Participatory budgeting

Open Management is important in both private and public areas. One public application is participatory budgeting, a form of direct democracy pioneered in Brazil's Porto Alegre in 1989. Can the same principles be applied to business?
Photo by St Peters Community News Flickr CC

Personal Budgeting

In these days of economic upheaval, budget deficits, lack of investment and high debt, maybe it's time to go over some basics. Let's start with budgeting.

The shoebox budget system has seven steps:

1. Get two shoeboxes and during at least a month, put all receipts and spendings in one box, all income (copies of checks, etc) in the other box.


2. Go through the content of each box and divide into groups that make sense to you. One tip is to divide into some categories of absolutely necessary costs and some that are not as necessary.


3. Sum up all the groups and totals for each box. Hopefully spendings are less than the income, otherwise there is a budget deficit (just like a country).


4. Look through your costs for opportunities of cost cutting.


5. Set a goal for cost cutting.


6. Apply your goal and follow-up your budget.


7. Set a new budget for the following month.

Participatory Budgeting

After a long series of dictatorships, Brazil was hungry for any type of Democracy and in 1989 the town of Porto Alegre pioneered a process of participative budgeting. What they did was holding public debates on where tax money should be spent, followed by voting. More than 300 cities now use the same principles, not only small towns but Paris, Pune, Barcelona and Cologne are famous examples.

Cologne promised its inhabitants, in 2009, that the 300 most voted issues would be solved. Many millions of votes were received, 85% by Internet, 4% by phone and 4% by letter. The town drew the conclusion that citizens are truly interested in this form of direct democracy and vote when offices are closed, which is in the evening and therefore they use the Internet.

In Leeds, England, the objectives were to: Build confidence for taking local action; Improve community cohesion and Support Local Politicians. In other towns a small budget was set up for all things that would make the community Cleaner, Greener or Safer. In all of these cases, members of the community were asked to present suggestions and were given three minutes on stage to sell their idea to voters. Voting was done immediately after each presentations, using voting machines looking like large calculators and scores were given in categories like practicality and fulfillment of project goals.

One comment from the English process was that

in newspapers, the debate starts with an article, participatory budgeting projects are much the same.

Business applications

In Pune, the Mayor commented that sometimes suggested projects are unrealistic, citizens suggest huge projects like new bridges and that much training is needed. Maybe this is just the point, maybe the debate and the participation starts with challenges like that - how to involve the community and focus on areas which are within reach with maximum positive effect.

I believe that the opportunity for using the total company brain capacity as well as increasing motivation is enormous. At the very least the process would start the debate necessary to bring change and innovation to business.

Do you agree? Comments?

Comments

[Paulo]

I completely agree with that thought. But it seems to me that in business world, personal agendas and goals that differ from the business goal itself, too often play a bottleneck role in bringing that paradigm shift to life.
But i strongly believe that if Pune's Mayor would break the unrealistic projects into small bits and then take care of the realistic bits...who knows if unreal shortly after becomes real and a motivation breakthrough!!
Great post J. Concrete examples are always insightful!

[johanfrisk]

Dear Paulo,
Thanks for your comment! The difference between personal and business goals is certainly a key limiting factor in motivation and productivity. To do as you suggest, break down unrealistic goals into "bite-size" chunks and engage stakeholders, sounds like a great recipe for success.