Management accounting is vital to long-term planning. However, in today's climate of rapid technological change, vigorous global and domestic competition, and the enormous expansion of information-processing capabilities, current management accounting systems are inadequate and outdated. In Relevance Lost, H. Thomas Johnson and Robert S. Kaplan, both professors of management accounting, combine their unique perspectives to describe the evolution of management accounting, combine their unique perspectives to describe the evolution of management accounting in American business, from the early textile mills to present-day computer-automated manufacturers. As they say, "understanding the reasons behind the obsolescence of existing systems should provide improved rationale for organizational change." Johnson and Kaplan argue that the use of outdated accounting methods may have helped undermine American manufacturers' efforts to adapt to the rapidly changing competitive environment of the 1980s. When management accounting systems report highly inaccurate product costs and provide misleading targets for productivity and efficiency efforts, America's large decentralized corporations become vulnerable to smaller, more focused competitors. Ineffective management accounting systems can prevent companies from achieving gains through vertical integration and diversification. Today new management accounting developments taking place in leading American manufacturing firms show promise of reversing this trend. Relevance Lost cites numerous cases of forward-looking companies that are accomplishing just that. Johnson and Kaplan masterfully and persuasively illustrate the need for modern corporations to reexamine their existing practices and to redesign new management accounting systems. Tomorrow's leaders will be those companies who have the foresight to lead management accounting back to the path of relevance from which it strayed over sixty years ago.

Relevance Lost: The Rise and Fall of Management Accounting

Business & Money

H. Thomas Johnson

Accounting

Harvard Business School Pr

Profit Beyond Measure: Extraordinary

Anders Broms

Free Press

<p>Traces the history of the role of management accounting in business and argues that present management accounting systems have become obsolescent</p>

Robert S. Kaplan

Economics

Harvard Business Review Press

<p>Waste has plagued almost every industrial-age firm for the past century. In this powerfully argued alternative to conventional cost management thinking, experts H. Thomas Johnson and Anders Bröms assert that any company can avoid the waste that is generated through excessive operating costs in the short run and excessive losses from market instability in the long run. To gain more secure levels of profitability, management must simply change how it thinks about work and how it organizes work. Profit Beyond Measure details how two extremely profitable manufacturers, Toyota and the Swedish truck maker Scania, have rejected the traditional mechanistic mindset of managing by results that generates waste. Johnson and Bröms explain how Toyota and Scania achieve their legendary cost advantage through a revolutionary concept they call managing by means (MBM). Instead of being driven to meet preconceived accounting targets, the production systems of Toyota and Scania are governed by the three precepts that guide all living systems: self-organization, interdependence, and diversity. Amid a wealth of new insights into Toyota's vaunted system, Johnson and Bröms introduce the tools of MBM to show how design, production, and profitability analysis are done to customer order. They demonstrate that by following the principles that emulate life systems, even a lean and profitable company can organize work to greatly lessen its long-term earnings instability and sharply reduce its short-run operating costs. Scania has achieved sixty-five years of financial stability and longevity in the face of fierce competition. Toyota has amassed a market value since 1988 that has rivaled -- or sometimes surpassed -- the American "Big Three" automakers combined. The principles that Johnson and Bröms set forth in Profit Beyond Measure can guarantee the same richer, longer life to any company that applies them.</p>

Profit Beyond Measure

Management & Leadership

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Books by H. Thomas Johnson