In this two minute video, Bjarte Bogsnes (Chairman at the Beyond Budgeting Institute) talks about evergreen targets at Statoil, and why you should deploy them in your own business.
Statoil is Scandinavia’s largest company, with operations in 36 countries and a turnover of 130bn USD. On Fortune 500, the company was recently ranked #1 on Social responsibility and #7 on Innovation. Transparency International has named Statoil the most transparent listed company globally.
“These are our most important financial targets in the company [Shareholder Return and Return on Capital] – the two KPIs here definitely have their weaknesses, but that is not the point, the point is that we are thinking in relative terms.
“On return on capital there is no target of 11 and a half or whatever, it’s all about doing well against competition. Here are some of the guys we compete with. We are not identical, so this is not as precise as setting 12 and a half, but it’s ten times more relevant.
“We call these ‘evergreen targets’. We’ve had the same ones for maybe ten years now, we’ve moved the one on the right [Return on Capital] up and down a few times, but we don’t need a big exercise every autumn to recalculate this – they stand until we have some other ones. These are probably the closest our board comes to approving a budget.”
Bjarte was speaking at the 2017 Beyond Budgeting Conference in London. Click here to view more videos, PowerPoint and blogs from the event.
Bjarte is the Chairman of the Beyond Budgeting Institute and Senior Advisor Performance Framework at Statoil. Bjarte is a popular international business speaker and winner of a Harvard Business Review / McKinsey Management Innovation award. He is the author of Implementing Beyond Budgeting: Unlocking the Performance Potential. Follow Bjarte on Twitter at @bbogsnes.