"If your manager knows what you're doing all the time, you're not doing your job, and he's not doing his."

Hew Evans, Sony HR Director - Asia

“Coming together is a beginning; keeping together is progress; working together is success.”

Henry Ford

...prisoners of the great North American manufacturing cost accounting system ...

"The thought was if we can do a fully automated factory and get rid of all the labor, we would have plants that run day and night fully automatically. But with these totally automated facilities you lose all flexibility and they are extremely capital intensive. The only way you can hope to make a return is to run pedal to the metal at all times. They were prisoners of the great North American manufacturing cost accounting system that says, as you eliminate labor, your costs goes down. But what they forgot was they were getting rid of direct labor but replacing it with indirect labor and huge capital costs. These costs were high because the technicians and other people needed in an automated plant were much more expensive than the hourly laborer. You need to look at every worker. You look at his value added time versus his wait time and you arrange the production flow in such a way that you maximize the value added time of each worker and reduce the waiting time. You concentrate on the worker not on the machinery. Use automation only where necessary"

Robert Lutz
Former Vice President at Ford Motor Company
Former Vice President of Sales at BMW
Former Vice Chairman of Global Product Development at GM

You've got the numbers, Now what?

"The problem is the tendency for companies that use cost-driver information to do efficiently what they should not be doing in the first place."

H. Thomas Johnson
Retzlaff Professor of Cost Management
Portland State University
Member of the board of advisors of the Journal of Cost Management

Leaders

"Leaders shouldn't be at the front or end of the food line. They should know their employees and not separate themselves from the people they work with."

T. Boone Pickens - Founder and Chairman of BP Capital Management
PMI Today - September 2009

Reconnecting with Strategy

Which of our product or service varieties are the most distinctive?
Which of our product or service varieties are the most profitable?
Which of our customers, channels, or purchase occasions are the most profitable?
Which of the activities in our value chain are the most different and effective?

HBR Nov-Dec 1996

Michael E. Porter
Bishop William Lawrence University Professor
Harvard Business School

Inventory Paradox

"The more inventory a company has, … the less likely they will have the part(s) that they need."

Taiichi Ohno

Reengineering the Corporation

… Michael Hammer & James Champy



“It is not products but the processes that create products that bring companies long-term success. Good products don’t make winners; winners make good products.” P.26

“It is no longer necessary or desirable for companies to organize their work around Adam Smith’s division of labor. Task oriented jobs in today’s world of customers, competition, and change are obsolete. Instead, companies must organize around process.
This is an assertion as radical and far-reaching today as Adam Smith’s was in his time. Managers who understand and accept this concept of process-based work will help their companies leap ahead. Those who don’t will stay behind.” P. 28

''There is nothing so useless as doing efficiently that which should not be done at all"

Peter F. Drucker

"It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts."

Sir Arthur Conan Doyle

Management & Leadership

"Supervision and command are the management of actions; coordination and integration are the management of interactions, and this requires leadership."

Russell L. Ackoff
Anheuser-Busch Professor Emeritus of Management Science
Wharton School
University of Pennsylvania

Performance Management

"Poor measurement systems cause employees to question the competence of managers who 'manage by the numbers' when the numbers conflict with the economic reality and the organization's objectives."

Balanced Scorecard Report - Volume 4, Number 1, Jan-Feb 2002

Robert S. Kaplan
Baker Foundation Professor
Harvard Business School

Using Data vs. Statistical Noise

"Before you can use data to justify any action, you must be able to detect a potential signal within the data. Otherwise you are likely to be interpreting noise. Nobody tunes in and listens to static on a car radio - so why should you try to run your business by listening to, and attempting to interpret, static?"

Donald J. Wheeler
Understanding Variation - The Key to Managing Chaos

Performance Reviews & Appraisal

"There is no good way to do performance appraisal (or performance review).It is inherently the wrong thing to do."

Peter R. Scholtes
The Leader's Handbook

Management Best Practices - Efficient Production

''The most efficient way to produce anything is to bring together under one management as many as possible of the activities needed to turn out the product."

Peter F. Drucker

Leadership and Improvement Initiatives

"If your senior leadership cannot articulate the basic principles of an improvement initiative, then employees will never achieve or sustain the initiative." - Cost Management - Jan/Feb 2005

Gary Cokins CPIM
Global Product Marketing Manager
Performance Management at SAS

"[F]inancial incentives [...] can result in a negative impact on overall performance."

