M t A ti R hManagement Accounting Research -Does it benefit Practice?
Plenary Debate9th Manufacturing Accounting Research Conference9th Manufacturing Accounting Research Conference
Münster/Germany, June 23, 2009
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P.R. China
InnovationStrategy
95%
PerformanceIncrease
Audi A4
30%
95%Market
coverage
StrategyStock
Swapping out
Stock
Swapping out
OptimizedprocessInnovation
Performance Increase
Audi 8030%
Marketcoverage
P d i 1
Stock
Transportation of pipes(raw)
Float
Transportation of pipes(raw) to work place
Float at the work place
Swapping out
Scanning
Swapping out
Stock
Transportation
Float
Transportation to the work place
Swapping in
Scanning
Float
Transportation to the stock
Swapping out
Stock
Transportation
Scanning
Swapping in Float
Transportation
Transportation
Float
Assembly
Float
Scanning
Pipe production
Transportation of pipes
(raw) to the workplace
Float to the work place
Swapping out
Forming
Plasma welding
Probe welding
FIFO float
Assembly
Production step 1
Transportation of pipes
(raw) to the workplace
Float to the work place
Swapping out
Production step 2
Production step 3
Production step 4
FIFO float
Assembly
As-is processIncrease
Production step 1
Transportation of pipes(final)
Float
Transportation to the stock
Float at work place
Scanning
Procuction step 2
Transportation
Float at the work place
Production step 3
Transportation
Float at the work place
Float
Transportation to the work place
Float at the work place
Production step 4
Float at the work place
Scanning
Transportation
Swapping in manufacturing stock
Manufacturing stock
Leadership and corporate change
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Publications
Books ■ Value Papers ■ Articles
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There are different types of managers
Discoverers Explorers Settlers “Inflexibles”
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fPoles of research methods
Innovation Action
Analyticalresearch approaches
Empiricalresearch approaches
Research
research approaches
Research approaches with
research approaches
Research approaches basedResearch approaches with strict separation between
researcher and practitioner
Research approaches based on the contribution of the
researcher
Descriptiveresearch approaches
Shapingresearch approaches
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fForerunner of the Innovation Action Research approach
Innovation Action Research = ActionAction research Innovation Action Research Action research + innovation
Scholary Consulting Argyris(real-time conditions)
Original concept of “ If social scientists truly wish to understand certain phenomenaOriginal concept ofKurt Lewin
(“practical theorist”)
If social scientists truly wish to understand certain phenomena,thy should try to change them. Creating, not predicting, is themost robust test of validity-actionability.”
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fTarget of Innovation Action Research
To modify and enrich an emerging concept or an
emerging theory in terms of knowledge-
enlargement by increase in experienceenlargement by increase in experience.
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Innovation Action Research cycle
2.Teach and speak about
3.Write articles and
Feedback and learning
Teach and speak about the innovation
Write articles andbooks
Cases Invitations
4.Implement concept in
1.Observe and document
Advanced implementation
Implement concept in new organizations
Observe and document innovative practice
Management and organizational phenomena
Base case
Initial implementation
Intermediate
Advanced implementation
New practices Create changes in practice
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Base case
Source: Kaplan (1998)
CTarget Costing
CAccording to common judgment, Target Costing is a
concept for integrating market- and customer-
orientation into cost management. Thereby, an
early and comprehensive market oriented design ofearly and comprehensive market oriented design of
products and their cost structure can be ensured.
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Target Costing: Simple core idea - difficult to put into practice
Th i l th tiThere is no longer the question ”How much will a product cost?"
rather
”How much is a product allowed to cost ?” andand
“How much is a specific feature allowedHow much is a specific feature allowed to cost?”
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Seidenschwarz, W.: Target Costing - ein japanischer Ansatz für das Kostenmanagement, in: Controlling 3 (1991) 4, S. 199
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Target CostingTarget Costing
Audi A4
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Audi 80
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Target Costing within Siemens: A. o. computer tomographs,automotive supply, operating panels, process optimization
“Target costing is the core of our market-oriented cost management and is based on the approach of Seidenschwarz, which nowadays is pp , yestablished in the company.”
