What is the 'Beyond Budgeting' philosophy, and what problems with the traditional annual budget does it address?

Beyond Budgeting argues the rigid annual budget is broken: it's slow and expensive to produce, out of date almost immediately, encourages gaming (sandbagging targets, 'use it or lose it' spending), ties fixed targets to incentives (driving dysfunctional behavior), and forces decisions into an annual cycle rather than when the business needs them. Its principles separate the things the budget conflates — target-setting, forecasting, and resource allocation — and handle each better: use relative/stretch targets and benchmarks rather than fixed negotiated numbers, use frequently-updated rolling forecasts (unbiased, decoupled from targets and rewards) for steering, allocate resources dynamically on demand rather than in an annual lump, and devolve decisions to front-line units with transparent information. In practice most companies adopt elements — rolling forecasts, driver-based planning, decoupling forecasts from incentives, continuous resource allocation — rather than abolishing budgets entirely. The core insight for FP&A: stop using one annual number for three different jobs, and make planning continuous and behavior-aware.