PSU Magazine Spring 2001

Business Review called the book one of the 14 most influential management volumes written in the last 75 years. Kaplan and Johnson argued that companies would regain the vigor of the past only by measuring costs even more rigorously. The book prompted scores of speaking invitations by groups both in and outside the world of accounting. As he climbed out ide the ivory tower, a funny thing happened. John– son, the dyed-in-the-wool accountant, came to believe that more was needed than a new and improved way to count beans. He began to believe that any cure would require a thorough rethinking of the very pillars of the accounting profession, of business, and even of the way busine s is taught, hence his controversial suggestion that colleges should drop management accounting classes because by focusing solely on the bottom line, they are no longer relevant. A merican business concentrates on net profit. But that bottom-line focus, Johnson says, is like coaching a sports team by looking only at the score– board. Are your players great? Is your star player giving her all? Will you be able to repeat your successes? Learn from your lo es? Who knows? The scoreboard only tells if you're winning or losing. About this time, Johnson met qual– ity guru W. Edwards Deming and aw that with Deming' influence, Toyota Motor Corp. was successfully achieving what American companies so desper– ately wanted. He put the two together and in 1992 published Relevance Regained: From Top-Down Control to Bottom-Up Empowerment, a repudia– tion, many have aid, of hi earlier col– laboration with Kaplan. ILLUSTRATION BY KEN ORVIDA /ARTVILLE At the same time, Johnson was becoming engrossed by the philosophy of "natural systems" thinking, which was emerging across the sciences. Sys– tems thinking holds that all things are interdependent and interacting, like an ecosystem. You can't interfere with one part of a natural system without affecting all parts-just as you can't log a forest without affecting the ani– mals that depend on it. Bu ine s, on the other hand, adheres to the Newtonian belief that objects, including humans, are inde– pendent of each other and only held together by external forces, such as rewards and punishments. Each of us is a mere mechanical system that can be explained by the right mathematical model, so there must be control sys– tems to prevent inert sluggards, who have to be kicked to be made to work, or who cheat or steal. In other words, this is a model that define the human heart by prisons and paychecks. Johnson believes this view is the root of U.S. companies' problems. By studying systems thinking, he came to see nature as the better model, in fact, the best system for sustained success. ln the interactions of a cell is a model for the interactions of a complex man– ufacturing process like Toyota' . In each case, the component -the factory worker or the cell-must deliver what is needed when it's needed, in good condition. If that doesn't happen, the next in line sends a message directly to the supplier that things are amiss. The brain--or man– agement-is superfluous to this most basic interaction, and the job gets done quickly and well. The quality of the relationship between cell or workers is what deter– mine the success of the interaction. Companie that heed this message, says Johnson, will maximize long-term suc– cess and restore spirit and dignity to the workplace. By nurturing relation– ships, says Johnson, companies will get the most satisfying result possible. In other words, it's not that the end jus– tify the means; the means are the ends in the making. "The sooner we grab hold of that model and apply it to our own world," he says, "the better." Profit Beyond Measure bring this together-what it means to run a busi– ness like a natural living sy tern. Filled with poetic quotes, the book explains systems thinking and shows how two succe sful companies-Toyota and a Swedish truck manufacturing con– cern-have used systems thinking to create two extraordinarily successful manufacturing companies. The book recently won the Shingo Prize awarded jointly by Utah State University and the National Association of Manufac– turer . Many con ider this award the Nobel prize of manufacturing. Now Johnson has begun to think that physics is perhaps an even better model than biology for understanding how systems work. That the uni– verse-matter, energy, and motion inextricably woven together-is not a collection of object , stars, planets, people, but is instead a community of interrelated subjects. Or, as another quote from Profit Beyond Measure explains, this one by Norbert Wiener, "We are not stuff that abide , but pat– terns that perpetuate themselves." D SPRING 2001 PSU MAGAZINE 11