I’m aware of the old Jewish wisdom that a person cannot testify to his/her own creations. But, somehow I feel compelled to attract enough curiosity, so busy people would find the time to come, listen, experience and argue on a topic that is, according to my own judgment, critical to almost all businesses.
Have a look at: http://tinyurl.com/p25dtat
Three critical organizational decision areas deserve to get special considerations:
- What to sell?
The answer to the question is not just the broad definition of what the organization offers the clients. The answer includes many frequent decisions about the variety of the offerings and the services around it and even the relative priority of trying to sell more of specific products or services. There should be ongoing efforts to define the overall product-mix that maximizes the profit (or another goal) and that mix constantly changes according to the demand and the capacity situations.
- What price is good for large enough potential customers as well as for the organization?
- How much available capacity, including manpower, should the organization maintain?
The investment in available capacity dictates what the organization is able to deliver in the near future. Changing the capacity levels are “hard decisions”, meaning the decisions are made under high uncertainty, and the decision maker might find himself under harsh criticism if the future demand does not justify the investment.
TOC has started its way with sharp criticism on the common tools of management accounting to support the above decisions. In spite of some progress, the common management accounting tools are still basically flawed. Even the TOC tools and knowledge need a certain update and wider scope, to be able to deal effectively with the three key decisions above.
I have already expressed in my blog the faulty assumption of management accounting:
Assuming the cost of capacity is linear.
I have also briefly shown the direction of the solution, which is considerbaly wider than the current throughput accounting tools.
However, understanding the full solution requires more experience with examples and hands-on use of the supporting software. Without that extra in-depth understanding there is a risk of cutting corners in a bad way.
Blogs, webinars and presentations can do a lot, but eventually face-to-face learning has some additional powerful characteristics that complement the above tools.
I’m going to deliver a two-day workshop on that topic. It is going to be in Paris, October 15-16. The above link contains detailed information. If you are interested enough to read my blog then I believe you are going to gain added value from participation, value that I still find hard to deliver in alternative ways.
Eli Schragenheim 