Book Review – Profit Beyond Measure
Post by Bill Bellows, Deputy Director, The Deming Institute
H. Thomas (“Tom”) Johnson stands at the forefront of a world-wide community of business thinkers who are unveiling the limitations, as well as assumptions, of the old economics that underlie the mechanistic decision making and planning practices of corporations and organizations. Upon co-authoring his 2001 book, Profit Beyond Measure, (with Anders Bröms) he achieved this notoriety by dedicating himself to offering interested listeners and readers an alternative solution, which he refers to as Management by Means or MBM. In contrast to the classic management style of Management by Results or MBR, Johnson proposes a process-driven strategy, which draws heavily upon the insights he gained from Dr. Deming’s System of Profound Knowledge, coupled with frequent visits to Toyota’s operations, often in Georgetown, Kentucky.
In keeping with Myron Tribus’ observation that “What you see depends on what you thought before you looked,” Johnson’s background as a “cost accountant,” guided by seminars and conversations with Dr. Deming, prepared him to see Toyota as a living system, not a value stream of independent parts. Instead of seeing a focus on the elimination of waste and non-value-added efforts, Johnson saw self-organization, interdependence, and diversity, the three primary principles of MBM.
In his 2006 article, Manage a Living System, Not a Ledger, Johnson states:
The essence of MBM, which compares Toyota’s system to a living system, is that satisfactory business results follow from nurturing the company’s system (the “means”), not from manipulating and wrenching its processes to achieve predetermined financial results (a mechanistic strategy popularly known as “managing by results”)….This sentiment is central to the Toyota organization’s deep-seated belief in the importance of defining the properties their operating system should manifest, and then having everyone in the organization work to continuously move the system toward those properties. …These three approaches to managing operations—the Shewhart-Deming approach, managing by means (MBM), and the Toyota Way—all suggest how different it is to nurture the system that produces a company’s financial results than it is to force the system to produce a desired result beyond its current capabilities.
Dr. Deming has been misquoted as having said, “If you cannot measure it, you cannot manage it.” Such a seemingly straight-forward perspective is actually counter to Dr. Deming’s admonition, borrowed from former Nashua Corporation statistician Lloyd Nelson, that “the most important figures that one needs for management are unknown and unknowable.” The prospect of “profit beyond measure” provides great homage to both Lloyd Nelson and Dr. Deming and the financial insights offered by Johnson to readers in communities guided by both the old and new economics.
For those who are willing and able to discern the dramatic differences between the prevailing focus of systems that aim to produce better parts with less waste and reductions in non-value efforts and those systems that capitalize on a systemic connection between parts, this book offers abundant food for thought. This difference also represents a shift from profit as the sole reason for a business to profit as the result of “extraordinary attention to work and people,” a most fitting sub-title to this book.