"We find that financial incentives may indeed reduce intrinsic motivation and diminish ethical or other reasons for complying with workplace social norms such as fairness.
As a consequence, the provision of incentives can result in a negative impact on overall performance."

Dr. Bernd Irlenbusch - London School of Economics

Department of Management
Managerial Economics and Strategy Group

"Customers do not contribute equally to the bottom line"

Jonathan L.S. Byrnes, DBA
Senior Lecturer, Massachusetts Institute of Technology (MIT)
President, Jonathan Byrnes & Co.

HBS Working Knowledge - Jan, 2003

"We have to accept what we all know to be elemental - that taking a defensive position can, at best, only limit losses. And we need gains."

Peter F. Drucker
"This Competitive World"
Harvard Business Review
March-April 1961

"No one gives a hoot about profits - if they did they would be interested in learning better ways to make them."

W. Edwards Deming

Time-Driven Activity-Based Costing

"Many companies abandoned activity-based costing because it did not capture the complexity of their operations, took too long to implement, and was too expensive to build and maintain. Here's a way around those problems."

Robert S. Kaplan & Steven R. Anderson

Lean vs. Traditional Cost Accounting

"It is only as we bring the processes under control through lean thinking that we can - step-by-step - dismantle the wasteful, misleading, and actively harmful traditional accounting systems."

Brian Maskell
President, BMA Inc.
Fellow of the American Production and Inventory Control Society

"Financial results are much better controlled by managing flow, not managing cost."

William H. Waddell & Norman Bodekin
Rebirth of American Industry - A Study of Lean Management

Strategic Cost Management

"In a global economy, nothing is more important than knowledge of customers’ wants and of how to satisfy those wants profitably. The fundamental reason for the lost relevance of modern management accounting is the belief that businesses can both plan and control their affairs with accounting information that is compiled for financial reporting purposes. Although better information is needed, better product cost information – even activity-based cost information – will not improve competitiveness or ensure long-term profitability. Instead, companies need activity-based information to better understand how to link work, resource consumption, and customer satisfaction."

H. Thomas Johnson
Retzlaff Professor of Cost Management
Portland State University
Member of the board of advisors of the Journal of Cost Management

"Traditional managerial accounting is at best useless, and at worst dysfunctional and misleading.“

John K. Shank
Noble Professor of Managerial Accounting and Management Control
Tuck School of Business
Dartmouth College

Executive Management's Information Literacy

"Executives have become computer-literate. The younger ones, especially, know more about the way the computer works than they know about the mechanics of the automobile or the telephone. But not many executives are information-literate. They know how to get data. But most still have to learn how to use data.Few executives yet know how to ask: What information do I need to do my job? When do I need it? In what form? And from whom should I be getting it? Fewer still ask: What new tasks can I tackle now that I get all these data? Which old tasks should I abandon? Which tasks should I do differently? Practically no one asks: What information do I owe? To whom? When? In what form? ”

Peter F. Drucker
"Be Data-Literate--Know What to Know", The Wall Street Journal, Dec. 3, 1992

Lean Manufacturing vs. Traditional Cost Accounting

"Anyone involved in a lean transformation inevitably bumps up against the vagaries of the accounting systems that reward overproduction and waste and seem to punish true improvement. We wonder what would happen if the accountants actually came to the production floor and witnessed firsthand the havoc created by their systems."

Jefferey K. Liker, Ph.D.
Professor of Industrial and Operations Engineering
University of Michigan

“[Traditional standard cost systems] are inadequate for managers and employees in today’s competitive environment.”

Robert S. Kaplan
Baker Foundation Professor
Harvard Business School

“Cost Accounting: Public Enemy Number One of Productivity”

Eliyahu M. Goldratt
"The Goal - A Process of ongoing Improvement"

Strategic Cost Analysis: The Crown Cork and Seal Case

" 'Strategic cost analysis' means using cost data to develop superior strategies. A good understanding of a firm's cost structure goes far in helping the company gain a sustainable competitive advantage."

John K. Shank
Noble Professor of Managerial Accounting and Management Control
Tuck School of Business
Dartmouth College

Vijay Govindarajan
Earl C. Daum 1924 Professor of International Business
Tuck School of Business
Dartmouth College

"Management is doing things right; leadership is doing the right things."

Peter F. Drucker

''Plants don't close from poor workmanship, but from poor management.''

W. Edwards Deming

"Learning is not compulsary... neither is survival."

W. Edwards Deming