Introduction
A concerted effort to elevate the strategic role of the Management Accountant is a key feature of the Global Management Accounting Principles (GMAP)[i] report. Published in 2023 by AICPA & CIMA its purpose was to reassess the role, given the disruptions the corporate world had, or is still experiencing. You will be aware of most, they include Covid-19, global supply chain disruption, Generative AI and many more. The elevation in the importance of strategy is both a recognition of the increased complexity the corporate world will face in the future, and the fact that the management accounting role will require far less human input. That means individual management accountants will be able to spend more time contemplating the future and less time trying to make sense of the past. This elevation also implies a dramatic shift in perspective for the accounting profession in general. Their very existence is to engage in the minutia of historic data. The exact opposite of strategy.
There is also another related concern expressed in a separate AICPA & CIMA publication. It recognises the problem, but not the solution. The observation, expressed in the report titled Integrated Performance Management (IPM), Driving strategy, engaging workforces[ii] is:
“A significant barrier to success (is) the lack of understanding of organisational strategy”
The Strategic Management Institute (SMI) recognises and sympathises with this conundrum. We recognise it because it is a truth that is relevant to numerous organisations. This observation is confirmed by a litany of statistical reports published in the past 20 years (or more) that 85 - to 95% of corporate strategy is not implemented effectively. That is why we also sympathise with the AICPA & CIMA. We, the SMI collective, know that there is no strategy system in place that allows strategy to be formulated effectively, implemented effectively or communicated effectively. That is also why the SMI has spent the last 20 years working on a solution. But a lack of effective strategy practice is only a part of our concern.
Our greatest concern is the fact that this lack of effectiveness impacts, and some would suggest diminishes, the effectiveness of the CFO, the undisputable ‘go to’ strategic advisor to the Board, the CEO, and leadership team. In the absence of a reliable strategy system, the supposed bedrock of reliable strategic content, the CFO is required to rely on intuition and whatever skills he or she may have in strategy, to provide that advice. Everyone has intuition, most CFOs are educated in various aspects of strategy, none of which are uniform. The formation of advice in their minds therefore is based on a shaky platform made up of miscellaneous interpretations, bias, and guesswork.
Management Accounting for the future
Thanks to Luca Pacioli, the ‘in and out’ (debit, credit) method of accounting has been in existence since 1494. Thanks to modern technology, automated, systematised versions of Pacioli’s methodology enable data on an enterprise-wide scale to be sliced and diced, analysed, and evaluated, then presented in multidimensional spread sheets and dashboards.
But that content is all about history, it consists of quantitative data pointing to how to effectively compete today. So, what about competing, or transforming for the future? That is where the AICPA & CIMA’s future vision of the management accounting role becomes relevant. This is a profession that evolved from cost accountants frustrated with the task of informing, rather than participating in strategic decision making. As discussed however their strategy focused tools of analysis have not been overly comprehensive making their, and ultimately the CFO’s role of strategic advisor quite difficult. Under the guise of decision support, strategy-oriented tools consistently deployed in practice are business simulation and modelling analytics, the development and monitoring of key performance management indicators, and the alignment of operating performance with the strategic plan. Specific tools are scenario analysis (primarily quantitative), strategic cost management and activity-based cost management.
Nothing wrong with that, but in sum, management accountants will face a huge challenge when pivoting from visions of the past to envisioned perceptions of the future. I can personally attest to the extent of the task. I started my career as a cost accountant in manufacturing and now write books on corporate strategy. With all the will in the world therefore, I know that management accountants and CFO’s do not have the best information allowing them to unequivocally judge the strategic decisions of the corporation. That said, strategy is about the future and future is unknown. Too often that reasoning is used as an excuse rather than a reason for poor strategy. But all is not lost.
Reinventing the strategic advisory role of the CFO
The task every CFO must face is to find the right tools and systems thereby enabling them to dramatically reinvent their role. They cannot forsake their assigned tasks as part of this change, no one else is qualified enough to act as surveyors and controllers of the past and the present. They must therefore find the away to integrate a strategy system into their existing management system and as an outcome, encapsulate outcomes within an integrated Enterprise Performance Management (EPM) capability.
To do this they will require a strategy system that will allow them to improve the way they ‘do’ and communicate strategy (practice) while at the same time instil a much broader and adventurous mindset in those who produce the strategy content (the practitioners). The former can be provided with access to the right data, information and knowledge, the right technology, and the right understanding. The latter can be provided through guidance on the right way of thinking.
