1.
Outperformance
International Center for
Alnatura.
The German Whole
Foods Market.
Page 1

2.
Beyond Budgeting Case Study
Alnatura
Introduction to the Case Stuy
Alnatura was in December 2008 by as identified as a Beyond Budgeting pioneer (and also as Management
Innovator / Management 2.0 organization). The following research describes both confirmed as also pending
and unconfirmed Beyond Budgeting principles. Further the introduction of the Value Creation Calculation of
Alnatura is described.
Table of Contents
Short company overview...................................................................................................................................3
Beyond-Budgeting-Principles confirmed by secondary resources....................................................................4
Alnatura's Value Creation Calculation ..............................................................................................................5
Beyond-Budgeting-Principles not complete in accordance with Beyond Budgeting.........................................6
Beyond-Budgeting-Principles to be evaluated within further primary research.................................................6
References.......................................................................................................................................................7
Version 1.1: June 2009
(Version 1.0: December 2008)
Page 2

3.
Short company overview
Alnatura is Germany's market leading biological and natural product
supermarket chain. Founded by Dr. Goetz E. Rehn in 1984, Alnatura
comprises 47 branches in mainly Southwest Germany, has a turnover
of about 304 million € (2008) and 1200 (2008) employees. Alnatura
products comprise the self-created brand “Alnatura”, to which currently
belong more than 870 products
that are not only sold within the own branch network, but also by
about 1200 retail partners e.g. like dm drogeriemarkt. Dr. Goetz E.
Rehn was awarded in 2005 by Ernst & Young Germany as
“Entrepreneur of the year” and is today professor at the University of
Alanus near Bonn. Further Alnatura was awarded in 2005 also as the
winner of the “Sustainable medium-sized business 2004”.
After 2000 Alnatura transformed with the experience of dm
drogeriemarkt's Value Creation Calculation and dialog-based leadership
style. Very interestingly is to note, that since this transformation
Alnatura increased its employer image, because new applicants apply
due to the high autonomy and entrepreneurship they can experience.
E.g. job descriptions state that Alnatura offers: “Work with a meaning.
The possibility to develop your fun on the job and your abilities. Short decision ways and direct
communication.”
Page 3

4.
Beyond-Budgeting-Principles confirmed by secondary resources
Alnatura matches to our research the following Beyond-Budgeting-Principles by using secondary research
(s. resources)
• Customers (both internally and externally)
• Values (these include the three core values of holistically thinking and acting, customer-focused
action and self-responsibility)
• Transparency (derived through the Value Creation Calculation)
• Autonomy (each branch decides on resource allocation, external services, branch marketing and
products, but assortment, the placement of goods, prices and central marketing are obligated by
internal central policies to the branches to ensure the same customer experience in each branch,
further branch employees were over strained with marketing activities)
• Responsibility
• Organization (in 2002 each branch or central department (the “cells”) decided on own products
and services within the Value Creation Calculation project)
• Targets and Controls (no fixed company wide goals, relative comparisons by branch cells)
• Coordination
• Resources
Furthermore Alnatura introduced the same Value Creation Calculation of dm drogeriemarkt in 2003, uses dm
drogeriemarkt's dialog-based leadership style, puts both customers and employees first, takes humans as
trustable persons in accordance with Theory Y and its values are based upon the anthropology of Rudolf
Steiner like dm drogeriemarkt. Further in accordance with the dm drogeriemarkt's knowledge sharing
marketplaces, branch managers at Alnatura seek advice by their peer branch managers. Also like dm
drogeriemarkt Alnatura's aim is not to make profits. These show only according to Rehm if the organization
was economically successful at the end of a period.
Page 4

5.
Alnatura's Value Creation Calculation
The Value Creation Calculation project was started in 2002 and introduced in 2003. In 2002 each branch and
central department was invited by the project group both to set their own products and services as also to
price them. This process took over a year and caused at the beginning only additional work and no benefits,
because the Value Creation Calculation cannot itself as an instrument replace traditional financial accounting
and internal cost calculations.
In mid-year 2003 the Value Creation Calculation was introduced to all employees by the metaphor of a
chocolate bar by two leaders: “”Imagine this chocolate bar as the complete turnover of your branch.” said
they, broke the first two bars and explained: “Then these 8 bars are the sum of your advance performance,
which you buy from other companies.” Bar by bar, piece for piece they broke the chocolate bar until the own
performance of the branch in the form of several left bars. But these also divided moreover in
“performances”: for employee renumeration, taxes, reserves and for investments, the profit. The expression
“costs” was never mentioned until the chocolate bar completely was separated into “performances”.”
The single value reports at Alnatura are derived from the central data warehouse in Excel sheets. In general
all branch cell information can be accessed by all employees. Information regarding central service cell like
IT or people management can only be accessed by branch managers and relevant cell staff. In practice the
Value Creation Calculation is mostly used by leaders e.g. to compare relatively different branch cell KPIs, but
not by sales persons or cashiers.
As already stated at firstly the Value Creation Calculation at Alnatura only led to additional work without any
benefits. But this changed dramatically. With the use of the Value Creation Calculation unnecessary internal
and external services were made clear. E.g. an external detective to cover theft issues was fired because the
Value Creation Calculation made clear that the expenses for the detective were higher than the theft wares
according to the inventory. Further the employees used to inventory to identify often stolen goods and to
develop own measures to prevent theft of them.
Also the attitudes towards “cost management” have changed with the Value Creation Calculation. A former
area manager nowadays uses the Value Creation Calculation not to cut costs, but to find ways to improve
the products that the customers buys again.
Page 5

6.
With the realization of the Value Creation Calculation it was discussed by the steering committee of Alnatura
about possible risks when freely available information is passed to competitors. In accordance with Theory Y
Alnatura trusts its employees and until now no case occurred where information left the organization.
Beyond-Budgeting-Principles not complete in accordance with Beyond
Budgeting
The reward system of Alnatura in not completely in accordance with the Beyond-Budgeting-Principle
Rewards. Notable is, that the bonuses are not linked to predefined fixed performance contracts, but are
based on actual performance afterwards and mechanisms are in place to prevent short term thinking and
foster long-term investments.
The bonus itself is only paid to branch managers and depends on the relation of actual branch turnover and
employee renumeration. To avoid short term thinking each branch is obligated to host several employees
with specific advanced trainings and to hire only permanent staff (and therefore to avoid Germany's famous
400 € jobs).
Beyond-Budgeting-Principles to be evaluated within further primary research
Due to the fact, that Alnatura is closely linked to German Beyond-Budgeting-Pioneer dm drogeriemarkt with
reference to the Value Creation Calculation (which is capable of supporting all original 12 principles), the
personal contact to dm drogeriemarkt's long-year founder and CEO Goetz Werner, the same leadership
philosophy of the dialog-based leadership style and the same company philosophy of Rudolf Steiner, it is
assumed that all other original Beyond-Budgeting-Principles are also met, but this has to evaluated within a
primary research project we are currently executing.
Pending principles are
• Planning
Page 6

7.
References
• Irle, Matthias: “Zahlen, bitte!”, in BrandEins, 09/2008 (main reference)
• Alnatura Homepage: www.alnatura.de , accessed 7th June 2009 (all sub pages and listed pod casts
and articles up to 7th December 2008)
• German Wikipedia: http://de.wikipedia.org/wiki/Alnatura, accessed 7th December 2008
• Pictures: Alnatura: http://www.alnatura.de/de/pressebilder
License
This paper except the logos and except the pictures is licensed under a Creative Commons BY-SA License.
Credit: quot;International Center for Outperformance (www.intco.org): Alnaturaquot; within the reference list
Page 7