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A recent article by Lucy Kellaway entitled “Good enough is better than perfection” (Financial Times, 2 September 2012) got me thinking. The subject of the article was prompted by watching a documentary about Jiro, an obsessive sushi chef, who never misses a day’s work in his continual quest for perfection. “I’ll continue to climb until I reach the top, but no one knows where the top is,” he says. His restaurant in a run-down area of Tokyo seats only 10 diners yet has been awarded 3 Michelin stars. Jiro’s sons, having been forced to follow their father and dedicate decades of their own lives in fish, are now resigned to the fact that they will never match his standards.
“You must dedicate your life to mastering your skill” is Jiro’s unequivocal response.
Kellaway goes on to question whether the obsessive pursuit towards the peak of perfection is, whilst recognised with Michelin stars, worth the human cost. Her conclusion: good enough is OK.
Good enough is, well, good enough. It is fit for purpose, a standard worth achieving, a satisfactory state of affairs. There are plenty of examples in business of those who fall short of this standard.
So what is good enough in Cost Management? The starting point must be the lamentable state of costing practices in many organisations which continue to produce distorted and misleading results. Compliance with financial reporting standards, risk, governance, sustainability reporting and so on dominate the agendas of many executives. Substantial commercial decisions are made on the basis of information which many, at least suspect, is a convenience-based set of measures using arbitrary allocations. To what objective standard is management accounting information held? What are the consequences for those who knowingly make sub-standard decisions?
In part then, this is a simple plea for organisations to identify and adopt a suitable cost management approach which can provide a reasonable basis for making decisions. The specific methodology chosen is less important than the application of basic cause-and-effect principle for assigning or allocating costs.
Make a start. Build small, uncomplicated, high-level cost models. Produce standard reports. Critically analyse the results. Extend and expand models as necessary.
Consultants, advanced software tools, project teams and industrial-scale production systems for cost and profitability reporting and analysis can follow.
Keep perspective. The cost assignment network logic is always more important than individual percentages or driver quantities. Balance effort with results. Ideal cost driver data is not always available. Make sure the results remain relevant to business. 100% accuracy is unattainable.
So this is the message for those organisations whose executives have recognised that shareholders, employees and other stakeholders demand, at a minimum, that good-faith business decisions are dependent upon reasonable, fact-based cost and profitability information. The same message that also applies to companies who are already advanced in their adoption of progressive cost management techniques but may have lost their way in modelling detail whilst striving for costing accuracy or lost business relevance in applying the dogma of a specific costing methodology.
Step back. Deep breath. Deliver what is good enough.


This article first appeared on Society of Cost Management’s blog at in November 2012