Source: Sill H : Market oriented cost management experiences from SiemensSource: Sill, H.: Market-oriented cost management – experiences from Siemens, in: Schmalenbach-Gesellschaft für Betriebswirtschaftslehre: Reengineering, Stuttgart 1995, p. 180 (published in German)
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Strategy and Target Costing for the Straight Acrylics USA f SBusiness of BASF: „Molecular and chemical recipes“
ti
Working out of a corporate vision and its integration into the overall world market strategycreating
an overall strategy for the world
market
constructinga world market
vision
creatingorganizational
presuppositions
customer satisfaction
strategymarket
researchreverse,
price-orientedcalculation
evaluation ofalternatives
(products andprocesses)
target costcontrolling
portfoliosand
road-maps
Product and process development for North America supported by market oriented cost management
gy processes)p
building up l i th
Building a Balanced Scorecard Four Perspectives:financial, customer, business process and team perspective
constructingSBUs
building upthe completebusiness for
North America
planning thecapturingproject
p p26 measuresconnecting perspectives with supervisory information and control systemsteam agreement and commitment
d i
reengineeringfor Europebuilding Asia
Expanding the total system process drivers: project leadership, marketing and controllingdevelopment of suitable data processing systems and gradual implementation into daily business
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implementation into daily business
Seidenschwarz, W. a. o.: Controlling und Marketing als Schwesterfunktionen, in: Reinecke, Tomczak, Dittrich (Hrsg.): Marketingcontrolling, St. Gallen 1998, S. 270
It always depends on the point of view......when you take a look at...
●FrankfurtFrankfurt
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... your markets!
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Audi Q7
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Localization needs Logistics
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Chinese supplier “Foxconn”:O f S“One million-strong workforce” – 200.000 people in Shenzhen
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Tata NanoFacts and Figures Strategic vertices
Price: from 1.700 EuroMarket launch: 2008/2009 in IndiaManufacturing base: originally western Bengals, currently SanandO t t 250 000 it ( l )
The vehicle aims at being the cheapest car in the world.Development of a successor model that will meet European safety and emissions standardsMain objective is a fuel consumption under 3 litre (i t d f 5 l/100 k )Output: 250.000 units p. a. (plan)
Market goal: 1 million vehicles p. a.(instead of 5 l/100 km)
Kinetic (USA) (Two-wheeler manufacturer): gearing
Continental (GER): fuel pump, charging level sensormanufacturer): gearing
Bosch (GER): fuel-injection technique, braking system, electronic parts ZF Friedrichshafen (GER):
Samco (CAN): body parts
charging level sensor
Freudenberg (GER): engine mounting
steering link
Sekurit (GER): panesBehr (GER): ventilation
Mahle (GER): camshaft
Sekurit (GER): panesBehr (GER): ventilation
Tata Group was founded in 1945 and is based in Mumbai. Ratan N. Tata is the manager of the company with approx. 350.000 members of staff and a turnover of 62,5 billion USD (2007/08).
In 2007/08 Tata Motors earned a turnover of 8 8 billion USD and employs approx 33 000 members of staff
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In 2007/08 Tata Motors earned a turnover of 8,8 billion USD and employs approx. 33.000 members of staff. Since March 2008 Land Rover and Jaguar have been a part of the concern.
Vertriebsstrategien in gesättigten MärktenM k t i A t bil t i bMarkentrennung im Automobilvertrieb
Entscheidentsc e deMehrmarken- oder ExklusivvertriebNeukonzeption eines zusätzlichen schlan-ken, markenexklusiven Vertriebskanals, integriert ins Vertriebsnetzintegriert ins Vertriebsnetz
Monetäre Bewertung von SynergieUmsetzenErhöhung des Absatzes
um 20% binnen 3 JahreUmfassendeProzessanalyse: Monetäre Bewertung von Synergie-
und ExklusivitätseffektenErstellung von Prozess-, Controlling-und Architekturkonzepte
Stra
tegi
e
Markenimage und Kundenloyalität deutlich ausbauen
Prozessanalyse: 10 Tage, 10 Handelsbetriebe, 50 Interviews
Steigender relativer Marktanteil im schrumpfenden Markt
Nutzen
S ausbaue
► Auch Leadership in gesättigten Märkten braucht Entdeckerfreude
schrumpfenden MarktSteigende Kundenattraktivität durch Markenerlebnisse abseits des Produktes
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► Auch Leadership in gesättigten Märkten braucht Entdeckerfreude.
C fApproved Concepts face up to new challenges
Target CostingWorking in an integrated management team!Only the truth of the customers counts!The customer can‘t know everything!
