Going for Growth Performance

Kathleen B. Allen has led a remarkable transformation of the budgeting and planning processes at Millipore Corp. Drawing from the experiences and resources from the Beyond Budgeting Round Table, Allen directed the efforts that have eliminated Millipore's traditional annual budget process.

A growing $1.26 billion global public company in 2006 and member of Standard & Poor's 500 Index, Millipore provides products, services and enabling technologies to pharmaceutical and biotechnology manufacturing companies and clinical, analytical and research laboratories. Since revamping its planning processes, Millipore is well positioned for future growth.

Allen spoke with Steve Player, North American programming director of the Beyond Budgeting Round Table, about Millipore's transformation initiatives.

Steve Player: What started you thinking about breaking free from the traditional budgeting process?

Kathleen Allen: I joined Millipore 23 years ago and was appointed CFO in 2000. What stands out is that in 2002, we had just gone through the establishment of the 2003 budget, which was just an awful process. I kept thinking that the budget process would somehow look better and be less painful from a more senior vantage point. But even as CFO I disliked the budget process more than ever. It was a waste of time. It was gamesmanship and represented an enormous amount of time and effort. I liked the methodology developed through the Beyond Budgeting Round Table because it gave us a framework to reassess our budgeting and planning processes.

SP: How did you make it happen?

KA: Two years ago [2005] our new CEO came on board. After giving him a few months to meet and greet and figure his way around, I suggested to him that his arrival might be a good time to introduce some needed process changes, including changing the way we do financial planning. Perhaps it came as no surprise his memories of the budgeting process were less than fond ones. He was receptive to the idea of beyond budgeting immediately.

With our new CEO, we refreshed our corporate strategy. As part of the strategic review, the executive team discussed the importance of establishing processes that would ensure we followed through and implemented our new strategic vision. So we asked ourselves: 'How do we make this happen? How do we make sure that we have an aligned organization? How do we make sure that we're measuring and funding the right things?'

As a result of this fundamental thinking, we brought together many of the concepts that we're using today -- the strategy map, the balanced scorecard, and the beyond-budgeting concepts: rolling financial forecasts and dynamic resource allocation.

In June of 2005 we launched our Growth Performance System, or GPS, and that's how it all started.

SP: It sounds like you were able to move ahead pretty quickly.

KA: We moved quickly on the front end, building and articulating the strategy and breaking it down into executable pieces. That whole strategy map concept at the beginning was like a foreign language for many of us. However, once we brought people through the training process, it started to pick up enormous momentum.

At the same time we started to wean people away from the concept of bottom-up, every-quarter budgeting. We recognized that we needed some technology to enable it -- a centralized financial planning tool, if you will. We relied heavily on Excel spreadsheets, so we needed a solution that would facilitate both a system and a process change initially for the finance organization but ultimately for line management as well. We didn't want to have to rethink our budgets every quarter. The goal was to put a system in place to allow us to identify trends, make high-level changes and get back to running the business.