Is Your Company’s P&L Report “Un-Lean”?

 Find out now. Take this quick quiz:

First Table.I made an off-the-cuff remark a while back when I said the traditional P&L reports (or “Income Statements”) that are used by most companies in the US and around the world are “Un-Lean.” I was thoroughly taken to task on this. How can a report be Un-Lean or Anti-Lean?

Maybe the context will make a difference? Or is it really only a matter of “It’s not what you say, but how you say it?”

There is perhaps some truth in that, nevertheless it set off my internal LEAN alarm bells. At the time I just found myself coming up with a bunch of reasons from the top of my head. These were all written as tweets. I have since given this more thought, summarized my ideas turned them into real English. Read them in the table below.

I have concluded it is really important “what you say.”

Because you have a choice:  you can make the way you measure your company financially easy to understand, useful for your Lean teams, and supportive of your company’s Lean strategy. Or ……… you can keep on measuring the wrong things, wasting time explaining  financial information, motivating non-lean behaviors, and undermining your Lean strategy. Or …….. you can ignore the financial reports. But thus 3rd choice generally does not work.

What was your score to my little quiz? I’ll leave it up to you to interpret for your own company. What I will say is this:  if you found yourself strongly on the Lean side of the fence, I think you are moving in the right direction. If you are still trying straddle the fence, you have some thinking and planning to do to get your financial reports in line with your Lean strategy.  If you find yourself still on the traditional side, and your company is “going lean,” you have work to do to get on board.

See if you don’t agree.  Tell me your thoughts about this. Am I right? Where am I wrong? Is there a better way to look at this? Let me know.

Second Table*  See more about the GM & Chrysler bankruptcy  GM Bankruptcy Blog