108th Edition – February 28, 2021
We must abandon our obsession with developing a unit cost for each of our products, and lose the associated horrors created by standard cost accounting and its related concepts of absorption and variance analysis.From the book, Real Numbers by Jean Cunningham
1. The 101 on Bitcoin
I still run into people who are not that familiar with bitcoin or cryptocurrencies in general. I’m sure there are good books on the topic. But, my suggestion and go-to site is still Bitcoin for Beginners at CoinGeek. One word – outstanding (even for those who know and understand bitcoin).
The mini-university is a mix of text and video content including topics like bitcoin wallets, how bitcoin is mined, and a solid discussion and video on blockchain.
Trustworthiness and reliability? In case you are curious, they have more than 1.6 million followers on Twitter.
2. To Absorb or Not to Absorb
Jean Cunningham is a former controller, author, and speaker whom I’ve followed for years. She was probably the first person to help me understand the concept of lean accounting. Jean’s hallmark book on this subject is Real Numbers: Management Accounting in a Lean Organization.
In case you’re a CEO or work in a service-based business, the book is for you too. Her book reads fast and is packed with practical ideas.
If you are a diehard cost accountant, then you might find the book a bit polarizing as Jean mentions it’s time to scrap absorption accounting. Do you agree?
I like reading and studying both sides of the argument. Accordingly, here are two (rather) recent titles with different perspectives, yet both make strong points.
- Profitable Expectations by Douglas Hicks is a cost accounting novel with a protagonist and a guide. Doug weaves in his ABC tools into this readable and accessible book that will not lull you to sleep as Charles T. Horngren did with his textbooks (sorry professor).
- Throughput Economics is sneaky good. Although it has the feel of a textbook, this content fills in the blanks by quantifying Goldratt’s theories.
3. Regarding Economics
In the list above, I left off Executive Economics: Ten Tools for Business Decision Makers. This is a book I give to CEOs and just have them read the first chapter only – Cost, Value, Price: Three Pillars of Profit.
Business decisions are built on three pillars–cost, value, and price. Cost is what businesses pay out to their workers and suppliers in order to make and market goods and services. Value is the degree to which buyers think those goods and services make them better off than if they did without.Shlomo Maital, Ececutive Economics, page 6.
4. An FP&A Leader’s Bookshelf
Last week, I mentioned Daniele Martins who is the Global FP&A Director at ThoughtWorks. When I interviewed her, I asked her about her favorite books.
What would you have expected her to say? Steve Player’s Future Ready, the bible for FP&A dream team members? Or how about some other financial book?
I appreciated her answer. Every book she mentioned was about people, self-improvement, or leadership:
- How to Win Friends and Influence Others by Dale Carnegie
- What Got You Here Won’t Get You There by Marshall Goldsmith
- Dare to Lead by Brene Brown
- Find Your Why by Simon Sinek
No surprise that Daniele is a leader with a strong following who is making an impact at her company.
She’s the second financial person I’ve heard mention Brown’s book. I just started listening to it last week.
5. Speaking of Interviews …
If you were to ask me who is the number 1 person on performance measurement, that would be easy – Stacey Barr.
If this is a topic that intrigues you, then look for CFO Bookshelf wherever you listen to your podcasts. Stacey is this week’s guest, and we talk about her two books and why so many businesses still get performance measurement wrong (the release date is March 1, 2021).
Regarding performance measurement, these are the best titles ever written on the subject:
- Practical Performance Measurement is the manual for setting up Stacey’s PUMP(R) framework. The first few chapters nail it on getting a proper thought process on performance measurement of any kind. Unfortunately, the book is out of print, but used copies are available on the open market, however …
- Prove It! is Stacey’s second book on this topic, and it’s shorter, but still excellent if you want a better grounding on performance measurement.
- Transforming Performance Measurement by Dean Spitzer is a classic. It’s long, but the time investment to read it is worth it.
- Measure What Matters to Customers by Ron Baker might seem out of place. Like the other authors, Ron helps his reader get into a proper state of mind as we approach both the concepts of measuring and measurement.
Also, I’d revisit Deming’s famous 14 points of management. In your own words, what did he mean on points 10, 11b, and 13?
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Always be learning and growing.
Photo by Andres Alvarado