Strategic planning for CAs in the digital age
The top 10 ways accountants can achieve successful strategic planning.
- Finance executives need to learn to think differently for strategic planning.
- Experiment factories, different budgeting and multi-disciplinary strategic planning yield the best results.
- If a company has a bad culture, then strategic planning will fail.
Technology advances and digitisation have created a powerful fulcrum effect on organisational value, with penalties for strategic planning failure and rewards for success now so much greater.
Acuity attended the Chief Strategy Officers’ Summit in Sydney to discover the latest thinking on strategic planning, and its relevance for CAs. We found that strategic planning, which was first developed in the 1920s by Harvard Business School, is continually evolving, going through phases of changed emphasis, including risk, growth, market share and competitive advantage.
Here are tips for CAs who do strategic planning:
1. Involve all disciplines
Successful strategic planning is not achieved by accountants in a back room. It must include all departments and disciplines.
Of special value are the arts, for creativity; science as it demands provable and repeatable outcomes; analytics, for its ability to analyse the past and predict the future; and psychology, for its understanding of people and culture.
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2. CAs as facilitators, not blockers
In a salutary lesson for CAs, multiple conference speakers described chief financial officers as impediments to strategic planning. There was talk of needing to “rehabilitate” those who have worked in finance before they can be useful in strategic planning.
The theme of CAs having a wider view and experience outside traditional accounting is one that Acuity has covered often. Similarly, with the prominence of digitisation as a component of strategic planning success, CA involvement in digitisation initiatives is critical.
3. Culture eats strategy for breakfast
If the company has bad culture, then strategic planning will fail. “People play sport and travel to far-flung places in their private lives. It’s because they like to challenge themselves. So tap into this at work too,” says Jo Ann Pass, Head of Digital Operations at Sydney Water.
“Today’s superstar corporates favour cultures where anyone can talk to anyone; absolute transparency – so everyone knows what everyone else is doing; open office space, conducive to interaction; giving all staff time to work projects that could potentially increase results by a multiple of 20 times; and a belief that ‘if you’re not doing crazy things you are in the wrong place.” One speaker emphasised that teams need to be comfortable at being uncomfortable.”
4. Experiment factories
Innovation is a critical component of strategic planning, the conference was told. Speakers from all types and phases of organisational development agreed that no matter the size or development stage of an organisation, having a separate “experiment or ideas factory,” is a key to good strategic planning. This applies to legacy, start-ups and renewal; be they corporates, SMEs, charities or NFPs.
Having people squeeze in strategic planning as part of business as usual (BAU) is a recipe for failure, as they will always be distracted by the work at hand and will lack speciality and focus.
Strategic planning requires a dedicated approach, no matter how small the team, as “business unusual” is the norm today.
5. Budget differently
The traditional annual budget allocation does not work well for strategic planning today. Digitisation means strategic planning and implementation is far from linear. Time is of the essence, and CAs should ensure there are open budgets, with funds available as and when required - just as long as the agreed measures are achieved of course.
6. Porter is still right
Thirty-two years after his 1985 book Competitive Advantage, Michael E. Porter is still right. There are just two ways for organisations to gain competitive advantage. They are cost advantage or differentiation.
The first strategy involves a business providing the same products and services as its competitors, at a lesser cost. The second is where superior products or services are provided by the firm. A key role for CAs is to ensure clarity around which strategy is being pursued, described to the board and measured for reporting.
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7. Ten X not 10%
Increasing organisational performance by increments of 10% on a regular basis will, due to the compound effect, yield significant improvement on a Business As Usual basis. Strategic planning should generate and implement indicatives that potentially increase performance ten times or more.
Top performers such as Google describe themselves as growth businesses and achieving quantum leaps in performance are the areas of focus for their innovative strategic planning. One idea is to act like the firm’s competitor and think about how the firm could take itself on.
8. Make it measurable
Make the unmeasurable measurable. This is another key to strategic planning. It enables predictability via known data sets and sophisticated modelling. There are free tools and training available, including Google Trends and Digital Garage.
9. Power through others
Use experts. In additional to well-known companies like Google, LinkedIn, and PayPal, an often overlooked world-class partner in strategic planning is Australian’s CSIRO, which has a data innovation network and has a Strategy 2020 plan to help transformative emerging projects.
Businesses should have defined systems, rather than relying on chance, to find the next big technology or patents for their industry, and keep a close eye on industry visionaries.
10. Segment of one
Strategic planning nirvana is to identify potential customers, right down to individuals and then implement strategies to reach them with products so well-tailored to their needs that they have no excuse not to purchase. Digitisation and analysis are making this increasingly possible. Strategic planning is a specialist area and to secure a job with a leading company requires true expertise and thought leadership.