How to Manage Through Worse-Before-Better Harvard Case Solution & Analysis

Many Western supervisors were introduced to lean production in 1990, with publication of "The Machine That Changed the World," based on a five-year study of Toyota by MIT's International Motor Vehicle Program. Lean management allows a marked reduction in stock levels across the supply chain, which ought to lead to better financial performance - particularly because firms reach simultaneous declines in manufacturing and service costs. One hurdle that is foreseeable is the crisis in confidence occurring when management isn't capable to enhance fiscal performance quickly.

Skimpy transformations typically have short-term adverse impacts on the firm's bottom line (that's, things get worse before recovering). Management requires to expect these challenges and enlighten them. To help managers overcome the financial hurdles on the path the authors offer new tools for expecting the deterioration in fiscal performance occurring as a mass producer goes skimpy and for understanding the actual performance improvements that take place during this period. Their strategy, called "value-stream accounting," helps managers strategy for the short term financial impact, monitor improvement, understand the operational improvements and develop strategies to maximize the longer-term benefit. Managers have to understand the "bad" news is not really awful - it is part of the required process of establishing a stronger, more productive organization. The writers' approach replaces the conventional cost-accounting system with a transparent accounting system that monitors the value of the company's streams, which comprise all the value-adding and non-value-adding tasks required to carry a product or service from beginning to the finish.

PUBLICATION DATE: July 01, 2008 PRODUCT #: SMR288-PDF-ENG

This is just an excerpt. This case is about LEADERSHIP & MANAGING PEOPLE

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