Karnack the Magnificent
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9 August 2013 - 23:33, by , in Activity-Based Cost Management, No comments

When teachers want students to grow, they don’t give them answers —- they give them problems!

One of my favorite segments on Johnny Carson’s Tonight Show was Karnack the Magnificent. Dressed as a fortuneteller, Karnack would first read an answer and then guess the question. For example:

Answer: Love notes on a 13-column pad.

Question: How can you tell you’re dating an accountant?



Answer: We’re a very close-knit organization.

Question: What does a potential employer tell you when they don’t have enough employees to do the work?

I thought of Karnack this week when I received the following E-mail from an ABC Project Leader. She has answers in an ABC software model but no one is asking ABC questions. Her experience is not uncommon:

“I have found that building the model is not hard to do, but how to use the information for clinical managers to manage their operations is hard. Most of the articles I find talk about how to build the model, but there are not a lot talking about how to use the model.”

A talented, but frustrated ABC Project Leader

As this accountant states, software is no longer a major ABC stumbling block. Mature ABC/ABM software products, such as CostMapper™, are well documented, tested and guide the implementer step-by-step through the implementation process. The obstacle to achieving ABC’s benefits has switched from technology to training. Non-financial employees must be trained how to read, interpret and use ABC data before it can be considered useful ABC information.

“If people can’t understand what an ABC report says, they won’t be able to determine what an ABC report means.” ~Tom Pryor


What happens when non-financial managers don’t understand ABC?

  • They become disinterested.
  • They ignore it.
  • Then they oppose it.

What happens to the ABC Project Leader when non-financial managers don’t understand ABC?

  • They get frustrated.
  • They feel unfulfilled.
  • They walk away.

What happens when everyone in an organization do understand ABC?

  • Confidence grows.
  • Decision-making improves at all levels of the organization.
  • Profits and processes improve.

ABM for the Non-Financial Manager training must become a required workshop in every company that has implemented ABC/ABM. Not a lecture where information only flows from the instructor to the students. Instead, ABC training will only be of value and effective for an organization when employees are taught ABC principles and then asked to apply them to real world problems in the corporate classroom. If people can’t understand what an ABC report says, they won’t be able to determine what an ABC report means.


In John Ortberg’s new book If You Want to Walk on Water, You’ve Got to Get Out of the Boat, he states

“It is only the process of accepting and solving problems that our ability to think creatively is enhanced, our persistence is strengthened, and our self-confidence is deepened.”

If someone gives me the ABC answers, I may get a good score on a test, but I will not grow my cost management wisdom or discernment.

If you’ve ever been to Yellowstone National Park, you were probably given a piece of paper by a ranger at the park entrance that said “Do Not Feed the Bears.” Yet you no sooner drive into the heart of the park when you begin to see people feeding the bears. While you may think the ranger’s warning is for your own safety, it’s actually for the bear’s sake. The park-service has to carry away the bodies of dead bears each winter, bears that have lost their ability to fend for food. Don’t simply feed your employees ABC answers. Instead, give them a problem and show them how to solve it.


E-mail comments about this article to: TomPryor@icms.net.


If this article has inspired you and your organization to cut costs this year, call us at 817-475-2945, or e-mail your needs to tompryor@icms.net.

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