Book Reviews

The Innovator’s Guide to Growth

Scott D. Anthony, Mark W. Johnson, Joseph V. Sinfield, and Elizabeth J. Altman

This is a very interesting book. It builds on Clayton Christensen’s book “The Innovator’s Dilemma.” The original book used “disruptive innovation” to create new products. Disruptive innovation, as opposed to sustaining innovation, introduces companies into new markets as they fill customer needs not met by current products.

This book is meant to guide companies in their efforts to create and implement systems that support innovative ideas or products. While many of us think of innovation as Archimedes shouting “Eureka” as a brilliant idea flashes into his consciousness, putting a process in place to foster innovation makes sense. Only by properly encouraging and promoting disruptive innovation can a company expect to grow the business.

The book outlines three steps in the innovation process:

1. Identifying Opportunities

2. Formulating and Shaping Ideas

3. Building the Business.

One of the key factors the book returns to constantly is the need to understand what the customer truly needs. It uses the theory that customers (whether individuals or businesses) don’t buy an item, but rather they “hire” a product to get a job done. The question becomes, “What fundamental problem is the customer trying to solve?”. This emphasis on customer needs, while seemingly obvious, is often missed in business today.

We recommend this book to everyone looking to expand their businesses into new profitable areas. Like Lean Manufacturing, it emphasizes quick, good-enough solutions as opposed to long “perfect” projects. Standing still will never lead to improvements in either business processes or innovations.

	The Goal: A Process of Ongoing Improvement	Eliyahu M. Goldratt and Jeff Cox
It has been 25 years since The Goal was first published in hardcover. This book is by far the most successful business novel ever written. It introduced Goldratt’s Theory of Constraints to business leaders. Simply put, a chain is only as strong as its weakest link. Only by finding and exploiting the constraints to the plant/business can a company optimize its operations. Because the book is a novel, the reader absorbs these theories while engrossed in the story of how Al Rogo can save his marriage and his plant. The theory of constraints, which came out well before Womack’s books on Lean (but well after Toyota was actually using Lean) mirrors many of the practices we see in lean manufacturing. Machines need to produce to match the drumbeat of the constraint not to be the most “efficient.” Goldratt was one of the first to point out the shortcomings of standard cost accounting and how it drives operations to make the wrong decisions. It also drives home the point, like Lean, that equipment and operations need to be planned to optimize the whole business, not a single machine or department. The “goal” is to make money, now and in the future. (Many publicly traded companies seem to forget that second part.) Goldratt stresses measuring financial health by looking at Operating Expenses, Throughput, and Inventory Investment. The Goal is one of the top 10 books that all business people should read. Even after 25 years, the lessons still ring true. Because the book is a novel, the reader is better able to grasp the concepts being taught, and it is something you can look forward to reading. Too many business books, no matter how valid their concepts, are just too boring to finish. That is not the case with The Goal.

	Real Numbers: Management Accounting in a Lean Organization	Jean E. Cunningham and Orest J. Fiume
Real Numbers: Management Accounting in a Lean Organization is an excellent resource for any business that is working to put Lean practices into place in Finance and Accounting. While Maskell’s book includes many practical applications and reports for the lean organization, this book by Jean Cunnigham and Orest Fiume concentrates on experiences they had in leading their companies to use lean accounting. Both their organizations (Lantech and Wiremold, respectively) were leaders in using the Toyota Production System in the United States. The authors were able to move their accounting departments off the traditional “Cost Accounting” models and into doing true lean accounting. This book (like Lean itself) gives the reader a simple map on how to guide an organization to proper accounting when TPS is part of the corporate culture. They stress simplicity, visual signals, and looking at real numbers. Variance analysis adds little real value in most organizations. The “variance” is to a guess (budget or forecast), so instead of concentrating on the real numbers, people spend time on the difference to a previous year’s guess of this year’s performance. This book gives an excellent example of how to use “real numbers” to drive your company’s performance.

