In TameFlow we talk about how cost accounting motivates leaders toward goals that serve their local interests, and that this sets up conflicts in the organization. Do you think that this undesirable effect impacts both sides of the coin equally – leadership and management? I’d be curious to hear your thinking about that.
Yes, this undesirable affect of cost accounting impacts both sides of the coin equally -leadership and management- in varying degrees; as any great design emerges( I mean design of the social organization), organization could learn by thinking through the management side and the leadership side and can evolves towards an effective design that meets the goal of the whole system and be on a transformational journey through life of the time.
As there is a lot of information and case studies that illustrates the problem of cost accounting and how TOC’s Throughput Accounting would solve those challenges of local decisions to meet the goals of the system, rather than local interests, I will make an attempt through the following thinking process.
One question to ask ourselves at the outset is why organizations still resist to abandon the cost accounting paradigm or for that matter resistance to any new paradigm changing ideas.
The resistance is part of the nature and it is desirable, as long as it is coming from the open minds(but, please don’t tolerate closed minds). The wisdom to know how to manage resistance and how to take advantage of it will help organizations to propel to great speeds and, also, helps to keep form and shape of the organization. For instance an aircraft wouldn’t fly without the resistance of the air or pull of the gravitational forces. A certain type and form of leadership plays a big role to manage transformational change by taking advantage of the resistance in a social setting. What is this type and form of leadership we would need? Let us explore some conceptual ideas on leadership as follows.
The same set of concepts can be applicable to new ideas in engineering, marketing, sales, or any domain.
What is the role of leadership? What concepts or models of leadership motivates you? Do you believe in designer as a leader? Do you believe in servant as a leader? Do you want to be an inspired leader? Do you believe in science of leadership- this leadership concept helps addresses the challenges of resistance to new ideas? So on and so forth. There are different concepts and models of leadership and you may adopt any of those or use combination of different concepts and ideas of leadership that you can walk your talk at every heartbeat of your journey and be true to that form of leadership. Of all concepts of the leadership models, my favorite is designer as a leader(attributes to Peter Senge of Fifth Disciple). This leadership style - designer as a leader- style helps to design your whole system, conceptually in the initial stages, and helps to emerge the design of your social system based on changing environment changes. Zara is one example and Toyota Motor Company and South West are also good examples.
One critical question that you need to ask is this: How would you like to design your social organizational system? Designer as a leader and science of leadership would give great insights and starting point to design your organization and inspired leadership concepts that TameFlow supports will help rally people in your organization towards your systems goals. TameFlow along with TOC and thinking process tools are a good start to design your systems and helps in creating an emergent design of your system as per your aspirational needs.
What are the key system goals from the perspective of cost accounting? Is it reducing the cost of the local interests or increasing the revenue of the whole system. When you think through these systems goals, you take the role of leadership- one side of the coin, some of the leadership concepts described above, could help to unravel the resistance to new ideas.
The second side of the coin- management- is primarily about maintaining discipline through a set of processes that are contextually compatible. TameFlow through the metaphor of the Jeep, Jungle, and Journey - the workflow, work processes, and work execution respectively- would certainly help to see through second side of the coin. The management side of the two sides of the coin would help you to integrate and synthesize symbiotically all levels of the organization to design holistically the social systems and that could help to churn products/services needed to changing market needs and at the same time maintain profit margins. Most importantly you would know methods to collect and measure flow metrics in your development and operational processes.