Campfire Talks with Herbie No. 7 – The TameFlow Approach

Here is today’s episode of the “Campfire Talks with Herbie”.

Mark J. Chaudhry ( Stuck On An Escalator / Growing Human )


This is a companion discussion topic for the original entry at https://tameflow.com/blog/2020-06-02/campfire-talks-7/
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Hi Steve,

In this episode of Talks with Herbie I believe you at some point say that we should measure financial throughput rather than P/L and then continue saying that leadership doesn’t change that they wont be successful with TameFlow.
Question: Assuming it is an uphill battle to get leadership change from P/L accountable to financial throughput accountable - likely most often a lost battle, how can we be successful with TameFlow anyway - if at all?
Hopefully, TameFlow can be used anyway. If not my take is that it will be of limited value in most cases.

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Hi @Soren

Cannot remember saying that; or maybe I was not clear.

So we must be very clear as to the scope of usage and applicability of Throughput Accounting. We are concerned about the usage of accounting data to make Management Decisions.

We are not at all concerned about replacing conventional Financial/Reporting Accounting, which are not only useful for their own proper purpose, but are also required for regulatory compliance.

We address the issues of misuse of Cost Accounting for taking forward looking Business Decisions. We want to help managers to make such decision not by looking into the rear mirror but looking ahead through the windshield glass.

Ask managers:

Do you drive your car just looking in the rear mirror or do you look forward through the windshield?

If they agree that just looking backwards is nuts when you intend to go forward, then highlight that that is exactly what they are doing with Cost Accounting.

Ask them if they would be at least curious to discover what they would see if they actually pointed their attention forward rather than backward.

Start to have that conversation, and show how Throughput Accounting will allow them to “Make more money now and in the future.”

If they are not interested in that, just drop them as a client. We don’t want to engage with clients who cannot afford to pay us today and in the future.

Finally, get the accounting professionals involved. It is easier than what you think. See: Throughput Accounting can be Reconciled with Cost Accounting

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