Yesterday Tl, Tomorrow the US?

You’ll have to look long and hard to find a major state that has had less influence than Texas has had over Jimmy Carter. However, as with every rule, there is an exception. That exception is Peter Pyhrr, who seven years ago, as an unknown 27-year-old manager at Texas Instruments, developed a revolutionary budgeting technique which has since swept private industry, and along the way, converted Jimmy Carter. Carter’s enthusiasm over zero-based budgeting led him to hire Pyhrr away from Texas Instruments so Georgia could be the first state to implement zero-based budgeting. Now Carter says if he’s elected in November, he intends to convert the executive branch of federal government to Pyhrr’s budgeting.

Zero-based budgeting eliminates the process in which existing budgets are merely continued from year to year without question – except for any new dollars added to an old budget. Under zero-based budgeting, each dollar requested for a coming year must be justified, forcing managers (or bureaucrats) to take a long, hard look at the necessity of spending any dollar, old or new.

Led by Pyhrr in 1969, Texas Instruments became the first major American corporation to develop and implement zero-based budgeting. TI did so in its 1970 budget, and since then, hundreds of American corporations, cities and states (including Dallas and the State of Texas) have followed suit.

Pleased with the success at TI, Pyhrr wrote an article about zero-based budgeting which was published in the November-December, 1970, issue of Harvard Business Review. Governor-elect Carter read Pyhrr’s article, and was so impressed that in January, 1971, declared in his inaugural address that Georgia would become the first state to implement zero-based budgeting. Carter hired Pyhrr to design and implement the process, which Pyhrr did, as a member of Carter’s staff. Pyhrr completed the job within a year, then left Georgia to join a management consulting team.

Today Pyhrr is the 34-year-old vice president and treasurer of Alpha Wire Company of Elizabeth, New Jersey. “I haven’t talked to Jimmy Carter in five years,” Pyhrr said recently during a telephone interview. “The whole thing was really odd. I didn’t think Harvard Business Review would even publish my manuscript,” he said.

“Jimmy Carter? I never heard of him until his staff telephoned me shortly after Carter’s inauguration as governor of Georgia,” Pyhrr admits. Today besides working for Alpha Wire, Pyhrr keeps an eye on the sales of his book, Zero-Based Budgeting, which has become the guidebook for implementing his revolution.

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