News and Events!

Watch for a new book -- by the creator of Lean Beans, and published by Productivity Press -- coming this Fall 2011.  The title of the book is:

"The Controller as Lean Leader:

A Novel on Changing Behavior with a Lean Cost Management System"

This novel is a compilation of the author’s many experiences in Lean and Lean Accounting over the past 20 years.  It summarizes the good, the bad, the ugly …and the humorous in lean transformations.  The novel focuses on “behavior,” “systems,” and “cost management.” 

While the topic of this new book is lean accounting, this book is not about numbers but rather about “behavior.”  And it is not about OPS versus Finance.  It is about the “learned behavior” of OPS and financial people.  OPS people have been taught how to “play the game,” while financial people have been taught to use a “financial” reporting system to try to manage the business.   

The story involves a fictional manufacturing entity which is embarking on a lean change management initiative – for the second time, having failed at its first attempt at lean implementation just a few years earlier.  What will the company do differently this time?  And what will they do to ensure success as the transformation unfolds?   

While there is no “recipe” for a successful lean change management transformation, the book will give the reader some tips for success – to include three new “principles” for success in any endeavor.  The book also illustrates that a Lean Cost Management System is “a must” if we desire to sustain our lean endeavors. 

The day after a Cat 3 hurricane a few years ago, my neighbor received a call from his landscaper.  She asked him, "What would you like me to do with your yard this month?" and he responded, "Probably nothing if there is no house there anymore."  If you do not have a Cost Management System, there will be no need for a financial accounting system as the business will cease to exist.

To keep up with the ever-changing and always competitive global manufacturing environment, traditional "Cost accounting" systems must change to world class "Cost management" systems.  This book helps teach the differences between "cost accounting" and "cost management."  To strengthen any corporation today, and assist the corporation in sustaining growth, accounting information (not just data) and its input must be distributed among, as well as originate from, all associates in any entity.  It is not enough to have only the accounting "department" involved in collecting data and transforming it into information. 

If you have read past newsletters or attended any of our seminars for continuing education for CPA's, you have heard us say that one of the primary reasons why lean initiatives fail in any organization is "Accounting."  Most traditional cost accounting systems measure efficiency of use of machines and people using volume variances.  These traditional systems are too complex, too focused on past performance, and become a barrier to change. 

The role of the accountant today must change from just reporting the business while looking in the rearview mirror, to directing and leading the enterprise toward becoming world class.  If we were to compare business to war, the financial accountant is the guy who goes in after the war, counts the dead bodies, and reports this to the General.  The lean management accountant, on the other hand, is the guy who is in the trenches with the troops, trying to help win the war.  For only by helping to lead the business can the Lean Controller assist in changing the behavior of people and thus the culture of the business.

This book should open a new window of opportunity for the Controller.  He will find that his role in business is changing today.  New paradigms are emerging!  Dramatic changes are taking place!  The Lean Controller will no longer be referred to as a "bean counter" or as a messenger of "doom and gloom," and will not be pigeon-holed by HR as an introvert, assigned to an office and "closing the books."  Rather he/she will be referred to as a catalyst for change, a strategist, and a team player, leading the cultural change, defining values, and changing behavior to change the culture by "leading" and not just "managing."  The Lean Controller will have added value for the customer and defined a road map or vision for the business.  The Lean Controller will have many "faces."  The Lean Controller is no longer a "functional superstar."

While accounting has really not changed since it began in 1930, Henry Ford told us, in his book Today and Tomorrow (1926), that financial information signals us that something is wrong, but tells us not what is wrong.  He stated that cost accounting has two, and only two, purposes: tax accounting and financial statements.  He even went on to say that accounting book values "...are meaningless as the machines are worth only what we can do with them."  Ford even stated in his early writings, "...every depression is a challenge to every manufacturer to put more brains into his business - to overcome by management what other people try to overcome by wage reduction...Get the costs down by better management."  (Ford, 1922) 

As we start to come out of this lingering recession, and as one completes the reading of this new book, the Lean Controller should be able to answer the following questions:

• What is the culture of my organization?
• How can I help assist in changing the management system?
• What are our new lean metrics?  Will they help change behavior?
• Are we focusing on the numbers or the processes?
• Are we focusing on cutting waste to "create" cash, or are we still cutting costs to "save" cash?
• Are we "playing games" to achieve success?
• Have our senior managers changed the way they think?  How can I help?
• How many hours per week do our top execs spend in meetings, looking at computer-generated reports, and how many hours do they spend on the plant floor?  How can I change their behavior, if necessary?
• Are my associates and I looking "top-down" through departments, or are we looking "outside-in" through a lean management system?

This new book creates new management paradigms for the reader, as well as a new role for the Controller in a lean organization.  The Lean Controller should no longer be concerned with "command and control" and sticking with the game plan.  The new business model is "learn by doing" not by rote and what you learned at the university.  No recipes for how to do this!  Ideas are coming from the people who do the work and have been empowered through Systems Values.  The Lean Controller will be challenged to lead, teach, coach - and then step aside as progress unfolds.