The Transformed Map of a Recovering Management Accountant

This guest post is an excerpt from Ed Baker’s book (pages 140-141), The Symphony of Profound Knowledge, which was created in partnership with

Dr. Tom Johnson, an economist and self-described “recovering management accountant,” is well known for his early contributions to the traditional accounting profession. His books Relevance Lost, coauthored with Robert S. Kaplan, and Relevance Regained, focused on improving the information available to management accountants. Johnson underwent a transformation of his own thinking and for more than two decades has been working to help others in the accounting profession understand that traditional financial management tools of MBR (Management by Results), by trying to optimize performance of individual departments and functions, suboptimize the performance of the enterprise as a whole.

I spent four days with Professor Johnson in June 1992 at one of Dr. Deming’s seminars. He is a proponent of Deming’s System of Profound Knowledge and especially of a whole-system ecological view of enterprise. He proposes that business and economic organizations should be viewed as natural living systems, with all that this view implies for financial management. In his writings, especially in his book Profit Beyond Measure, coauthored with Anders Bröms, Johnson presents this view as an alternative model for accounting and financial management professionals. In that book and other articles (e.g., “Manage a Living System, Not a Ledger”), Johnson explains that better cost information, such as activity-based costing (ABC), will not provide a long-term method of reducing manufacturing costs. The focus must be on managing work activities as components of an ecosystem. Based on the assumption that financial results emerge from complex interactions and nonlinear feedback loops, in the way that outcomes arise from the interrelated parts of a living system, attempting to control those results with linear accounting information is both wrong and possibly destructive to enterprise in the long run. Johnson therefore recommends that management view financial results as the outcomes of operations that behave according to the principles that govern a natural living system.

Processes are the means to achieve ends. Managerial accounting focuses on the ends. “Managing by Means” (MBM) is the term that Johnson uses in Profit Beyond Measure to describe financial management thinking that comes from an ecological map of the enterprise as a living system. The philosophy and methods of management change dramatically from using financial targets to drive results to how and why results are going to be achieved. Johnson explains that MBM can produce quantitative measurements, but it helps to understand that those measurements have emerged from a system of relationships. Accounting models must be able to evaluate the contribution to performance of the quality of interrelationships between different activities and functions in a business. Methods to achieve this are explained in Profit Beyond Measure.


About Aileron

At Aileron, we fervently believe privately held business fuels free enterprise and raises the quality of life for us all. As businesses move beyond the start-up phase, a systematic approach to your business is critical to sustainable and strategic growth. We call this approach Professional Management, and have developed a system to implement it influenced by Dr. W. Edwards Deming and other great thought leaders. Dr. Deming’s timeless teachings have been, and will continue to be, a driving influence because we see his philosophies work.

Aileron is proud to support the illuminating, alternative perspective of Dr. Deming’s teachings and philosophy presented in Ed Baker’s book, The Symphony of Profound Knowledge.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top