Let’s look at each:
1. The right tools: Independent, rigorous strategy tools are abundant, accessible via any numerous strategy textbooks. What value do they really add though if the objective is to arm the management accountant with a viable, integrated tool set that is multifunctional?
To date, commonly used, strategically oriented tools and techniques are limited to strategic/corporate ‘planning’ and corresponding SWOT analysis, gap analysis, competitor comparisons - and so on. Discussed and evaluated by a select few, each fail to energise the accountants or the CFO into the development of deep strategy content. From there, more formal strategy tools that are also in use barely lift the dial. Focused on time horizons, market share analysis, competitive advantage, and images of the core competence of the corporation; there is nothing new about any of them. We can throw in scenario analysis for good luck, along with Porters Five Forces model. My observation though: “They are meaningful, but their use is not going to change the world.”
Blue Ocean Strategy for example has proved to be invaluable strategy tool, but only in a context of market positioning. How does it contribute to strategy from a resourcing perspective, a corporate strategy perspective, a transformation and organisational structuring perspective and a long-term sustainability perspective? Similarly, the Balanced Score Card is used widely by accountants. As a methodology grounded in baseball scoring formats it is a far cry from a representation of comprehensive corporate strategy.
Solution: This is where the Third Wave Strategy system becomes the answer. As defined in the books Corporate Strategy (Remastered) I[iii] and II (Hunter, 2020)[iv] Third Wave Strategy is a systemic approach to strategy practice which is encapsulated within a Strategic Management Framework. As a dynamic system, as opposed to a static strategic plan, it naturally incorporates methods of alignment between operations and strategy; up, down, and across the organisation. The platform for the dynamic system the Third Wave Strategy Framework demonstrated in Figure 1. Its design is
grounded in the philosophies of corporate planning,
informed by numerous empirical research articulated in numerous textbooks and journal articles on Corporate Strategy
brought to life through the practice of deep, structured critical strategic thinking,
and,
nuanced through the recognition of cognitive capabilities known to psychologists, but unexplored by strategy professionals. Examples are prospection, integrative thinking and transcendence.
The systems approach is enhanced in a way that encapsulates new features and the means to ‘glue’ the framework together. The idea of a Strategic Architecture, a Strategy Blueprint and Strategic Alignment are examples of the binding mechanisms that can be found in the framework.
The Strategic Architecture (Illustration 2) provides a structure to long-term strategy. This in turn informs content included in the short-term Strategic Plan. The plan is in turn constructed in the form of a Strategy Blueprint; it is similar in design to the Strategic Architecture. It this format that enables the enactment of a logical alignment between long term and short- term strategic thinking.
The Strategy Blueprint also provides the platform for the implementation of strategy, articulated in the format of a Program of Continual Strategy Renewal. There are many other tools, constructs, techniques, cognitive elements and social expectations that make up Third Wave Strategy practice, too much for further discussion here.
2. The right technology: Dashboard reporting mechanisms are the primary domain of an Enterprise Performance Management (EPM) system. Examples of software packages accommodating this task include Qlik, Tableau and Cognos. They are not the only way to analyse and capture vital information, however. Ask any accountant and they will tell you nothing beats an Excell spreadsheet. While tradition has determined that accounting reports focus entirely on quantitative, historical, mostly operational data (the core tool of the management accountant) however, they fall short when it comes to future focused, dynamic, strategically focused qualitative analysis. Again, the Balanced Scorecard tried to do this, but did it work?
The solution: Naturally, there is not a lot of information about the future, but there are trends and trajectories that can provide insight. It is also possible to capture experiences described by others, as well as intuitive based conjecture. The task is made easier using emerging Generative AI platforms ranging from Gemini and Copilot, to Chat GPT, Perplexity and Claude. Equally, good old-fashioned survey Apps such as Survey Monkey and LinkedIn are also viable options.
All the foregoing is useful in the development of scenario analysis for example, while other content can inform competitive intelligence and similar regimes that now incorporate and in fact embrace digital, AI enabled foresight. Less specific references made up of observations addressing emerging trends and fashions can also be captured by degrees of uncertainty and sophistication. Similarly, future focused information extrapolated from the court of public opinion can be expressed more readily through consumer surveys.
The right understanding: Perhaps its more than training, it is inevitably education and most likely organisational leaning. Each are a representation of the accumulation of life experiences combined with better know-how from experience in leadership, management, and strategy practices. A Master of Business Administration (MBA) provides a good founding from a formal educational perspective, but that is a huge commitment, and ages quickly. There is limited strategy content too which I would estimate to be around 10-20% of the full course.
