History

PMI’s Over Half-Century Historical Context 

ABSTRACT

Louis R. “Lou” Mobley was the man behind the scenes who trained every CEO and Executive of IBM, up to the John Akers era. His finance and leadership culture set the still-be-equaled business standard in the 1950s and ‘60s. Some of the saga is captured in his book, Beyond IBM, published in 1999, the year after his passing. He teamed up in the 1980’s with Charles “Chuck” Kremer, CPA, who took Lou’s ideas and connected them to standard accounting language, and framed the concepts to be both understandable and usable by building numerous versions of 1-pager spreadsheets that have become the robust tool called the Financial Scoreboard™. Chuck’s book, with two co-contributors, Managing By The Numbers is a continuously strong Amazon seller. Both men’s life works has been integrated to create the tools and methods to enable the people who do the work to be active co-designers of their accounting, measurement and reporting. PMI’s toolkit and approach turn out to dovetail perfectly with former IBM fellow Dean Spitzer’s master work published by AMACOM in 2008, Transforming Performance Measurement, especially his notion that there is a Path to Measurement Maturity.

HISTORICAL THUMBNAIL

Louis R. Mobley was an engineering graduate of Georgia Tech in 1939, who went straight to work for the Tabulating, Calculating and Recording Company of Atlanta, and ended up working as Tom Watson, Jr.’s right-hand man at what become International Business Machines, from 1950 until his retirement in 1970. Lou was the behind-the-scenes architect of IBM’s ascendency, building a legendary leadership culture whose performance has in some ways, still never been equaled by any Fortune 500 company.

In order to achieve this unprecedented business success, Lou had to apply fundamental principles of math and logic to rationalize the relevance of financial statement information for the purpose actually operating an enterprise using accounting data. In so doing, he discovered the modern Cash Statement, inventing and applying the concept of Cash Flow from Operating Activities, or Operating Cash Flow, to the practice of business in America.

The power of Lou’s mathematical matrix , or the ‘magic square’ called the Mobley Matrix, to integrate the property, contract and cash dimensions of any business using simple addition and subtraction, was so great, that among IBM’s senior leadership, his last name became a verb. Whenever IBM leaders used his tools to know more about their customers, vendors and competition than they knew about themselves, they had “mobley’d” them. These tools also allowed them to ‘mobley’ whole economies.

Then, in 1983, a CPA named Chuck Kremer was the Controller of the Rocky Mountain Banknote Company in Denver. He was in a professional crisis, searching for where he could move in his career, because he was at his wit’s end. He could no longer stand the fact that the tools of his profession made it so difficult for him to establish and maintain strong collegial bonds with his boss, non-financial peers, direct reports and internal customers. The emotional drain of being isolated as the ‘performance cop’, as well as the unwelcome messenger of bad news, and worse news, had convinced him he must leave the profession.

Meanwhile, at the end of 1979, at the end of a decade-long run (after retiring from IBM in 1970), Lou had become the country’s leading authority on the cultural values shift in the US - that had happened in the late sixties. All that came to an abrupt end when he died for over 6 minutes on the operating table during a quadruple by-pass heart operation, during which time he was conscious. While his heart was flat-lining, he had a profound realization - that he had built one most successful businesses in history, and he had figured out how to give entrepreneurs in America sovereignty over their relationships with their accountants and their bank accounts – but he had not told anyone how he had done it. He and I met a few months later.

Lou and Chuck’s partnership, begun when they met at a business conference in the Rockies, lasted until Lou’s death in 1988. Chuck was a passionate CPA once again, who loved using the Mobley Concepts to teach non-financial people to love the numbers. I was privileged to be present the day in 1984 when Lou first taught Chuck his material by taking us through the classes he developed at IBM’s Sands Point Executive School. I worked closely with both Lou and Chuck to create and apply these powerful tools in harmony with Generally Accepted Accounting Practices (the GAAP), and specifically with the gift Lou gave to every businessperson in America – meaningful accounting data about Cash.

Lou spent every day of the years since his near-death on the operating table, until November of 1987, tirelessly using his bully pulpit as IBM’s leadership genius, to get the Financial Accounting and Standards Board to pass regulation 95, finally providing an accounting tool that could make good common sense to any business person. Oh the tragedy of it, that, even though the answers are there, almost no one actually makes use of them. Up until Chuck’s passing in 2005, he and I did everything we could to bring Lou’s legacy of success using rational business logic to help business leaders be successful.

Chuck’s innovations about how to make Lou’s genius useful to all, have among other things, distilled to become PMI’s Trademark – Three Bottom Line Performance ™. We have codified the combined Mobley and Kremer legacies into a comprehensive and rational business system that any organization with financial statements can apply. Every person committed to success in their workplace can now be a material contributor to an evolving measurement system that continuously improves accountability, effectiveness and job satisfaction. Every committed stakeholder can use these tools to be on a level playing field, and able to render their best stewardship on behalf of both themselves, and the larger whole.

You may now consider yourself formally invited to have fun and make money serving the best interests of all - by making the numbers your great ally.

In collaboration,

Jahn Ballard, 

Founding Director, Performance Management Institute

LETS RUN THE NUMBERS   ~  PMI  ~  1(877) $Cash Fl(ow)  or   (877-722-7435)  9 - 5 Pacific Time