitivities that does not add values to the value chains need to be avoided or fixed as soon as it happened. The system is not designed as a whole, but as individual components. Processes are divided into smaller processes, production is done in smaller batches. When things went wrong, we know exactly where it went wrong, the cause of it and how it should be changed. Lean methodoly does not restrict to physical products. Software industry is now a big fan of it. It makes perfect sense. Build individual features, test them, if things end well, congrats, if it doesn’t, no biggie, just try something else. Quick, simple, cost efficient, less heartbreaks.

In my opinion, minimalism is not really that much different. Even though it has different applications and practices, it serves that same purpose of “staying lean”, by limiting what we possess and/or consume. We carefully review what we need, if we truly need something and cannot live without it, then it’s here to stay, if we don’t, throw it out. I think a large number of us have the tendency to keep something we don’t need, with the reason that we may need it again someday. But let be honest, we all know that it will stay in our closet for all eternity, until the day the sky fall and all hell break lose. Just think about how much space has been wasted for those kind of stuffs. I think it gets worse than that. When the enviroment around us is cluttered, our life feel also cluttered and foggy. Minimalism might sound a little bit extreme, but I think we should all give it a more careful look.

So, What Now?

Well, I think it’s utmost important not to let anything feel cluttered, in business, in relationship, or in any aspects of life. If things get out of control, remember ZBB, remember to wipe it out and start fresh, even if it seems scary. And this time, let be more careful about what to bring in. Stay lean. Less stuffs, less headache. More visibility, more comforts later on.

What!? So much irrelevant examples and definitions just for that? Well pardon me, but I was desperately needing a way to remember these interesting concepts. What’s better than writing it out and trying to explain it to someone else? All jokes aside, I do think we need to remind all of this to ourselves every now and then.

Harris Nguyen

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