It’s a rare business management phenomenon that yields the kind of wild success of “zero-based budgeting,” or “ZBB.” Accenture Strategy research has found that, since 2013, ZBB has exponentially grown by 57 percent every year.1 More recently, companies have realized that a zero-based approach—optimizing spending not by a certain annual percentage, but by looking at what things should cost from a blank slate—can be applied to other areas of the business: supply chain, the front office and the organization itself. Thus was born the concept of what Accenture calls “ZBx”—a holistic, zero-based mindset whereby companies take out non-working money that doesn’t efficiently support the business strategy and funnel the savings back into growth initiatives.
ZBx isn’t necessarily an easy path, however. On the one hand, companies are finding that ZBx can impact many cost categories. According to our research, high numbers of companies—92 percent—focus first on G&A spend,2 but ZBx broadens that perspective to include sales and marketing, cost of goods sold, and direct and indirect labor.
On the other hand, it can be a challenge to create a culture that delivers more than just one-off savings and instead sustains a zero-based mindset over time. Asked about the biggest obstacles to ZBx success, the top-two answers in our Accenture Strategy study were “culture” and “change management.”3 Success with ZBx involves zero-basing the culture too, creating a fresh value system across the company where all employees treat every dollar as if it were their own and make decisions accordingly.
Looking under the hood of culture change
Most companies are aware of a few core principles about culture change:
- Leaders have to engage. Our research found a significant correlation between top management having a high level of engagement in culture transformation and attaining the desired results.4
- People across the company need to “own” the change at a personal level.
Beyond these well-known organizational change objectives, let’s look “under the hood” at six key levers leaders can pull to embed culture change in ZBx programs.
- Set the tone from the top. “Tone” is the operative word here. Effective ZBx leadership is not about setting top-down mandates but more about the way you speak. The tone needs to be both direct and authentic, and it needs to ooze with transparency. Especially effective are storytelling techniques (think “TED” talks) that are both informative and inspirational.
- Be role models. Culture change is focused on new knowledge as well as on new mindsets and behaviors—visible actions and not just words. Leaders should show their teams what they are already doing to make change real. For example, using webcast technologies for leadership meetings that do not require face to face, rather than incurring the costs of an in-person meeting, can have a big impact.
- Establish accountability and controls. Leaders at all levels should agree on a set of key performance indicators by which progress on the ZBx journey will be measured, as well as the person who will be held accountable for each metric. Embed desired behaviors into reward and incentive structures.
- Tap into technology. Design a creative, multi-channel learning and communication campaign that both engages and enables. Crowdsourcing technologies, for example, can be used internally to solicit ideas, which are then refined and commented on by other employees. Innovative digital learning technologies can scale knowledge and new behaviors across the entire organization.
- Communicate and celebrate real achievements. Let the whole organization know about successes that have resulted in measurable benefits. Identify and recognize the people that made it happen. Recognition can range from financial incentives to a simple postcard from local leadership to individuals and teams.
- Hardwire into the employee experience. Newer employee engagement techniques are available to integrate desired actions into everyday performance. Directed programs over a short time period—as little as one month—can use discrete performance challenges or “micro actions” to help employees perform in new ways while also bonding with their colleagues toward a common goal.
Unlike traditional cost-cutting programs, ZBx is more than an exercise that gets completed and is then simply admired. It’s about thinking and doing things in new ways, and that requires culture change. “Culture” has often been defined as “the way we do things around here.” But more accurately, especially with strategic initiatives like ZBx, culture is about enabling “the way things should be done around here.”
1 Accenture Strategy, ”Beyond the ZBB Buzz”, 2018