Relevance Regained

by Johnson, H. Thomas

• ISBN13: 9780743236270
• ISBN10: 0743236270
• Format: Paperback
• Copyright: 2002-01-15
• Publisher: Free Press

Summary

Building on his pathbreaking, award-winning bestseller, Relevance Lost, H. Thomas Johnson presents a devastating critique of the top-down hierarchical accounting systems that have dominated American corporations since the 1950s. Johnson shows exactly how "managing by remote control" through results-oriented accounting information has obscured and obstructed the real business objective: to reduce process variation and lead times for the purpose of obtaining and keeping satisfied customers. The failure of most American businesses to be competitive and profitable in recent years, he contends, is their reliance on management accounting information to control people's actions and productivity. Cost-focused imperatives from on high must be replaced, Johnson asserts, with information systems that link actions with imperatives of global competition. Past practices of manipulating processes to achieve accounting cost targets dictated by "top-down" command and control information must be replaced by "bottom-up" empowerment. Self-managing work teams, according to Johnson, must own problem-solving information to reduce variation, delays, and excess in processes. Johnson prescribes the necessary changes in management principles that must replace the outdated style associated with the industrial revolution. Responsiveness to customers -- not accounting costs -- and flexibility -- reducing lead times and removing constraints -- are necessary for sustained competitive excellence and long-term profitability. Johnson discusses the radical overhauls of companies, such as General Electric's work-outs/ "best practices" program, Eastman Kodak's process control costing, and Harley-Davidson's work simplification programs, and shows how these strong commitments to new strategies maximize a company's most important assets: people and time. To be globally competitive, he claims, a company's work must be directed toward selling to customers, not just selling products. Transaction- or product-oriented companies, according to Johnson, ultimately will lose out to responsive, customer-oriented ones.

Author Biography

H. Thomas Johnson is Professor of Business Administration at Portland State University in Oregon and Distinguished Consulting Professor of Sustainable Business at Bainbridge Graduate Institute in Washington. He co-authored Relevance Lost: The Rise and Fall of Management Accounting, which is considered one of the most influential management books of the twentieth century by the Harvard Business Review.

Table of Contents

Preface	vii
PART I RELEVANCE LOST IN TOP-DOWN CONTROL	1	(54)
Information, Action, and Business Performance	3	(13)
Remote-Control Management in the Dark Age of Relevance Lost	16	(17)
Consequences of Remote-Control Management	33	(22)
PART II RELEVANCE REGAINED BY BOTTOM-UP EMPOWERMENT	55	(118)
Imperatives of Competition -- Past and Present	57	(16)
Becoming Responsive by Building Long-term Customer Relationships	73	(16)
Becoming Flexible by Empowering Workers to Remove Constraints	89	(15)
Management Information for Competitive Excellence	104	(27)
Activity-Based Cost Management: Relevance Lost Deja Vu	131	(24)
Putting an Improvement Process in Place	155	(18)
PART III INFORMATION, EMPOWERMENT, AND SOCIETY	173	(32)
New Frontiers for Business Education	175	(22)
The Information Revolution Revisited	197	(8)
Appendix: Where to Turn for Help	205	(2)
Notes	207	(10)
Acknowledgments	217	(4)
Index	221