From comfort to stretch zones: A field study of two multinational companies applying “beyond budgeting” ideas

• Beyond budgeting intends to move decision-makers from “comfort” to “stretch” zones.
• “Discomfort” with the “comfort” role of budget triggers MCS change in multinationals.
• Moving decision-makers to a “stretch” zone is about changes in mindset and behavior.
• It requires new processes of target setting, forecasting, and resource allocation.
• Better decisions in situations requiring negotiation and learning follow.

This paper explores how change in the design principles of management control systems (MCSs) based on implementing the beyond budgeting (BB) ideas has influenced the transition of decision-makers from “comfort” to “stretch” zones and how this transition changed the supply of and demand for managerial information. This paper's starting point is based on the research evidence showing that there are many organizational problems associated with using budgets. Thus, this paper puts forth a previously neglected research context of companies that claim to have abandoned budgeting. In two cases, we illustrate how changes in the design of the MCS can create new management practices based on new ideas of information needed for decision-making. In particular, this paper illustrates how the use of new information provided by the MCS design, which is based on new principles, move decision-makers into the “stretch zone” characterized by new characteristics of decision-makers’ mindset and behavior. We also demonstrate how unbundling target setting, forecasting, and dynamic resource allocation enables better forward-looking and strategy-oriented decisions in situations requiring negotiation and learning.