ZBB Essentials - Mckinsey

• ZBB or Zero Based Budgeting is a a budgeting process where on a very granular level, you go through a company's spending and determine what resources various business units require. That means looking at individual cost categories across all business units. The process puts the burden of proof on the manager who's asking for resources. He or she must demonstrate almost on a continual basis the reasons the resources are in fact still required to achieve business objectives. 
• ZBB is fundamentally different from Cost Cutting initiatives. Standard cost cutting programs typically start with a directive to reduce the previous year's spending levels. As a result, executives naturally focus on the largest expense categories -- the tallest trees in the forest. ZBB instead asks everyone to rebuild their budgets from the bottom up, with no carryover from the preceding years. This process identifies many small pockets of waste that add up to big savings.
• ZBB shifts the burden of proof from those tasked with driving cost reductions (finance team or productivity program management office) to the business leaders and front-line organizations which must contribute to both identifying unproductive costs and eliminating them in practice.
•  The whole intent of ZBB is to ensure that right money is behind the right projects.