Much has been written about why Japanese their U.S. competitors in cost, quality, and on-time delivery. Most experts point to practices like just-in-time production, total quality control, and the aggressive use of flexible manufacturing technologies. One area that has received less attention, but that I believe contributes mightily to Japanese competitiveness, is how many companies’ management accounting systems reinforce a top-to-bottom commitment to process and product innovation.
A version of this article appeared in the July 1988 issue of Harvard Business Review.