Review of Real Numbers - Management Accounting in a Lean Organization

Why this is required reading for CFO's, finance & accounting:
This book is written by 2 CFO's and will assist senior executives, particularly the CEO and CFO in understanding financial impacts of Lean, and how it can be applied to accounting.

Accountants will benefit from the many ways they can provide a higher level of service identified here.
Lean Leaders will be better prepared to communicate with finance personnel and help them learn to see.

Those looking to better understand `the numbers' will have a renewed understanding of them, the actual impact of traditional accounting methods rooted in our businesses, and the obstructions we've rooted in internal policy and culture, which are often treated as external.

Some of what's covered includes:

- how accounting can provide significantly more value to the business, and vastly improve how they support decision making

- open book management, which firms can leverage to promote trust and a sense of personal ownership in the business

- the 'reasons' some people will struggle in the process to provide more relevant info, and what the CFO needs to understand to move past this

- compliance with materiality, GAAP, etc.

- performance measurement, and how metrics drive behaviour

- how management by objective sub-optimizes and damages a business

- avoiding unintended consequences from metrics that aren't meaningful, and examples to determine if these exist in a firm

- details how it is far less important to know the cost of making an individual product than to manage the costs of a business as a whole

- how using traditional allocation methods leads to potentially significant distortion in calculating product cost

- closing the books, and methods for firms to have real time financial results available as soon as the month ends, and the impact when they are not timely and arrive after

- cost planning and target costing

- impacts of variance analysis, capacity variance, and activity based costing most firms are not aware of

- financial statements that communicate nothing vs. what is really happening in the operation, how to present the same financial data internally in a usable format, and easily introducing the relevant format to the organization so financial information is useful to everyone

- the product of an accountant

- allocation costs, and how managers may be tempted to make operating results look good by changing allocation methods

- how clarity in metrics ensures a firm's offering is what a customer wants, not what creates the most absorption hours

- the correct way to evaluate capital requests which accounting courses don't teach (yet)

This book is loaded; I suggest it be read twice. 

Demand Surges for Lean Talent over Six Sigma

Industry Week

Jill Jusko
Feb. 14, 2012

Lean talent demand exceeds Six Sigma by almost 68% in the current study, almost double the 35% edge it held last year.
Demand for lean talent over Six Sigma talent has accelerated at its fastest year-over-year pace in the study's history, according to Avery Point Group. 

Why has a desire for lean talent overtaken that for Six Sigma? Noble suggests that companies may be seeking a "more practical way" to get results with fewer resources -- and to get those results more immediately. For some, Six Sigma carries a stigma of "paralysis analysis," with results considered a more long-term endeavor, he says. 
Full article here:

Avoid Social Media Failures & Innovate Faster Cheaper Better

The Simple Way to Avoid Social Media Failures

A Canadian woman lost her disability benefits when Facebook vacation pictures contradicted her claims of debilitating depression. Divorce lawyers now frequently monitor Twitter and Facebook posts to find dirt on their clients' exes, to be used in alimony and child custody negotiations. One mom even lost custody of her children because her Facebook profile showed she was spending too much time on Farmville. And not a day passes without a handful of people's poor social media judgment getting them fired (for posting party pictures on alleged sick days, for example), or simply not hired (most employers shy away from candidates whose profile pic includes a bottle of tequila in each hand, Cinco de Mayo or not).  Consider this tweet from Kenneth Coleduring the height of the revolution in Egypt: "Millions are in uproar in #Cairo. Rumor is they heard our new spring collection is now available online at...

Your boss, your constituents, your customers, and yes, even your ex-wife's divorce lawyer are all connected to you. They are removed from you not by six degrees of separation, but by one little mouse click.

Because it is informal, personal, and immediate, social media is well suited for apologies and brand damage control efforts. If you face negative publicity in new media, there is zero chance of turning it around with old media techniques.  But now you can fire back through social media — uploading your own YouTube video explaining what you are doing to fix the situation and creating a special Twitter account to specifically handle customers concerns about this issue. Because of quick and appropriate responses directly to the people most concerned, you are able to diffuse what can be a catastrophic event.

Use Jugaad to Innovate Faster, Cheaper, Better  found this article interesting

Passengers using Time Observation Forms - Air Canada

This happened to be one rare occasion where the passengers plane from Toronto returned to that airport due to mechanical problems, and the plane that would have been the alternate arrived late from Korea.

Prior to this flight the passenger received a 15% discount code which did not work when they booked, and when they called they were told to email using the online form. The response from the online form was to call. It remains resolved, a reflection of Air Canada's customer service.

Instead of arriving late Wednesday night, the passenger arrived late Thursday morning in poor condition since the altered logistics did not allow them to sleep more than 2 hours, and lost hours on the job they were flown in for.

The stopwatch measured a total time of 19 hours. Calculated travel time is 30% (value add), meaning 70% is Non Value Add time.

