Four Reasons Why Zero-Based Budgeting Works

As manufacturers face shifting customer expectations, macro-economic turbulence, and technology change, business decisions can be more difficult and consequential than ever. How can leaders improve their odds of success? One answer lies in a surprising source: zero-based budgeting (ZBB), or zero-basing.

Too often blamed for uninspiring cost-cutting programs, zero-basing’s real objective is to instill a growth mindset—a return-on-investment (ROI) mentality based on value, not cost.  

Of course, changing minds is hard work: most transformations fail because of management behaviors and employee resistance. So, creating a culture of cost management for growth takes more than just the CEO and the leadership team asking the right questions. Instead, managers must learn to debate spending with an eye toward investing where it matters.

How exactly does zero-basing, when done right, help bring about this culture change for growth? 

Create opportunities to make better spending decisions

While cost-cutting has a role to play, ZBB’s real aim is to make thoughtful spending decisions—reframing choices as cost management. The small changes that result have the cumulative effect of creating investment opportunities to drive growth.

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