Profit Beyond Measure

by H. Thomas Johnson, Anders Broms

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 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.

Genres: Business, Management, Accounting

280 pages, Paperback

First published November 1, 2000

Reviews

[Tania · Rating 5 out of 5]

From my professional view this was a shockingly exciting read. I never thought in a million years I would want to read what an accountant had to say about how to organize your enterprise and measure it's value, let alone an historian of accounting, but this was fascinating. Tom Johnson figured out decades ago what my new start-up is trying to bring to healthcare: that you can't treat your company/hospital/factory like a mechanical thing to be manipulated with levers. Quantum science has taught us that Newtonian science will only get you so far in understanding the universe: organizations thrive when we learn to align them with natural laws that define living systems. Toyota figured this out. Others can too. Our management and accounting systems are limping along in an outdated paradigm.

[Daniel · Rating 5 out of 5]

As an accountant (at least by professional designation and training), I found Profit Beyond Measure to be an mind-opening experience. I learned that Toyota doesn't use cost accounting in their manufacturing plants (compared to say GM or Ford that appear to be managed by cost accountants with an engineering background) and then I considered that Toyota is profitable while GM, Ford, etc. are losing billions of dollars, and I had to conclude that the authors are on to something.

The later chapters ventured into the political correctness of environmental activism that didn't support the overall book, the misadventure wasn't enough to reduce my overall conclusion that this is a must read for business leaders, especially if your profits aren't where they should be and you seem to be managed by accounting information.