What HR needs to know about recruiting Lean Talent

Some summary points from an article posted at

When recruiting lean talent:

You are looking for someone with preferably NO INDUSTRY EXPERIENCE
o       They bring value by not understanding it through the ‘stupid’ questions they ask, which those familiar with the process would never ask, helping them to understand it. 
o       This gets those with industry experience to see things differently – helping THEM break down and rebuild the process.

There currently is no standard to determine lean training/certification. 
o       There is no green belt or black belt – it is not related to six sigma – but many consultants use this framework, adding to the confusion
o       There is no greater ‘certification’ than true experience and results as a measure of qualification.

Skills you are looking for:
-          Coaching, patience, questioning, problem solving, interpersonal skills, communication & facilitation skills, leadership,
-          Someone who is interested in working with people to learn how lean will apply to your unique situation, because you are different; NOT someone who tells you how it applies
-          Someone who has NO experience in your industry

Yes, a lot of it is counter intuitive at first.  Keep learning click here

No Bail Outs - RIM

Don't support companies that are not sustainable. If they can't compete, the one's that can will thrive.
Why give money to an organization that hasn't evolved competitively so it can continue? It maintains dying market share that a competitive company could gain to support its sustainable growth.

Yes jobs will be lost, and there may be some rough times. This requires creativity to get out of and spurs innovation - the catalyst we need.

We slow down evolution and progress by maintaining legacies.

Creative Financing

Buying future credit and debit card sales.
Merchant Advance Capital will buy (for example) $50,000 of your future sales for $40,000 today.  They'll take 5% of each sale until they get repaid the full $50,000.

Paying cash up front to buy a client's accounts receivable contracts for approximately 80% of the contracts value.  The factor then waits for payment and performs all necessary legwork to remind the debtor client that the bill remains outstanding.
Once the factor gets paid in full, its staff deducts a fee that tends to be between 2-5% of the contract's value.  The factor then sends the remaining money back to the client.

A language they don’t understand: Lean in Spanish

Did you learn about Lean in Japanese? Why are we teaching it in Spanish?


Is making a translation sheet for terms rework or over processing? What about using it? Could we be more effective?


We had this feedback during process improvement work at a hospital with a clinician who previously completed her PhD on Jargon being a Power Differential.


Regarding our use of Spanish terms instead of English to teach lean concepts, she said whenever we use a foreign language:


- “it alienates people because you’re speaking a language they don’t understand.”

- “We do this in health care; it’s like we have a culture [the medical culture where we have our own language]”

- “we are not communicating in a language to understand [for end users like patients]”

- “It’s a culture we [medical professionals] all understand, and that myself {medical professionals] maintaining my own culture is more important than ensuring communication actually occurs.”

- “Speaking in another language unintentionally excludes those who don’t understand it.”


Does this promote resistance?


Are you focused on the end user of your communication if teaching something in a language they don’t understand?


What’s the feed back from your learner on language preference?


Examples of Spanish we use to reference lean:

Muda - waste

Kaizen - continuous improvement

Poka-yoke - mistake proofing

Heijunka - leveling

Jidoka - human autonomation (independence)

Sensei - teacher

Gemba - workplace

Hoshin Kanri - strategy deployment


We already use English for 5S;

Should we start using more Spanish terms? Why not?

There is an English translation for each Spanish term.


As continuous improvement leaders we set an example – and look for areas we can self improve; should we use the same language as those we’re talking to?


If during this article you thought “Why are they using Spanish?” -that’s how you audience feels when you use Japanese.


We welcome feed back on this – in a language we understand.

Correction brink when?

For about two years we've been anticipating a period of correction, who knows when;

Starting with the prolongation of dealing with the problem by the US through bail outs - instead of everyone sucking it up and dealing with the problems, they apply band aids. 

It is our understanding despite a lot of the media hype & the politics involved around the US making it's payments, there has been some recovery in manufacturing and corporate is making money.   

The inflation from all the money printed in the US has been spread out by low interest rates & high unemployment.

Europe is in rough shape, Greece hopelessly trying to refinance its debt. 

Canada's housing market

has been showing signs of change/slowing - articles in BIV p10 Shifting Real Estate Tides

"...continued sings of prices falling."

"There is a big gap between vendor expectations [of prices] and the market reality."

"Today's BC coastal market is characterized by a huge number of listings and flat sales."

"While both Royal Lepage and Re/Max forecast a strong recovery starting this summer, vendors may recall that the same predictions were made in both 2009 and 2010."

Exceptions to the trend being in parts of Northern Ontario, Saskatchewan & Manitoba.

another tech bubble? (see Steve Blanks blog) we don't know.

There's always opportunity and businesses that grow in recessions. More importantly we have the knowledge in methods and technology to solve all these problems, and need a shift in thinking to adapt them.  While a crisis situation is the most difficult time to implement them, it is often the catalyst needed to start.