Customer Reviews

Relevance Regained

5 star:		(2)
4 star:		(0)
3 star:		(0)
2 star:		(1)
1 star:		(0)

 

 

This early book by Thomas Johnson shows a remarkable vision in the making, of how command and control thinking inhibits creativity and progress, and how traditional management accounting is a powerful under-the-radar mechanism of that control philosophy. An early pioneer in Activity Based Costing, who later reversed course as a result of his ten year insider experience at Toyota at the invitation of Mr. Fujio Cho who was then President of Toyota's North American operations, Thomas became a pioneer in the practice of management accounting for Lean - or rather the absence of management accounting used in an attempt to guide operations. Johnson has long been in Peter Senge's inner circle, and was recently awarded the Deming medal for advancing the practice. This book is an important step in the journey of one of the lesser known but more influential Lean thinkers from the very beginning.

Where does sustained competitive advantage come from? Using top-down accounting results to command and control an organization works well enough... if conditions are stable and the path to the goal is known. In that case, management's task consists largely of establishing targets, providing incentives and periodically checking results.

But many companies are finding themselves in marketplaces grown crowded and dynamic. It's not possible to know how conditions will develop, and when you fall behind it's hard to catch up. Our current managerial-accounting-based management system may not be up to the task that these challenges present. In crowded, dynamic markets, leaders and managers need to teach their people how to work systematically and iteratively to overcome obstacles and meet larger goals.

The change in market conditions can be slow to surface, so we may feel little urgency to change our management approach. And resistance to such change is naturally great anyway. In this book Professor Johnson gets you thinking... what if the constant use of financial-accounting-based "process drivers" cripple organizations in the long run, leading to eventual decline? Then Johnson points to mindset and behaviors that leaders, managers and business schools can adopt to better equip them for the uncertain grey zones ahead.

This book is completely germane to today's world, and it will surprise you to learn it was first published in 1992. Relevance Regained is a classic I recommend to anyone interested in management and leadership.

I had been recommended this book a few years back and finally got around to reading it. The book is somewhat dated and only includes information until about 1990. I think the book does a good job showing some of the problems with management accounting today but falls short on how to correct them.