Target Costing means the development and commercialization of products and services, that provide an ambitious profitability and customer enthusiasm
g g
on Target CostingDelivering a drastic boost in benefits for the customer (innovation)!
Development/commercialization all of a piece!
enthusiasm.Pivotal question: How much is the customer willing to pay for a product and its features?
al q
uest
io Basic
Target Costing
2nd wave of Target CostingLean Management means bringing forth an efficient and adaptable business which produces
Use together an established toolset!
The customer is the impulse generator!Lean needs Leadership!
Challenges
and
pivo
ta understa
2nd wave of Target Costing and Lean Managementan efficient and adaptable business which produces
excellent products and services and serves its customers faster and better than others.Pivotal question: How is it possible to combine
Lean needs Leadership!Continuous, holistic sustainable!
Simple processes and standards!Lean is leveraged by frontloading!ef
initi
on a
anding
Lean Management
and Lean Managementq p
necessary significant changes with an employee-based, continuous improvement-process?
L M t
Lean is leveraged by frontloading!Lean as well in indirect fields!Everything we do: customer benefit!
De Lean Management
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Lean Management
C f d f CChallenges of the 2nd wave of Target Costing
M kFar-scattered markets over the
360° market analysesDesk research
Market Customer
Market analyses
worldIn-depth knowledge in target segments and regions (also across)
Field research
CompetitionDistribution
channel
Market segmentation
Customer enthusiasm strategy
List of functions
Diversity of cultures and customersComplexity of the product definitionProfiling trans-regional and trans-
enthusiasm
performance
strategy
R
functionscultural
Clearness about Target Profit
basis
Target Turnover
= Allowable costs
./.Binding target profit
Reversecalculation
Reflection of complexorganizational structures andtrans-regional process chains
= Directly influenceable costs
Current costs
Target cost gap
./. Target overhead I & II
./. Product related costs
Generation and selection of alternatives
Management of the complexity byPlatform conceptsTrans-regional network
ABC
BC
B
Generation Evaluation
Refinement Selection
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of alternatives Local network D
Advantages of and criticism on the Innovation Action Research approach
The research process enables a stimulation of theory and practice.
Advantages
Demand for corporate change requires direct confrontation between practice and new approaches.Scientists are able to abstract issues from their daily business.Due to an iterative process of concept development and testing, a fast enhancement of the concept is possible.
Area of tension between exclusive knowledge of the researcher and hisArea of tension between exclusive knowledge of the researcher and his role as an advocate for the concept.Danger of mixing up search for solution and the solution itself.Acceptance of implementation work as prolongation of the research work
Criticism
ccepta ce o p e e tat o o as p o o gat o o t e esea c oby the researchers.Implementation competence of the researchers is not ensured.Public transfer of innovative findings through innovative companies cannot g g pbe expected in every case.Potential misinterpretation caused by a precipitate evaluation by third parties.
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Question of evaluation of the research concept is still not clarified.
CConclusion
Conclusion
Th k l d di T t C tiThe knowledge progress regarding Target Costing is realized through a combined usage of several scientific research approaches.Innovative concept developments in Target Costing are neither possible through formal analytical approaches, empirical surveys nor throughapproaches, empirical surveys nor through explanation of case studies. The innovative component of the research process
b t d b th I ti A tican be supported by the Innovation Action Research approach.
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Main conclusionsCompanies, very often, take up more ideas from consultants and from practice than from Management Accounting Research.Management Accounting Research.● E.g. Target Costing originally from Japanese Companies.● E.g. EVA from Stern Stewart.● E.g. Balanced Scorecard from the “practitioner“ Bob Kaplan, not from the “researcher“ Bob Kaplan.
Implementation of researchers´ results in practice● Researchers´ results are mainly used to double-check the state-of-the-art and to position the own
company's practices.M i h dl T i b t l h t ti● Main hurdles: Topics are maybe not close enough to practice.
Research innovations relevant for practice● “Which innovations after the 90s?”
Interlocking theory and practiceInterlocking theory and practice● “Common three hour-events with speeches from both sides are not enough.”● “The adventure of practical experience is a fruitful bowl for understanding challenges.”
How to cause more benefit for practicep● There is not one way to create benefits …● Being authentic is key.● Innovation action research.
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● A-journals: “Almost no entrepreneur and almost no manager is reading an A-journal.”
f id t l ®from idea to value®
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