Learning Like Lightning: Lessons From JSF F-35 Sustainment Activities



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Based in Fort Worth, Texas, the JSF F-35 program provides several important lessons about financial management:Projected Costs

  • Begin with the end in mind
  • Measurement inversion happens—manage it
  • Don’t set arbitrary targets and then manage to them
  • Develop adequate information before making decisions
  • Use interval rather than point estimates

The November/December 2015 issue of the Journal of Corporate Accounting & Finance breaks down these lessons and sheds light on the world’s largest project to date, the trillion dollar to develop the F-35 Lightning II family of single-seat, single-engine, multirole fighter aircraft.

Here’s a closer look at the third lesson: Don’t set arbitrary targets and then manage to them

In his 1986 book, “Out of the Crisis”, W. Edwards Deming laid out 14 key principles for managing. Deming’s eleventh point: Eliminate arbitrary numerical targets…Substitute aids and helpful leadership….

Deming based this point on the idea that it is useless to specify a goal without developing a method for achieving it. The U.S. Government Accountability Office has been critical of Department of Defense (DOD) affordability efforts:

When the DOD established affordability targets for the F-35 program in 2012, the methodology…was not informed by actual resource constraints….Specifically, DOD officials stated that targets were determined by arbitrarily lowering…estimated F-35 Cost per Flight Hour by 10 percent….

The JSF F-35 program is massive—unprecedented in size. It has scored many successes.

Along the way, it has offered many lessons for us to consider.  You can read about them in the Journal of Corporate Accounting & Finance, 2015 (November/December) and also here.


If You Enjoy Combat in Commerce, You Might Enjoy “An Effective Response”


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Today’s headline from San Francisco Business News heralds the coming of intense airline competition in the western United States:

Flying into unfriendlier skies: United tries to stay aloft as the Bay Area’s dominant air carrier while rivals circle

Things seem to be heating up again.  CJ McNair-Connolly and I provide a look at some of the intense airline competition in the US during the last couple of decades in our latest: “An Effective Response:…” [Cost Management, Nov/Dec 2017] (If you are interested in how managerial accounting can serve to guide organizations through crises, then you may be interested in the subtitle.  Airline aficionados find the swordplay entertaining.)

By January 1995, United was operating flights in 14 markets with Shuttle by United, its self-declared “airline within an airline,” which was designed specifically for the head-to-head competition with Southwest and similar airlines in the western United States.“‘Shuttle by United will be a catalyst for change,’ declared Gerald Greenwald, chairman and CEO of UAL Corporation, parent of United Airlines.”  Herb Kelleher, president and CEO of Southwest Airlines, took an openly aggressive stance, declaring:

They are proposing to take on the airline with the best balance sheet, the best customer service record, and the lowest operating costs in the industry. Now, that’s their business judgment to make, but I would suggest that it’s not necessarily the right one. If anyone thinks our people aren’t lusting and thirsting for war with them, they are making a serious mistake. Our people are ready for it, and they will enjoy it. 

Exhibit 3, Timeline for Case Study Narrative

Annual Net Margins for US Airlines Combined

Your Best Performance Measure Is the One You Don’t Need


My wise, old friend Tom Pryor provides a steady flow of insight-filled guidance–and has now for many years.

Recently, he and I teamed up to address a couple of key themes in performance measurement and management for the Journal of Corporate Accounting & Finance.  Read about it at “Your Best Performance Measure is the One You Don’t Need”, 2016, 27(6): 11-18 and here.


Strategic Development of REITs in India


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DAS-Prashant Prashant Das continues to provide important insights into real estate assets and financing with this discussion of how India might implement REIT financing.

“Introduction of the real estate investment trust (REIT) structure in India is an important step towards the building of a mature commercial real estate market. The move is reflective of increasing appetite for structured financing of investments in commercial real estate assets….”


While delivering insights into the potential for REITs in India, the article provides a useful description of the current state of the real estate market.



Das, Prashant & Thomas, Charles. 2016, “STRATEGIC DEVELOPMENT OF REITS IN INDIA”, Journal of Real Estate Literature, vol. 24, no. 1, pp. 105-131.

