The Product Cost Compass may be described as a staircase, describing a company's structure (the steps), interdependence and how to manage and control your business.
Your customer and market decide what products or services your company produces. Your production is based on an efficient refinement process from suppliers, flowing through your company, to reach your customers.
Organization is a consequence of the above steps with the task of controlling in-depth activities in your process. Human Power is in turn a consequence of the skills the organization's organizational structure requires.
IT carries the flow of information that connects the different steps and the Product Cost Compass and the financials are the setpoints and actual values you need to manage and control your business. In a Relationship Economy, these setpoints (such as KPI:s, Quality, Time and Amount) and actual values also need relations to each other and a connection to money to be useful.
The Haystack Syndrome (Eliyahu M. Goldratt, 1990) points out that "Non-financial measurement are equivalent to
anarchy. You simply cannot compare apples, oranges and bananas, and you
definitely cannot relate them to the bottom line (result). The goal is to make
money. Every measurement must, per definition, have a dollar sign in it”.
The New Digital Economy (revision of the books chapter by chapter)
The importance of establishing a change process comes from our insight that a change process is completely different from executing the refinement process.Read more
The new IT leap, such as digitalization, Big Data, apps and Blockchain are major risks for businesses in the hands of IT/ERP communitiesRead more
Activity is the engine in the refinement process that consumes resources and results in products or services. It's the activity that should be constantly questioned if it may be implemented more efficiently, or simply removed.Read more
Economists failure to replace their industrial glasses for those of post-industrialists has opened up for a hidden economy that allows a company to rot from the inside without any seeable notice on the facadeRead more
The orienteer runs according to the compass bearing. Consequently, if the compass shows errors, the orienteer gets into trouble. The income statement and product cost calculation are the compass of a business.Read more