Good to Great Book - Assignment Example

Good to Great Affiliation Good to Great Explain how the book Good to Great: Why Some Companies Make the Leap . . . and Others Don’t by Jim Collins relates to the use of accounting information by top managers. The importance of accounting in management is based on the culture of discipline. The importance of accounting in management is based on the culture of the discipline. Responsibility accounting was developed by Bernard Semler, who was an accounts officer with Abbot. In Abbot, every cost, investment and income item will be identified with the managers responsible for them. Therefore, each manager handles their return on investment. The best thing about the Abbot system was how it used discipline and rigor to enable entrepreneurship and creativity. The concept of accounting consists of looking for self-disciplined people willing to go an extra mile, not tyrannical confusion disciplinarian with the culture of discipline, building the culture around responsibility and freedom within a framework (Collins, 2001). 2. Describe the most important things you learned from reading Good to Great: Why Some Companies Make the Leap . . . and Others Don’t by Jim Collins. One lesson learned from the book is that short-term success is due to exceptional leadership. When such leadership is lost, the company falters. When this happens, however, it does not become a tribute to the departed management, rather it is a sign that the management failed to create a lasting disciplined business culture. Another lesson is that hierarchy and bureaucracy develop as a way to measure and manage people without discipline. As a result, administration becomes a breeding place for individuals who do not contribute. Collins insists that the people are not the real assets in a business; rather, the right people are the true assets. Collins writes that the wrong people should be left out as early as possible (Collins, 2001). 3. Explain the strengths of Good to Great: Why Some Companies Make the Leap . . . and Others Don’t by Jim Collins. Collins (2001) gives companies ten practical steps that enable them move from good to great. First, he offers them a diagnostic tool, which they can use with their team. Then, he writes on the importance of having the right people for the right jobs. He encourages companies to have brutal facts meeting every three months. Besides, management should have long-term goals that stretch for fifteen to twenty-five years into the future. Every day, management should take steps that lead them toward their objectives no matter how small they may appear. In the coming three years, they should place more than one big bet. On the next lucky event, management should ensure that the company gets a high return. Also, they should practice productive paranoia by having a plan that will allow them to go for a whole year without revenues but still maintain their operations. They should also have a to-do list and commit to core values on which to build the enterprise (Collins, 2001). 4. Explain any weaknesses of Good to Great: Why Some Companies Make the Leap . . . and Others Don’t by Jim Collins and your recommendations for eliminating such weaknesses. Although the principles in the book are real, they are ambiguous and open to interpretation. Therefore, their usefulness is decreased. For instance, Collins (2001) writes that real companies think of people to hire and then decide what their roles will be. Very few people reading the book will find this as a new concept and begin hiring top performers for the jobs that they have. Despite the importance of reminding readers of such notions, Collins does not offer a better way of hiring new people. Therefore, Collins offers his readers principles that are vague but appealing (Collins, 2001). 5. Explain how an organization that is going from good to great would modify its budgeting process. (See pages 140 and 141.) First, there needs to be a strategic plan, which means it should know why it exists. It can be accomplished by having a mission and vision statement. Another step is to have business goals, which are the objectives that a company takes to implement its strategic plan. The budget is a resource used to achieve the company objectives. Another modification is by having revenue projections, which are based on historical financial performance. For example, if an enterprise plans to increase its revenue by 10%, the sales should be part of the revenue projections (Collins, 2001). 6. Explain how an organization would use managerial accounting to provide the brutal facts of an organization’s current reality that it must confront if it is to become a great organization. (See pages 13 and 79.) The reason the truth is important in business is that when one starts with honest and diligent efforts to determine the needs of the business, the truth becomes evident. Managerial accounting creates a climate where facts and truth are heard. Sometimes, management may have false hopes regarding the performance of the business. Managerial accounting, according to Collins, helps the management confront reality. Managerial accounting should be used to provide answers to management questions, enable them debate and dialog and conduct autopsies without blame (Collins, 2001). 7. Explain how a culture of discipline reduces the need for controls and managerial accounting reports relative to the control function of management. (See page 13.) The culture of discipline enables a business set its objectives for the year. The culture of control allows for creativity and entrepreneurship. Also, the control allows the organization to focus and adhere to the hedgehog concept. It means that they cannot take opportunities that are out of the three circles. The fact that something appears like a once-in-a-lifetime opportunity is irrelevant if it does not fall within three circles. The culture of discipline also helps companies to do what it takes to remain the best and continually seek improvement. With a culture of discipline, there is no need for comprehensive controls and accounting reports because even though there is a single leader at the top, he does not enforce discipline throughout the organization (Collins, 2001). 8. Explain how a company that is going from good to great would use the performance evaluation function with information provided by the managerial accounting system. (See pages 49-52) In management accounting, managers use the accounting provisions information to inform themselves better before making decisions on matters of their organizations. It helps in control of performance functions, which assists in management. The use of management accounting information exists in three areas. These include risk management, performance management, and risk management. This feature enables management accountants to work as value creators because they are more concerned about choices that will impact the future of the business. Management accounting experience and knowledge can be from many roles and fields in the organization (Collins, 2001). 