Prashant Das serves as Assistant Professor of Real Estate Finance at the prestigious Ecole hôtelière de Lausanne, HES-SO–University of Applied Sciences Western Switzerland.

A Dousing at NWBC



Our family walked the 1½ blocks to church every time the doors opened-the first pastor I remember was Brother W.D. Boswell and he was succeeded by Kirby McGuire.  I made my profession of faith on a Sunday night in, I think, 1943.  I’ll get this date correct later.  Kirby McGuire baptized me on a Sunday night in the warm artesian waters provided by north waco water supply company, (in that section of Waco users had the choice of using city water or North Waco Water Supply).  mother and daddy both taught Sunday school and there were always plenty of deacons outside the church smoking cigarettes between sunday school & church each Sunday–daddy among them.  bandana-157057_640.png

One of the funniest things I ever saw happened in the baptistry of North Waco Baptist Church* (2001 McKenzie Avenue).  It was customary to have baptisms on Sunday night and have the choir remain in the choir loft immediately below the baptistry, NWBC had a mission church further out north 19th street in a low-income area & when they had a baptism to perform the would use NWBC baptistry and Kirby McGuire would perform it.  One Sunday night I was still in church watching the baptism and daddy had gone outside to smoke and, for some reason, mother went outside as well, the first candidate was a very large woman who came into the baptistry in as ugly a homemade dress as I had ever seen and a bright red bandana around her hair curlers, the preacher said the words and laid this massive figure backwards at which time we all became aware that she was deathly afraid of water, so she struggled and slapped the water straight up with all her might, delivering a pre-shower to everyone within 20 feet, the preacher calmed her and leaned her back again, he discovered that she still wasn’t quite ready when she struck the water with a mightier blow doing more water damage than the first time, by this time the congregation was giggling and I was almost falling out laughing, I was close to the back of the church–so I ran out the back door & told daddy & mother that they just had to see this!  splash-308941_640

When we got back into church the baptism was still going on and not very well, the choir loft was darkened for the service, but you could see various member creeping quietly down while wiping their faces, arms, etc. with whatever they could find to wipe, in once last final, near fatal attempt, the preacher started her down again and this time she scooped the water (as kids douse each others faces in the pool) and the result was masses of water drenching whatever had not been drenched before, the pastor, counting the job well done closed with a prayer and we all went home laughing

It was in this church that I saw the only “excommunication” I ever saw-actually i believe they called it “withdrawing fellowship”.  There was a family named “Deutsch” who had been members for quite a while, they had a daughter named Agatha who was a talented pianist though I’m not sure whether this is part of this story, anyway, all kinds of strife surrounded Mrs. Deutsch, including that she gossiped, I know mother didn’t like her for reasons she never saw fit to disclose I do remember a little about the acrimonious business meeting of the church when fellowship was removed, mother & daddy had little or nothing to do directly with the battle, but it soured their feel for the church, I think.

North Waco Baptist Church, April 29, 1945

North Waco Baptist Church, April 29, 1945

Shirley and my cousin, Gwen, went through various steps in the girl’s auxiliary (g a’s) & every time there was a ceremony they dressed up in these little costumes and I had to attend, I hated it!  Shirley also played the cello during those days and her recitals were more than I could bear so, as I recall mother & daddy mercifully left me at home–sparing me the agony & them the risk of embarrassment that would have resulted from my behavior.

     -Charley Thomas

1941-42, Waco, Texas



2117McKenzie_Waco_TexasAt some point when I was 4 or 5 we moved to 2117 Mckenzie.  Our next door neighbors were the Stinsons (who for some reason unknown to me) we did not like and the millers who we liked with very much.  The Millers had two daughters-Meta & Kay-one older and one younger than me they were my playmates until I went to north waco elementary school which was in September 1942-when I was almost 6 1/2.  During the summer Meta would get out her dad’s rods and reals and we would cast from the front porch as far as we could which was about 25 feet. there was a rail on the porch and we had to cast over the rail.  Once–when we were competing for distance–Meta (probably as competitive a women’s libber as I have ever known) reached back and with all the strength she could muster swung her rod and he me up side the head knocking me off the porch and onto my head on the sidewalk–I can still see those stars & my head has never been the same since.  Gary was born in Hillcrest hospital on February 13, 1941 while we lived at 2117.

