Participatory budgeting – next level financing

We presented the innovative method of participatory budgeting in our first blog post on the topic back in September 2021 and used the anonymized example of ‘Fruitmix’* to illustrate how it works. In December 2021, we returned as coaches for the second participatory budgeting event for the ‘Fruitmix’ portfolio.

In the second half of the year, the ‘Fruitmix’ portfolio implemented the budget that the participating value stream leads had defined themselves. Many interesting epics were tackled and there was a strong focus on developing the minimum viable product (MVP) for each one. The second participatory budgeting event at Zühlke Switzerland called for an adapted approach to the one taken the first time. Romano and Nadine returned as participatory budgeting coaches and hosted the event:

Looking back, planning forward

Together with the portfolio management team, they defined the timeline and analysed the feedback from the first participatory budgeting event. The problem back then was that the Fruitmix committee budget was being inadequately allocated across the value streams. Too many ideas and projects, not enough time and funds. The introduction of the Scaled Agile Framework (SAFe) toolkit and the ‘participatory budgeting’ method went down well with the involved value stream leads. The method, which has been adapted to Zühlke’s situation, led to a positive outcome in four sub-stages. Most importantly, the outcome was supported by all participants. In the second round, the aim was to build on this findings and lessons learned. The process execution followed the same sequence:

• Preparing the content
• Assembling the participants
• Conducting the forums
• Analysing the results

The preparatory work (stage one) was similar to that carried out in the first round. The guidelines and principles for the portfolio and the event had not changed much since the first event was held. The portfolio was again aligned with Zühlke Switzerland’s targets, OKRs (objectives & key results) and strategy. The value stream leads prepared their epics (including the MVPs), while the coaches focused on reviewing information and on the agenda, calendar invitations, virtual forum discussion rooms and the calculation basis. The SAFe Excel template for the PB event was helpful here. And because the coaches are Certified SAFe® 5 Program Consultants, they had access to all the necessary resources.
The feedback from the value stream leads and the coaches’ retrospectives led to two significant changes to the first stage: in order to make things easier and less confusing for the participants, a distinction was no longer made in the second version of Zühlke’s Particpatory Budgeting Process between the two budget aspects ‘grow the business’ (GTB) and ‘run the business’ (RTB). In addition, the participants were given two extra weeks to prepare and were asked to focus more on the content of the epics.

In the second stage, there was an additional information meeting for all value streams. The new composition of the value streams was also taken into account; strawberries were now present in the portfolio as well. All value stream leads prepared for the upfront meeting. The aim was to find out more about the planned epics and initiate interaction between the value streams in order to identify potential priorities and collaborations before the event.

Stages three and four remained the same in essence. In this second round, the event received more attention and support from the management. The management team attended the event as a silent audience. Budgeting remained the responsibility of the value stream leads.

Learning and improving iteratively

Two of the four described differences between version one and two of the participatory budgeting event were organisational in nature:

The information meeting was used to understand the epic context in detail. The extended timeline eased the pressure and facilitated creative collaboration. In addition, the participatory budgeting phase was extended to four weeks. Although this is twice as long, the mutually invested time (meetings, budgeting) was roughly the same.

The attention received from the management gave more weight to the chosen method and thereby helped to increase acceptance of it within the organisation. This stronger support made it easier to initiate discussions about the epics, generate wider interest and get the backing of Zühlke colleagues who were not involved.

The other two changes were process-related and had a significant impact on the course of the event:

The general Zühlke strategy, targets and OKRs are no longer the only decisive factors for the epics, as the epic’s business hypothesis is now additionally subject to guidelines. A threshold or significance value was introduced for this purpose in the second round of the event; an epic was only to be discussed in this event if it fulfilled one of three values:

• Three or more value streams were affected, or
• It concerned a potential ‘new fruit’, or
• The MVP investment exceeded a predetermined amount

This ensured that only significant epic pitches were discussed. Other ideas and suggestions could be put forward in the individual tasks for the value streams.

That is why the second change to the process and workflow was necessary; determining the RTB share of the budget was no longer part of the budgeting event itself but, instead, was calculated in advance by the Fruitmix committee using a transparent but confidential formula developed internally by Zühlke. This gave the individual value streams more autonomy to manage their smaller projects and issues. At the same time, the main/big epics (GTB) attracted more attention by having a budgeting event dedicated exclusively to them. The total budget for the event was reduced in proportion to the pre-allocated RTB share.

Creating an adapted recipe for success together

The adapted preparatory measures quickly proved effective during the event. The value stream leads were well prepared and informed about the epics to be discussed. The pitches on the adjustments and changes to the epics went smoothly. At the same time, skipping the RTB budgeting round saved a valuable 45 minutes to invest in effective budgeting for the innovative new services.

The participatory budgeting process in the Zühlke ‘Fruitmix’ portfolio has seen various changes since the initial idea – from the SAFe version of participatory budgeting as a tool to the lessons learned in the first and the second round. The recipe for success is simple: iterative improvement towards an increasingly tailored solution.

As coaches, we now want to keep working on this and continuously improve it. The excellent insights from all of the participants, as well as regular discussions on the topic, will be particularly useful to us in achieving this. Potential focal points for the third round might include creating a more refined version of the epic template and incorporating the medium-term goals (MOALs) into the epic assessment. An added benefit is that the value stream leads now have much more experience of the process, which will help to streamline the procedures and make the workflows more fluid. This potential is to be exploited in the next participatory budgeting round, stay tuned!

* Zühlke’s processes, investments, people, portfolios and solutions have been anonymised for the purpose of this article. And since we’re all big fans of fruit, we’ve come up with a fruity theme for our digital ideas.

co-author: Nadine Broghammer