9. Explain how managerial accounting can provide insight into how an organization can most effectively generate sustained cash flow and profitability. (See pages 95 and 96.) Management accounting helps provide value-based management. A companys value is its discounted future cash flows. It helps ensure that there is enough information for decision-makers to enable them right decisions. Value is when a business puts capital at interest levels that surpass the amount of money. Management accounting extends these concepts through focusing on how companies use them to make strategic as well as everyday decisions. Using Management Accounting helps align a companys aspirations, management processes, and analytical techniques. Management accounting entails managing the income statement and the balance sheet, which brings about the balance between short- and long-term perspectives (Collins, 2001). 10. Explain how a company that is going from good to great would make decisions about acquiring technology and how this would affect the information provided in making these decisions by the managerial accounting system. (See Chapter 7.) Technology helps automate many of the functions that would otherwise be repetitive. The best information system to use for a business depends on its operations and if there is room for improvement or customization. Some of the techniques common to management accounting include cost control, budgetary control, profit analysis, variance analysis and sales analysis. With any technology, deciding whether or not to use it depends on the long-term prospects. For example, if the company or individual that created the program does not upgrade it to include more functionality, it would be unreasonable to adopt the program. Moreover, the use of technology would help the management focus on the most important tasks as the mundane jobs would be eliminated (Collins, 2001). 11. Explain how you will or could apply what you learned from reading Good to Great: Why Some Companies Make the Leap . . . and Others Don’t by Jim Collins in your career as a manager. Be specific and give examples. This part of your book report should be substantial. I would ensure that I have big audacious goals for the company to keep it focused. Also, I would have projections done and if possible by software so that human error is, and the management gets as close to reality as possible to prediction. Many businesses today avoid taking risks. However, Collins encourages managers to take big gambles at least once every three months. I would ensure that the company is not financially vulnerable by ensuring that it has enough cash reserves to last the whole year. Every day, I will encourage the management team and their subordinates to take steps to ensure that the company is in line with its short- and long-term goals (Collins, 2001). 12. Explain how Good to Great: Why Some Companies Make the Leap . . . and Others Don’t by Jim Collins related to any other books you have read, if any. Give the exact titles and the names of the authors of these other books. If you have not read any other books, please state that fact. The Google Story (Vice, 2007) is a book that proves that the principles of Good to Great are true. Google began with a vision to organize all the world’s information. It was an audacious goal. However, the two founders and other employees of the company worked together by taking daily steps to ensure that this objective was reached. Moreover, the company took risks by investing in areas that were out of its domain. For example, Google Earth was an investment to have the entire earth’s locations in one database. No promise existed that this experiment would pay off. However, by having an advertising model built around Google Earth, the company created a significant initiative that helped millions of people around the planet and at the same time making the company a lot of profits (Collins, 2001). 13. List any additional books that you plan to read in the next year as a direct result of reading Good to Great: Why Some Companies Make the Leap . . . and Others Don’t by Jim Collins. Please give the exact titles of the books and the names of the authors. In the coming year, the books I plan to include Built to Last by Jim Collins, The Tipping Point by Malcolm Gladwell and The Toyota Field book by Jeffrey Liker and David Meier. These are books written by authors who have researched on what successful companies have done to achieve extraordinary feats. Toyota, for example, has had a successful business model in terms of management and it is important to learn from its practices. Malcolm Gladwell shows what makes companies move from right or mediocre to a great level. 14. Explain how reading Good to Great: Why Some Companies Make the Leap . . . and Others Don’t by Jim Collins has changed your perspectives on the role of top management and managerial accounting. From Good to Great is an excellent book because it compares companies that have succeeded to those that have failed. Collins goes to great length to explore the principles and habits that make companies like HP last for a long time. Therefore, I will apply the principles from the book as a manager to ensure that my business is not a temporary blip on the enterprise scene, but an enduring business. By focusing on the long-term instead of the short-term, the company will weather all adversities and be ready for what is in the future. In the past, I used to believe that a great business was on the size of the demand as well as the quality of the product. However, the book assisted me learn that there is more to a successful company than luck and opportunity. In conclusion, Good to Great is a book that demonstrates how a successful company is run. It shows the qualities of good management and why certain companies last more than others in the business. Although it contains some weaknesses, such as vagueness, it is a great reminder of the general business principles that will turn a good company into a great one. Companies of the present and the future will do themselves good by reading this book. References Collins, J. C. (2001). Good to great: Why some companies make the leap... and others dont. Random House. Vise, D. (2007). The Google story. Strategic Direction, 23(10). Read More