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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

This document was created for the exclusive use of our clients. It is not complete unless supported by the underlying detailed analysis and oral presentation.It must not be passed on to third parties except with the explicit prior consent of Seidenschwarz & Comp.

Address

PD Dr. Werner SeidenschwarzSeidenschwarz & Comp. GmbH

Schlossbergstr. 1gD-82319 Starnberg

Tel. +49-8151-99 88 77Fax +49-8151-99 88 7 66

erner seidensch ar @seidensch ar [email protected]

2© Copyright Seidenschwarz & Comp. GmbH, all rights reserved, Starnberg/Germany 2009

Seidenschwarz & Comp. GmbH Schlossbergstr 1Schlossbergstr. 182319 StarnbergGermanyGermany


Seidenschwarz & Comp. (Shanghai) Co Ltd(Shanghai) Co., Ltd.31/F, Jin Mao Tower,88 Shi Ji Avenue88 Shi Ji Avenue200120 ShanghaiP R China


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


Production step 3

Transportation


Float

Transportation to the work place


Production step 4


Scanning

Transportation

Swapping in manufacturing stock

Manufacturing stock

Leadership and corporate change


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Publications

Books ■ Value Papers ■ Articles


There are different types of managers

Discoverers Explorers Settlers “Inflexibles”


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


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.”


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.


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


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.


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?”


Seidenschwarz, W.: Target Costing - ein japanischer Ansatz für das Kostenmanagement, in: Controlling 3 (1991) 4, S. 199


Target CostingTarget Costing

Audi A4

17


Audi 80

18


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)

19


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

20


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

21


... your markets!

22


23


Audi Q7

24


Localization needs Logistics

25


26


Chinese supplier “Foxconn”:O f S“One million-strong workforce” – 200.000 people in Shenzhen

27


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

28


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

29


► 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

30© Copyright, all rights reserved Seidenschwarz & Comp. GmbH, Starnberg/Shanghai 2008

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

31© Copyright, all rights reserved Seidenschwarz & Comp. GmbH, Starnberg/Shanghai 2008

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.


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.


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.


● 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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MtAtiRhManagement Accounting Research - Does it … · MtAtiRhManagement Accounting Research - Does it benefit Practice? ... Tata Nano Facts and Figures ... Distribution channel Mark