	Who’s Counting? A Lean Accounting Business Novel	Jerrold M. Solomon
What exactly is a Lean Accounting Business Novel? Sounds like an odd combination of words! How can an accounting textbook be a novel? This wonderfully written book gives the reader a simple way to learn about lean manufacturing and accounting while being entertained. The story is about the employees of a company beginning on the lean path, and their internal battles with the new concepts. Written primarily for financial types, the main character is Fred Chapman, the CFO. I found myself really relating to Fred as he was struggling to understand lean and some of the changes required in accounting and systems. Readers will also be able to identify themselves or their co-workers among the other characters, like Jim Lawton (the Plant Manager) or Steve Taylor (the VP of Sales and Marketing). These characters exist in all of our companies large and small, and I predict that you will find yourself smiling as you read the 250 pages. The author successfully answers the mostly common questions and misconceptions about lean and accounting. He skillfully, yet humbly, explains why many of the traditional accounting techniques are outdated and misleading, and he provides some practical new alternatives. Just as importantly, this book deals with the emotional impact a culture shift like moving to lean can have. Resistance, fear, or misunderstanding of the change can result in failure of any initiative. Lean’s success heavily depends on people and their active participation and acceptance. Yet people are usually uncomfortable discussing these personal issues. Who’s Counting recognizes this and allows us to deal with these sticky questions in a funny and unguarded way. I highly recommended this book for all financial employees and others. It is a must for every lean library, and I recommend re-reading every five years or so.

Conquering Complexity in Your Business

Michael George and Stephen Wilson

This is a very important book. The authors’ premise, which would be supported by any Pareto Analysis, is that all businesses have products, services, or customers that do not add any profit to the business. Pareto tells us 20% of the items sold creates 80% of a company’s revenue. At Sixth Floor Consulting Group, we have found this to be true in all businesses we have worked with. So what is the other 80% contributing? For the most part, your “B” items (usually the next 30%) still add profit; however, the “C” items usually lose money.

Why don’t more businesses stop making these items? There are two factors driving why these are not addressed. First, no customer will ever complain about additional functionality/complexity in products. They may not be willing to pay for this complexity, but they won’t stop buying because of it. Second, standard cost accounting, with its overhead absorption calculations, does not give a true picture of a low (or high) volume item’s true profit contribution.

This book uses informative examples from companies who were willing to remove complexity for which the customer was not willing to pay. These companies include Dell, Toyota, Intel, and Wal-Mart. The book also examines the profitability of those companies who were not willing to take that step. It gives quantitative formulas to determine complexity and economic profit. These formulas are not easy to follow, especially for anyone willing to venture beyond the Simplified Complexity Model. Fortunately, most of these can be built in Excel and then applied to a business. While not the easiest business book, it covers an important topic that every business needs to look at closely.

	The Featherbone Principle: A Declaration of Interdependence	Charles “Gus” Whalen, Jr
This book tells the story and evolution of The Warren Featherbone Company. It is an engaging read about a family business and the challenges, principles, and lessons learned over its hundred plus years. What makes the story so compelling is how the generations confronted the challenges. As the title implies, collaboration and teamwork were essential ingredients in the company’s success. Change, innovation, and supply chain management were embraced well before becoming popular buzz words. Charles “Gus” Whalen, Jr., an entrepreneur, innovator, change agent, and popular speaker at national and international events, was previously chief executive officer of Alexis PlaySafe, Inc., part of the Warren Featherbone Company. He is an active proponent of local manufacturing as a major source of wealth creation, and through the Warren Featherbone Foundation, he has initiated Georgia’s Manufacturing Appreciation Week, which is being adopted by other states across the country.

	5 Pillars of the Visual Workplace	Hiroyuki Hirano
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	Visual Systems: Harnessing the Power of a Visual Workplace	Gwendolyn D. Galsworth
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