The, the strategy content that is presented is more of the same in terms of long-standing independent strategy theory. And no new theories of direct relevance to this paper have been released since the publication of Blue Ocean Strategy as long ago as 2005[v]. Of course, I can’t criticise the value of the research that led to that content, it is extremely powerful and constitutes a significant contribution to the makeup of Third Wave Strategy.
3. The right way of thinking: If you are familiar with the concept of the Black Swan moment, you will know it is a reference to an unexpected event, one that has a significant impact. It is often rationalised after the fact as those impacted by the event realise it could have been predicted – when it wasn’t. While the true meaning of such an event is crystal clear, here are some comparisons. They included:
a. Bolt from the blue: A sudden and unexpected event.
b. Game changer: An event or idea that significantly alters the current situation or thinking.
c. Wild card: An unpredictable factor that can have a significant impact.
As irritating as it is I wanted to repeat these definitions to emphasise the point that the very notion of strategic management is at a tipping point as are the corporations that use them. The world is changing rapidly and corporations in it have been slow to adapt, never mind invent - in a context that allows them to go beyond managing and indeed, seek to take control of the future rather than just manage it. Under the current state-of-being the look-out from the edge of the abyss is dismal - or bright depending on your point of view.
Either way, your conclusion will be enmeshed within an awareness of the targets you set (what could be) encapsulated within a deep concern for the preservation of what is. Resolution will depend on the practice of deep, critical, strategic thinking applied to decisions based on dynamic, sometimes highly disruptive, but deliberate actions. In most corporations the resources do exist to instigate and make change stick, but as argued here, they are not readily available, or fully utilised when they are. The question is, who should be in control? At which point, it all comes back to the CFO and to a lesser degree the Chief Strategy Officer (CSO); should there be one.
Each will be charged with the responsibility to provide support to the CEO with the Chief Strategy Officer focused on the formation of forces that will shape the future of the corporation, potentially in the form of disruptive inventions and interventions. It is the CFO however that is best placed to provide support to the CSO in the corporation’s capacity to adapt to the future, and better still, the invention of its own future. Supported by a team of strategy savvy management accountants the CFO will speak with confidence when providing that advice so cherished by key decision makers.
That advice will include alerts concerned with the effects of the emerging forces of change that are foreseeable now, are foreseeable in the future, or are regrettably unforeseeable. Other reports can address content concerning competitive intelligence, industry and global tends of consequence. The impact of changes in market dynamics and the associated resource redistributions deployed to serve those changes in markets are an example, there are many more.
Whereto the strategically focused CFO?
Strategy content can and does ‘change dramatically in practice. It’s a time when the planned for outcome just doesn’t happen. As an example, newly elected US President Donald Trump along with the CEO’s of OpenAI, SoftBank, and Oracle gathered on January 21, 2025, to announce the formation of Stargate, a collaboration between these technology titans that would proceed via a $500 billion joint venture agreement. Their purpose was to build an advanced AI infrastructure in the United States, for the benefit of the United States – thereby delivering a competitive advantage to them and the USA for years. No one, no other company would or could come close, they thought. Only 2 days later, the Wall Street Journal printed headlines that proclaimed the “Tech-heavy Nasdaq Composite falls more than 3%”, all because of the launch of the China originated version copycat of Stargate, DeepSeek. It was developed at minimal cost in comparison to Stargate but offered equal levels of performance - and it was open source. Was this apparent oversight anyone’s fault? Well, no, and yes. No because in an absence of expectations – however uncomfortable – no one could have anticipated the arrival of a competitive product so quickly.
More likely the answer is yes though, even if the timing of the event was unknown, it should have been expected that a competitive AI platform would be developed to compete with Stargate at some time in the future. It was the timing that was the reason for surprise, above all else. The fact that its apparent low cost and unparalleled operating efficiency and effectiveness was secondary to the lack of business intelligence. Perhaps it was critical strategic thinking that was missing. The same can be said of the Covid - 19 pandemic, it was inevitable that a pandemic would occur at some time and will again. The question is; when?
The solution
To accommodate the yes campaign a little further, let’s take a time to consider the following:
· What if a suite of management accountants has an established strategy system in operation that provided a format related to Strategy Evaluation, Shaping (formulation) and Strategy Evaluation, Reviewing (implementation) – each key enablers of agile strategy practice.
What if a strategic alerting mechanism was in place to warn decision makers of those inevitable long term, unexpected eventualities that too often occur in the short, to very short-term? Accommodating strategic risk.
What if the CFO operated a strategy system that would allow her to simulate and structure strategy, and thereby ensuring alignment between long- and short-term strategy and its implementation along with an ability to prioritise the management of emerging threats by measured degrees of uncertainty? Thereby enhancing their depth of financial control.
