Black Box Accounting

Presented By:

Bill Waddell

Session Abstract:

Many (perhaps most) of the non-value adding overhead costs that create the waste in your business are the result of decisions made long ago regarding the choice of management processes. They constitute the basic cost structure of the business. Classifying them as fixed costs and attempting to control them through traditional budgeting and variance tracking rarely yields favorable results and hides the opportunity to drive significant improvements.

In this session we will introduce you to “Black Box Accounting” – a method of identifying the basic cost structure elements that have little to do with either the mix, volume or nature of the products, but are more often dismissed incorrectly as the ‘cost of doing business’. They cannot be significantly improved in an incremental manner, utilizing a kaizen approach. Rather, they require a holistic, strategic assessment in order to change. We will show you the various techniques by which accounting can break these costs out into a meaningful summary, and lead management to the decisions needed to achieve kaikaku – radical change and improvement.

Learning Objectives:

“In this session you will learn…”

  • Which costs are ‘Black Box’ costs driven by management’s choice of business models
  • How to pull these costs together into cross-functional summaries that make them understandable for management
  • How to lead ‘kaikaku’ – Fundamental and radical changes to the system, unlike Kaizen which is focused on incremental minor changes

About the Facilitator:

Bill has been an integral contributor to the Lean body of knowledge for almost 30 years. He presented and taught at the first Lean Accounting Summit in 2005 and has been a part of it every year since then. Many of the companies that have presented at the Summit, describing their experiences and successful Lean journeys are been Bill’s consulting clients, and this year is no exception.

Bill is the author of Simple Excellence and Rebirth of American Industry, a book he co-authored with Norman Bodek – the ‘Godfather of Lean’. Most recently he wrote The Heart & Soul of Manufacturing, exploring the ethical and moral foundation of Lean.

He has worked with companies in 26 countries on five continents, including keynoting the International BPM Conference in Lisbon Portugal earlier this year. He is known for his straightforward, informative and always entertaining style, and his blogs and articles are followed by thousands of readers.