Participatory budgeting – financing in the 21st century

What does modern budgeting look like? In this article, Nadine and Romano show you how they coached a portfolio team and applied participatory budgeting at Zühlke to fund the initiatives of the company’s different value streams.

The mid-year preparations for Zühlke Switzerland’s various portfolios have come at a time of great uncertainty. Our plans and actions are still heavily affected by the COVID-19 pandemic. We now need to invest in the right areas and create stability, but also ensure that we don’t miss out on any new opportunities that come our way. One of these portfolios is ‘Fruitmix*.
 

For the ‘Fruitmix’ portfolio, the first half of the year was eventful, bringing many new enquiries and opportunities. But it also left us with limited time and resources to focus on bigger, strategic things. And the COVID restrictions meant that we couldn’t hold events, either. The overall picture differs depending on the strategic focus and the sector.
 

But the portfolio management team agrees on one thing: they need to move things up a gear in the second half of the year. The situation in a nutshell: the portfolio management team has set a budget of CHF 100,000* for the second half of the year. The 10 value streams – including some of the big ones, like the Banana value stream* and the Date value stream* – have not changed much in terms of content or structure, and they will remain in place for the second half of the year. The main priorities are the same, but the initiatives are new.
 

A lot of exciting initiatives have been put forward, and all of the value streams in the portfolio can look forward to new opportunities. There is talk of blue bananas*, new combinations of dates and berries*, and even experiments with frog fruit*. But ensuring they’re successful and not just different calls for smart investment decisions. This is precisely where the new method of participatory budgeting (PB) comes into play.
 

PB is a process within the Scaled Agile Framework (SAFe) and is applied at overarching portfolio level. This kind of portfolio is a good thing. It represents a particular section of a company, such as a unit or a division. In our case, this is the fruit*. The portfolio manages several value streams that drive certain solutions end-to-end, from concept to customer.
 

A value stream comprises all the people who contribute to the solution, all of the systems that are used, as well as the information flow and the required materials. In the first half of the year, the Banana value stream, for example, wrote a new white paper on future banana growth*, and the Date value stream* adapted the processes for its key deliverables.

OKRs, epics, and SAFe

We’re now in the second half of the year, and the portfolio management team is planning to move things up a gear. To ensure maximum added value for the clients, the team is counting on two things: effective collaboration between the value streams, and entrepreneurial thinking. Also they are hosting a preparation workshop together with us as coaches. Over the course of two hours, we will explain the concept of PB to the 10 value stream leads, and they will learn how to put it into practice. This will help with the preparations.

The first step ‘Prepare the content’ starts right away and is already tackling guardrails and principles. The portfolio is aligned with Zühlke’s objectives, OKRs (objectives & key results), and strategy. This will include all portfolio initiatives, and will drive the company forward. But only the best ones can be implemented, as the budget for the 10 value streams* is fixed at CHF 100,000*. The value streams now have time to describe their grow-the-business (GTB) initiatives in the form of an ‘epic’.

Epics are key initiatives that can have an impact on one or more value streams. They must be analysed in a lightweight business case, and the necessary financing must be available. This is precisely what the best epics will receive through the PB event. The SAFe epic template helps to structure the different initiatives and makes it easier to compare them. In addition to the grow-the-business part, we need to carry out a run-the-business (RTB) assessment for each value stream, in order to define the self-managed budget and keep the value streams running.
 

As PB coaches, we also have a lot of preparation to do. Alongside the general PB information, the agenda, and the forum discussion rooms, we also need to provide a calculation basis. The SAFe Excel template for the PB event is helpful here. And because we are Certified SAFe® 5 Program Consultants, we have access to all the necessary resources. The PB Excel has been adapted to the needs of Zühlke Switzerland. For example, calculation options are used in place of individual elements. This facilitates the necessary changes.

Participatory budgeting in plenary

In the second step, ‘Assemble the participants’, the value stream leads are split into two groups. Each group consists of five participants and one coach. This means that half of the value streams are always represented in the groups.
 

Then, after two weeks, it’s time for step three, ‘Conduct the forums’, which involves setting the budget in two runs – RTB first, followed by GTB.
 

The RTB proposals are presented to the plenary by the value streams in a short pitch. The two groups then discuss the proposals and agree on how the budget will be allocated. This first run starts with the full portfolio budget (CHF 100,000*) for each group. During the discussions, each group must consider the pitches of all 10 value streams*, with the aim of achieving the best possible outcome for the Fruitmix* portfolio.
 

Each group has five representatives, but they also consider the perspective of the five value streams that are not present in the group. The coaches support and supervise the group discussions, keep an eye on the clock, and occasionally make reference to the OKRs and the strategy. Back in the plenary, there is a short group presentation, before a final agreement is reached on how the RTB share will be allocated among the 10 value streams.

Scope for innovation, ideas for collaboration

The value stream leads then deliver another pitch in the second run (GTB). The epic presentations are interesting and diverse, and they offer many new insights into the various themes of the individual value streams. Anyone who wants to find out more or read up on an epic can do so at any time, as all epic descriptions are available in digital form.

In the next step, we as coaches present the new situation: the GTB budget available for allocation depends directly on the RTB budget that has been agreed. So: CHF 100,000 minus RTB. This new reality shows exactly how much is available for genuine innovation. Can we squeeze out any more? Yes!

The value stream leads show true entrepreneurial thinking by voluntarily reducing their own RTB budgets to create more scope for innovation. Partnerships are proposed, ideas for collaborating are put forward, and there is plenty of food for thought for the impending discussions. The GTB group discussions are particularly lively, focusing on the reduced but still considerable GTB budget. The talks are intense, time is scarce, and the decisions are tough. After wrapping up the deliberations, both groups present their proposal for the GTB budget and which epics should be financed with it. We also supervise the closing discussions in the plenary. We first talk about what the two group solutions have in common, and the value stream leads then work towards a consensus. The budget is allocated.

co-author: Nadine Broghammer