Mrs. Dudley, a sweet white haired lady was my first grade teacher and all the other kids and i adored her.  I still have a group picture of my first grade class which included Ron Linam, James Balch, Betty Smith (my first girl friend), Janie Williams (my second girl friend) and about 18 other-there were 20-22 of us.  There was no pre-school and no free kindergarten so very few kids started school until the first grade.  We still had no car–so Stratton-StrickerFurnitureCo_AdvertShirley and I walked the block to school and daddy road to work with a co-worker at Stratton-Stricker furniture. at this point daddy did not sell, but delivered, hung draperies, moved furniture within the store, laid a lot of linoleum, and laid carpet.  I remember going with him a time or two and realized, even at that young age, that this was hard work.

The japanese bombed pearl harbor on December 7, 1941, and, since I was 5 years old I should remember, but I don’t.  However, I do remember when the newspaper issued “extras” to highlight significant events.  Many people didn’t have radios-very, very few had telephones (and party lines at that) so the newspaper and word of mouth were the principal sources of news.  I think I should cut this off-this paragraph has gotten much too long!

Blind Faith: The Hidden Costs of Capacity Overutilization


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In the March/April Cost Management, Dr. CJ McNair-Connolly, an internationally-recognized expert in cost management, and Charles Thomas explore the role played by escalating marginal costs of disruption as capacity utilization moves beyond specified limits.  The example of an airline is used to identify and explore both the more easily measured and less easily measured costs of capacity overutilization, as well as the limiting features of capacity utilization.


The goal of the article is to overturn the notion suggested by Shank and Govindarajan that more is always better when it comes to executional cost drivers such as capacity utilization.  In fact, overutilization can rob an organization of its flexibility to respond to normal problems of daily business, moving them into crises that can negatively affect the organization’s ability to meet and exceed customer expectations.



More Forthright Than A Politician: Load ’em up


at some point in time (where is shirley when i need her?) we moved to a house located two houses from the corner of 25th street and mckenzie on the north side of the street.  i was probably 3 or 4 at the time.  it seems that we only lived there briefly–probably only a few months.  but i remember the black 2-door coupe auto that stayed in the next door driveway close by our porch; it had the look of a late 1930s model and, i thought, how wonderful it was because we had no car.Willys_6_1931_Sport_Coupe.JPG

also remember loud country music coming from the house next door and, i swear i remember this–whether any agrees or not, that i believe our neighbor was hank williams!

i probably shouldn’t tell this, but to be more forthright than a politician, i remember my last “accident” i had in the underwear department.  one summer day i was sitting on the curb watching firemen refill the water tank on their truck–i don’t remember whether there had been a fire close by or not–but i watched with interest too long and “loaded ’em up”.  i was so embarrassed that i went in and changed, but hid the mess in the floor of my closet!  needless to say when mother found it a few days hence she was not happy at all with me!

read on if you are still interested–i don’t think it will get any worse than this.

Childhood Nutritional Supplement–Dirt


not so very long after i was born- we moved to 2604 summer, but i was too young to be much help with the move–probably 1 year old–for some reason my memory fails me on that.  we lived next door to the harrisons*.  he was the fire chief and a tough looking guy while she was an attractive dark haired lady with flashing black eyes and a kindly personality to go with an attractive smile.

they had two kids-“lee p”, as we called him, and bonnie.  lee was my age and the first playmate i remember.  he was bigger than i was and always went around with the back flap on his drawers open and his rear end shining.  i can remember being embarrassed for him even at that young age.

lee p was bigger than i was and often sent me home crying from childish skirmishes.  finally mother talked to mrs h and she told m that i was going to have to fight back–which i had always been taught not to do.  so, i’m told i “cleaned his plow” one day and that wound up the skirmishes.

i remember the harrisons* had a pony and shirley rode it occasionally.  one day it ran away with her and scraped her off under a low hanging gate.  so much for “annie oakley”!


lee & i periodically partook in the childhood nutrition supplement–dirt.  the fact that it tasted bad didn’t dawn on us until our parents pointed it out.



Annie Oakley photo courtesy of Roland Bonaparte (Cowan’s Auctions) [Public domain], via Wikimedia Commons