What if the organisation already had access to the highly qualified people who are more than capable of operating a strategy monitoring and reporting system? That would be the management accountants delighted to do so, if asked?
Such solutions are available through the introduction of Third Wave Strategy as illustrated previously and explained in detail in the Corporate Strategy (Remastered) books. Its realisation starts with recognition of the new role of the management accountant and recognition by the CFO the positive change in their knowledge, and accordingly, the quality of their advice. So yes, in that sense it will literally energise the CFO, but to make it happen the following changes in focus must occur. They can initially focus on the management accountant but eventually the entire organisation. All are subject to the authority of the CFO and acceptance of the CEO:
develop appropriate tools and techniques providing support to the strategic decision-making process rather than hinder it,
teach management accountants to look to the future, at least as often as they look to the past,
leverage their capacity to manage the minutia of ‘what was’ and ‘what is’ while at the same time, embrace the challenges, enormity, complexity, of what ‘could be,’
continue to dwell in the detail but confine an awareness of risk to the boundaries of today, while also
embracing the uncertainty that accompanies the assumptions that lead to ‘trial and error’ decisions which in turn lead to the emergence of the corporation of the future.
Conclusion
There is so much more to strategy than is currently accessed/deployed to corporate wide practice. At the same time, most organisations lack the systems required to make strategy infinitely more effective. To make the much-needed change, I recommend the following practices are adopted. They start with the establishment of an organisational learning capability which is grounded in an appreciation (ideally) of Third Wave Strategy and incorporates a broad based, culture (and practice) of organisational learning anchored in future focused strategic thinking. This culture can then be nourished through the establishment of multi-functional Communities of Strategy Practice (COSPs). Each COSP group authorised to undertake searching discussions on corporate strategy concepts and topics addressing corporate specific strategic issues. Most importantly, I suggest access to strategy is democratised through a formal Enterprise-Wide Operational and Strategic Performance Measurement, Management, Monitoring and Reporting (ESPM) mechanism. It would of course be future focused and contain as much qualitative data as quantitative data. This mechanism will be operated by an empowered management accounting function which reports directly to the CFO.
Corporations could also consider the empowerment of a Human Capital Management function charged with the development of open communication mediums that accommodates open strategy practice. The latter focusing primarily on the communication of strategy, and the disbursement and capture of knowledge that is both operational and strategic in nature. In essence this would allow all stakeholders to celebrate the past while at the same time, work in earnest to drive transformational change based on energy deployed to the adaptation to those eventualities beyond their control (what is) - to be undertaken at the same time as inventing and implementing future versions of the future’ - what ‘could be’.
[i] AICPA & CIMA, The Global Management Accounting Principles, 2023, chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.aicpa-cima-cn.com/upload/file/File20230710170611.pdf Accessed 3/02/2025
[ii] AICPA & CIMA, Integrated Performance Management (IPM), Driving strategy, engaging workforces, 2024 https://www.aicpa-cima.com/resources/download/integrated-performance-management-2-0, Accessed 4 Feb, 2024.
[iii] Hunter, P., Corporate Strategy (Remastered) Vol I, High Performance Strategy and Leadership in a Volatile, Disrupted World, Routledge, Oxford, Uk 2022, https://www.routledge.com/Corporate-Strategy-Remastered-I-High-Performance-Strategy-and-Leadership-in-a-Volatile-Disrupted-World/Hunter/p/book/9780367499570?srsltid=AfmBOopZN8RBQBg8mMhUaFpOtckh2m7QwfKuq0Klqi_At54Iss6d3Mfv
[iv] Hunter, P. Corporate Strategy (Remastered) Vol II, A Fieldbook Implementing High Performance Strategy and Leadership, Routledge, Oxford, Uk 2022, https://www.routledge.com/Corporate-Strategy-Remastered-II-A-Fieldbook-Implementing-High-Performance-Strategy-and-Leadership/Hunter/p/book/9780367473204?srsltid=AfmBOooO8mmg059_IjOFOGbjpn3z3g8v4XhZ_LNvBeP6JJgkKa43UVYN
[v] Whittington, R, Professor, Said Business School, Oxford University. Presentation paper from Strategic Management Institute Conference, London, November, 2017. Strategy as an Enabler of Change in an era of unbounded disruption.
Authors: Dr Paul Hunter, Professor Stuart Orr
Produced by the Strategic Management Institute www.smiknowledge.com
Distributed by PH Strategy and Leadership: www.phsandl.com
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