Education

Shoddy reference

D. MURALI | Updated on January 24, 2011 Published on January 12, 2011

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Chennai: 01/12/2010: The Hindu: Business Line: Book Value Column: Title: Ever Improve, A Guide to Managing Prodictrion the TOC Way. Author: Oded Cohen.

What can be a dubious starter material to students of finance and accounting is ‘ Taxmann's Dictionary' by Dhruba Duttachowdhury ( www.taxmann.com). Addressed to ‘chartered accountants, company secretaries, cost accountants and corporate professionals,' the book begins with ‘A, A+, A++' explained as “the gradation certificates on project rating conferred by the Project Appraiser Board of India. They depend upon multi-dimensional facets of new projects in the fields of communication, agri-business, petrochemicals, electronics…” If you search for “Project Appraiser Board of India” in Google, the only result is from www.odisha360.com/yellow-pages, about a Bhubaneswar-based entity classified under ‘Society - NGO and Charity.'

Fraud buster

Fraud is so much in the news these days, so if you thumb towards ‘F' there is the entry for ‘fraud buster.' It is not the CAG or CVC that finds place in the elaboration but “a kind of computer program used by Microsoft Excel to detect cyber fraud through statistical analysis.” Thankfully Duttachowdhury has given a link to an article of 2003 in www.aicpa.org, wherefrom you will learn that ‘fraud buster' is the name given the article's authors for a Visual Basic Application (VBA) they have developed.

Disappointed that ‘scam' does not seem to figure among the entries, I move on to ‘signpost' which is “a post with arms showing the direction of and distances to certain places,” and that makes me desperate enough to look for the missing ‘scarecrow'!

Interestingly, however, what follows the ‘signpost' is ‘silence as fraud,' about which the author says, “Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that it is the duty of the person keeping silent to speak, or unless his silence is in itself equivalent to speech.” Well, if that make you wonder about the PM's silence, you may not be alone.

As for the book, it is heavy enough to be kept in impressive shelves that are rarely disturbed.

A systematic approach to improvement

What is the role of professional managers? To ever improve the performance of the system under their responsibility, says Oded Cohen in ‘ Ever Improve: A guide to managing production the TOC way' ( www.kkbooks.com). “This is what motivates managers to do a professional job; this is what is expected by their bosses and their companies. This assumption also serves as the basis for remuneration, bonuses, and career promotion,” he adds.

Four elements

The author is of the view that becoming a professional manager is a conscious decision reflecting a self-selection process. He notes that good managers are not only capable, and confident, but are also willing to make the effort to make the difference.

Elaborating on the role of professional manager, Cohen lists four elements, viz. the area of responsibility, performance measurements, improvement, and continuous improvement. As for the first, he explains that once a manager is put in charge of an area, a sub-system, or a full system, the organisation expects a smooth running of the area and a positive contribution of the area to the goal of the company.

“While constructing a conceptual solution for improvement it is important to clearly define the area of responsibility. In many improvement methodologies the authority given to the implementer of the approach is limited, and so there is a danger of getting only a fraction of the expected or potential results.”

Since every area and sub-system has to make a specific contribution to the organisation's goal, performance measurements become necessary. There are both implicit and explicit measurements; examples are balanced scorecard (BSC) and key performance indicators (KPIs).

Closer to the goal

Defining ‘improvement' as taking the system closer to its goal, Cohen observes that KPIs are expected to provide the bridge between the long-term strategy of the global system and the short-term local actions and decisions made within every area. “Through the use of KPI, top management indicates what the desired level of performance is. Many times the KPI is presented as a gauge with clear zones that highlight if the performance is good, excellent, or not satisfactory.”

The fourth element, that is ‘continuous improvement,' calls for ‘ever improving' the performance, meaning thus a commitment to never stop striving to find better ways for the system to run smoother and with higher performance, says the author.

As an example of what it takes to commit to continuous improvement, Cohen narrates his experience of working with a plant manager of a large engineering company in the UK, who was then just over 60 years in age but energetic, extremely charismatic, and a remarkable leader. “He told me: ‘Every day that I walk through the gate of the plant, I have an idea how to improve the system. The day that I will have no idea to offer is the day that I should retire.' He was serious about his commitment.”

When improvisations wear out

Since managers have the pressure to improve the performance of their areas, they develop ‘solutions' – that is, ideas new to the environment, and changing the way they manage their areas. Conceding that many times the solutions do produce improved performance, the author instructs that a point is eventually reached when managers are not happy anymore with the return on their improvement efforts. This, he finds, is the time when the managers may consider looking at TOC (Theory of Constraints) as an alternative to the improvisation route.

Cohen describes TOC as the pivot that provides the bridge between the current and the future. For starters, the TOC way is based on the realisation that the performance of every system is governed by very few of its constraints; and the constraints block the system from achieving higher performance.

Through the TOC pivot, the author assures that we can indicate to the manager not only what to do differently but also, very strongly, what not to do. “We can summarise it as: Stop doing the wrong things and start doing the right things!”

Right read for enterprises eager to recover faster than the rest.

>BookPeek.blogspot.com

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Published on January 12, 2011
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