Replying to LO27702 --
In a message dated 1/27/02 9:52:46 PM,
learning-org-digest-approval@world.std.com Roger writes:
>Andrew Campbell in his original mail mentioned Tom Johnson. At a talk
>Tom ... showed two indicating the efforts that two similar companies put
>into the accounting and money management . One (Ford) expend about 50%
>of their effort on looking after the beans...the other (Toyota) expend
>about 5% of their effort on looking after the pennies. In the UK our
>rail infrastructure is run by a company called Railtrack. They were
>making substantial losses. ...accountants were put in charge. They are
>now making far bigger losses.... E F Schumacher clearly demonstrated
>that economics should be a local (inefficient) but highly effective
>enterprise. Andrew also mentioned that 4/5 of the world live on less
>than two dollars per head per day. Does this not illustrate the real
>tragedy. Money does not matter it is the outcomes that do, yet the
>(lack) of leadership expressed in the West ...
There are several interesting points in this dialog that I would like to
respond to.
There is a lack of leadership in the West to some degree, but this is also
true in the East, in the North and in the South. It's one of those human
frailty kind of things, certainly not unique to the US or the West. The
West did launch the League of Nations and the UN. Both of which were
attempts to make the world a better place. Goofy things certainly get
done in the name of money, religion, nationalism, etc. but the West does
good things as well.
Toyota does spend less on accounting related information than Ford or most
other companies. Their accounting system is part of an overall system
(sy) and surrounding(su), as At vividly describes in an earlier message.
Dr. Deming (whom I spent time with on several occasions) and Russ Ackoff,
among others, also talk about how every system is part of another system.
When we make changes to one system we risk making another worse......we
could also unknowingly make another one better.
Toyota has honed their accounting system to fit the Toyota Production
System for the last sixty years. Other organizations have different
systems and surroundings. That cannot simply take Toyota's best practices
and copy them. That has been clearly proven over the last twenty five
years.
Despite Enron and Arthur Anderson the state of accounting in the US (which
is the system I know most about) is not bad compared to other places.
It's overly complex, but US companies actually disclose far more than the
average Japanese multinational is required to do under Japanese accounting
rules. Never assume that Rules and Regulations will fix it, where greed
and incompetence can happen.
Still opportunities for simplification exist. I recently wrote a paper on
Lean Accounting. If you have an interest you can read it at:
http://www.imakenews.com/rainmakers/e_article000051673.cfm
Accounting, like operations, needs simplification. Most accounting
transactions do not add value and many do not even provide accurate
information. Most management accounting based reports provides estimates of
accurate information. Today, one can simply go about estimating more
effectively and more simply than traditional approaches. Traditional
accounting reporting has been around for so long that people are
self-deceiving and believe the information is accurate. It's not! I
primarily concern my remarks to management reporting, not external
reporting.... although the same problems exist in that world to a lesser
degree.
I am unaware of the source of the information (referenced to Andrew), that
4/5 of all people live on less than $2 US a day. That is not true of the
places that I have worked and visited as I traveled all over the globe.
It's an interesting statistic however. And ugly, but not quite as ugly as
it sounds. When the local population does have limited funds, the local
prices tend to be less than prices charged in New York, Chicago (yea!),
Rome, Paris, London, etc. That is not to say that US $2 would provide a
high standard of living anywhere in the world.
Sorry for ragging on. As Dr. Deming once said, "survival is not
mandatory," but it sure is a nice thing to do when one feels like they
are making a contribution to the world.
PS American's are somewhat squeemish about death. I am reading a great
book by a Chicago legend, Studs Terkel titled, "Will the Circle Be
Unbroken? Refections on death, rebirth, and hunger for a faith" I have
not finished, but it is interesting reading. Amazon reference:
http://www.amazon.com/exec/obidos/ASIN/1565846923/learningorg
Best wishes to all,
Michael Bremer
The Cumberland Group
630-789-8262
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