A Review of the Book by Peter A Hunter
Reading this book in the current economic climate is an eerie experience, like listening to a recording of Nostradamus predicting the downfall of civilisation, while it was actually happening.
Profit Beyond Measure was first published in the UK in 2008 but has been in print in the US since 2000.
The story that Johnson and Broms have told in this book is about the hugely destructive effect that management accounting has on an organisations ability to perform.
This approach, called “Management by Results” is familiar to almost anyone who has worked in a large company in the last 50 years or who has been called to account for failing to meet the targets that result from this strategy.
This book is subtitled “Extraordinary Results Through Attention To Work And People.”
What Johnson and Broms do in this book is to tease apart the management by results strategy that seems to have sandbagged the current generation of managers into believing that it is an effective way to manage.
Instead they firmly replace the focus of management onto the people who produce the profit and the place that they do it, neither of which are to be found in the offices of the accountants who try to drive performance with numbers.
Or, as Johnson and Broms put it, “Management by numerical goals is an attempt to manage without any knowledge of what to do”
They explain business as a natural living system whose growth and energy will be restricted if we try to impose external controls, saying that the job of the manager is to nurture and cultivate the conditions that bond the companies talents with the customers needs in a profitable union, not to drive work with destructive financial targets.
Through the example of Toyota Johnson and Broms show us the profound change of thinking that has to take place before “Management by Results” can be replaced by what they call “Management by Means.”
There has been a huge amount of literature devoted to the difference between the way cars are produced by Toyota and the way they are produced by almost any other car company with the result that the Toyota Model has been copied throughout the world but, as “Profit Beyond Measure” points out, the Toyota Model has been copied without being understood and the associated performance improvement has not therefore been realised.
“Profit Beyond Measure” is about what happens when we understand how destructive driving performance is, about what happens when we understand that order does not derive exclusively from human intervention, that pattern and order emerge spontaneously when an organisation conforms to natural principals.
Johnson and Broms suggest that a manager can be likened to a skilled gardener who knows that caring for the soil is enough, the rest is up to nature.
W Edwards Deming said that over 97 percent of the circumstances that affect a companies results are unmeasurable, but that American management spend more than 97 percent of their time analysing the 3 percent that can be measured and less than 3 percent of their time on the 97 percent that really matters.
Profit Beyond Measure is first and foremost about what a manager needs to do to tend the soil, to create the conditions that will allow his workforce to grow and produce the performance that continually escapes the directive, controlling manager.
This book shows managers what happens when instead of trying to drive a natural system with quantitative mechanistic targets they start to regard employees as living parts of a natural system.
“Profit beyond Measure” will not be on the favourite list of many management accountants, if it was, they wouldn’t be management accountants for very long.
Peter A Hunter
Author – Breaking the Mould