As part of my MBA I studied Zero Based Budgeting (ZBB) in Cost and Management Accounting course. I liked the concept a lot! In simple words the ZBB idea is as follows:
Our budgeting exercise is usually incremental in nature. We take this year’s budget as a baseline and think about incremental budget required for the next year. That increment is almost always a positive number, but at times it could be negative as well. For example, if your current period budget is 100, the next period’s budget could be 105 or 108 or, in rare circumstances, 95 or 92. But we never question whether 100 was the right baseline, or reference in the first place.
Zero Based Budgeting approach asserts that you get rid of the reference 100. You start with a zero – i.e. clean slate. Thus you look at every component of the baseline 100 again and check if that is still valid.
ZBB was first developed in the US in 1969 at Texas Instruments Inc and since then it has become a useful tool. Still very few organisations or Governments use it in practise because (a) it’s very time consuming (and people are lazy) and even costly to start with zero and do the entire budgeting again, and (b) more importantly, it may lead to unpleasant/undesired results. For example, if the Governments really start following ZBB, they would realise that most of their current budget spend is wasteful or even unnecessary. That would force a lot of people to face uncomfortable decisions and consequences. Perhaps Governments (and even Corporates) know this and that’s why ZBB has not really become a norm. Still, it’s a very useful concept.
In fact the concept can be extended and generalised in the form of Zero Based Thinking.
It’s a very powerful tool. I have started applying it since 2020 and through 2021 to certain extent. However, I really want to embrace it in 2022 and today being the New Year’s eve, it’s right time to start.
Zero Based Thinking (ZBT) concept was articulated by self-help author and motivational speaker Brian Tracy (which I came to know about much later). However, I view at ZBT differently, and my take on ZBT was developed completely on my own when I learnt ZBB in 2015-16.
For me, Zero-Based Thinking gives you the opportunity to start over! Similar to ZBB, where you cut ties with the previous baseline budget and start with a clean slate, ZBT helps you cut ties with the past and start all over again. That’s my view of ZBT.
Let me elaborate how I started using it. In 2020, I had to move to a different place temporarily, and just like previous few occasions (when I went to another city or abroad for work, or for higher education etc) I was faced with some important decisions. I couldn’t take all the belongings with me – be it clothes, utensils other physical items, books and so on. I had to choose, always.
However, when I was doing it in 2020, the thought struck me that it resembles Zero Based Budgeting, or Zero Based Thinking concept. In the sense that since I could not take all the belongings with me, I had to start from zero, look at what all I really wanted to take with me, and in the process I also discovered what was useless/worthless/meaningless which I was holding on to, or which was just lying around untouched.
This sudden realisation of similarity between Moving to a new place and ZBB or ZBT was an enlightenment! There were books which I had not read for years, things which I had not used or even seen. And I didn’t need them, I didn’t miss those things. Yet, since I never took all the things out (with intention of moving to a new place or otherwise), I never cleaned up the pile. It forces you to think what you really value and hence want to take with you and what you would leave behind, if you don’t have enough space, budget, time etc. It’s the essence of Minimalism!
And then I started thinking about ZBT as a powerful tool for many aspects of life. The most important being Relationships!
The most fundamental change which happened in my life after moving to a new place in 2020 was my extended thinking about applying ZBT to relationships.
Imagine this: Every time we change a job (and I have had changed many jobs), we meet new people, we cut ties with the old ones. Some of the old ones could be carried to the new job, but for most part, it’s a total new environment. It’s a fresh start all over! What you carry with you are the memories and experiences and learning from the previous jobs, but not the people and professional relationships with them.
Why can’t we do the same to our personal relationships? How would our life change (for better) if we start doing it?
My personal take it that my life would be far better! And that’s why I have started implementing ZBT wherever I can – particularly to relationships.
I always used to think about how we make and keep friends. Many of my old friends grew up with me from my school days. We have practically known each other since age 5 or 6 years till now (I am 41.5 years now). I became friends with them just by being with them in school and spending a lot of our formative years together. Some of them have grown up to be a very different kind of person than I am. I often think that if the same kind of stranger person comes in my life today I wouldn’t want him as a friend – may be not even an acquaintance. And yet I cannot disown my friends who have grown up into exactly the kind of person (or personality) which I wouldn’t want today. That’s because we were friends BEFORE this transition happened. And extending the concept of ZBT, I never applied “zero based relationship” approach to those friends. They were there in my life, they existed and I kept them.
The same goes with relatives. I remember reading a quote: “God gives us relatives. Thank God we can choose our friends”. I had liked it! We don’t get to choose our relatives and we just accept and live with whatever relatives we get. But is it really necessary to accept? Why not apply “zero based relationship” concept to the relatives or childhood friends who you do not really like now?
That’s mainly because of the same reasons I mentioned with regard to ZBB. (a) We are lazy and it’s time consuming, takes a lot of effort. and (b) it may lead to unpleasant outcomes and decisions which we may not like. We never make a fresh start with our relationships. One of the reasons (or excuses) could also be that there are two people in a relationship and YOU are not the only one to decide unilaterally.
I disagree! We are independent to apply “zero based relationship” principle. However, we may not execute or implement the decision unilaterally – especially when very near and dear ones are involved – your spouse, parents or a soulmate!
However, implementing decision is secondary. Important thing is to train your mind to apply “zero based thinking” to relationships and carry out the thought experiments.
There is a very powerful quote/thought by Rosa Luxemburg: “Those who do not move, do not notice their chains.” It means that if you are chained/constrained, but you never make an attempt to escape, you would not even realise that you are chained or constrained. You have to move out, move on if you want to first realise your chains, and later overcome those chains.
Often times it needs a trigger for us to act, to move out of comfort zone. That trigger could be external or internal. It could be a situation or an event or just a conventional milestone (such as New Year).
Nothing really changes when the present year changes and New year begins. It’s just a counting system. And yet, we often feel motivated to make some changes, start few new things and leave past behind. To that extent, New Year is a good time to bring change in yourself.
So what better day than 31st December, which also has a special significance in my life, to start applying Zero Based Thinking in 2022.
As mentioned earlier, I have already started applying ZBT to relationships and have got rid of quite a few unnecessary, burdensome, meaningless interactions and relationships. Today I formally cut ties with such relationships. I will not carry forward those relationships to 2022. While some of the people may still remain in my phone/ email address book, and very few in memories (and even passwords!), I’ll not give them a place in my life by default. It also means that I don’t need to carry any bitterness or grudge towards the people I am cutting ties with. In fact, if there was a reason to be bitter, I wouldn’t cut off ties. I would continue with the grudge 🙂
This frees up a lot of headspace and mindspace for me to focus on and cultivate the other meaningful relationships and even build a few more.
Year 2021 has been a very good year for me – the best in last one decade! I’ll write about it soon in a separate blog post to elaborate on why I feel so. However, I feel upbeat entering into New Year and sense that 2022 is going to be the life-changing year I have been hoping for since last 10+ years!
So, Good Bye 2021 and Welcome New Year 2022!