STRATEGIC ACUMEN: Do Accountants Really Get It?

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  2. STRATEGIC ACUMEN: Do Accountants Really Get It?
By CharterQuest, 04 November 2019

In this edition, we zoom into a specific, yet critical dimension of Business Acumen –'Strategic
Thinking'. The goal is to point to innovations in strategic management and accounting techniques
and practices that should help accountants develop strategic thinking acumen, yet so many treat these techniques as just another measurement; or, numbers for accounting and audit reports that only end up in the filing cabinet!

THERE IS PLENTY OF WRITINGS ON ‘STRATEGIC THINKING’, BUT LET'S FOCUS ON THE ONE THING COMMON TO ALL –ENVISIONING SOME FUTURE, ESPECIALLY THE ‘VERY’ LONG-TERM FUTURE!

Strategy experts may disagree on the meaning of, or how to develop a good strategy –hence the field of strategic management is replete with various concepts or approaches to strategy: rational (design lens), incrementalism (experience lens), innovation (ideas lens), free-wheeling opportunism, emergent, position-based and resource-based, to name a few! Once these strategy experts converge, that is if they ever do, new disagreements quickly emerge around the available strategic choices on how to compete and where to compete –hence various strategic models such as Ansoff matrix, and Porter's generic strategies; often these disagreements extend to the direction of, and method of growth or, even whether a given strategic direction is a sound one –and hence techniques such as BCG, Ashridge Portfolio and Lynch, to name a few! 


What strategy experts do not disagree on is that strategy is essentially about envisioning and achieving a long term future; hence we often hear words like visionary, strategic thinker, strategist -all interchangeably used to characterize leaders who have demonstrated a track record for, or the capacity to envision a long-term future and work with others to bring it about. This future is what is typically expressed in a company’s website, or internal strategic documents such as the mission, vision, objectives, priorities, critical success factors; and in essence, a core part of what constitutes strategic thinking. Sometimes, this future and the holistic manner with which the Board plans to bring it about is what the corporate reporting and governance community calls integrated reporting –see 'Integrated Reporting, then Integrated Thinking –Latest Fad but nothing new!'

ACCOUNTANTS ARE EXPECTED TO PROVIDE MANAGEMENT ADVICE AT THREE LEVELS OF THE ORGANISATION
Per Robert Anthony's hierarchy model, the future is often imagined and actioned at 3 management
levels:
  • Level 1 (Operational): preoccupied with the ‘immediate and short-term’ future and thinking (1-18 months);
  • Level 2 (Management/Tactical): pre-occupied with ‘medium-term’ future and thinking (19-36 months); and
  • Level 3 (Strategic): with emphasis on the ‘long-term’ future and thinking (37+ months)

ACCOUNTANTS NEED TO APPRECIATE THAT TACTICAL AND OPERATIONAL THINKING IS NOT NECESSARILY ‘STRATEGIC THINKING’

"Accountants are measurement ‘animals’: they are trained to first measure activities in order to facilitate their evaluation and control, for them, a natural display of their ‘gifted’ technical skills; but
as it turns out, as they move higher from the operational level where their career starts, to the strategic level, activities become more intangible and fuzzy; lending more to conceptual than to the technical skills they are typically trained to exhibit"!

Until such time that an accountant develops conceptual and strategic (long-term) thinking skills, he/ she will never fully understand the nature of the strategic choices and disagreements at the board level, even if he/she provides reports directly to such board sessions. Most board reports accountants generate are at best, addressing only management or operational level questions. They nonetheless receive a thank you because it is good human relations to do so! But the board turns
around to appoint outside strategic advisors to address what accounting reports often fail to address!

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Integrated Case Method: THE FUTURE TODAY