Thursday, March 26, 2015

Zero Base Budgeting in the news

Over the years since I started this blog many people have asked me what the title "Zero Base Thinking" meant. Now that zero base budgeting is in the news, as the formative concept for 3G Capital's great success, Forbes has a nice piece up about it. PJ O’Rourke had described it well in my favorite political polemic disguised as humor, "Parliament of Whores." Read the book if you are one of the few who still reads books, but meanwhile Forbes has a nice encapsulation of the concept:
All it really is is insisting that as people prepare this year’s budgets they start with a blank sheet of paper. Rather than just taking last years’ budget and updating it a bit for inflation and or wages. But the effects seem to be really rather large: which is why we almost certainly want the government itself to take up the practice when looking at its own budget.
It is also a good technique to use to organize thought. That is where the title of this blog comes from. It also explains the subhead:
Question authority. Find out the facts. Think for yourself
Zero base thinking means you try to shed your preconceived notions when presented with new evidence. Fight confirmation bias by starting from a blank sheet of mental paper.