By now it’s well publicized—if not obvious—that many companies’ cost accounting systems are falling down on the job. They give managers incorrect product costing information, or they inundate managers with irrelevant cost information, or they fail to measure the things that really count. Strategies may be conceptually brilliant, but if they are based on faulty information about the cost of a product, they are likely to fail in the marketplace. Many have.
A version of this article appeared in the January–February 1989 issue of Harvard Business Review.