Search for the word “strategy” on Amazon and you will come up with over 200,000 hits. Everyone wants to apply strategy to their lives, whether it be dealing with difficult people or saving enough to retire by 55. The word is so ubiquitous it has kind of lost meaning. That is why it is important to develop your own strategic leadership style, one that is authentically your own.
Strategy, in its application, is not an end-point, but an ongoing journey. Effective strategy, and consequently, leadership, as we know it, is generated from people with the know-how to make informed decisions that contribute to the long-term health and sustainability of organizations.
Harvard Business Review (HBR) has written extensively on strategy. But perhaps its best insights come from strategy failures. In the article, “Many Strategies Fail Because They’re Not Actually Strategies,”1 author, Freek Vermeulen, writes:
“A real strategy involves a clear set of choices that define what the firm is going to do and what it’s not going to do. Many strategies fail to get implemented, despite the ample efforts of hard-working people, because they do not represent a set of clear choices.”
The article then goes on to note four principles of effective strategy execution: 1.) Communicate your logic, 2.) Understand it’s not just a top-down process, 3.) Let selection of choices happen organically, and 4.) Make change your default.
Strategy, as HBR defines it, is more of a mindset than a discipline. This mindset is evident in people regarded for their creativity, leadership, and execution. Take Elon Musk, Telsa CEO and inspiration for the character Tony Stark in the Ironman movie franchise. He applies a “first principles” strategy to everything from making rockets to electric cars. As Inc.2 explains, “A first principle is a basic assumption that can't be deduced any further. As in, it is the thing you know about a complex problem that is absolutely sure.”
Musk explained how he applies this way of thinking to making rockets. For instance Musk says his greatest impediment to following through on sending people to Mars was the astronomical cost of rockets (they can cost up to $65 million). In applying first principles to this problem, he decided that to make the cost less prohibitive, he would have to build one himself. He broke his complex problem down, and found the simplest solution was the most effective.
In the world of finance and accounting, professionals are not directly grappling with how to send people to Mars. But they may be seeking to understand cost models that contribute to large-scale initiatives like Musk’s. For this reason, IMA® (Institute of Management Accountants) exists to provide the latest information on things like costing models and best practices on how to add value to an organization. The CMA® (Certified Management Accountant) certification is one of the best ways to demonstrate mastery of management accounting.
As IMA envisions it, the CMA will be the one to recommend eliminating different legacy systems used for accounts payable in favor of a centralized software solution. They will make the case for migrating products/services sold through sales reps to online sales channels. They will create the “bold, tightly integrated digital strategy” McKinsey3 has argued will be the greatest differentiator between companies in the years ahead.
A salient fact every management accountant is dealing with today is that “no developed country has recaptured the growth momentum we expected before the financial crisis of 2008–09,” as McKinsey4 reports. McKinsey has described today as a time of “moderated growth” where “companies must take a granular approach to identifying opportunities, placing bets, and backing them with sufficient resources,” This kind of nuanced approach is exactly what CMAs are taught. From identifying organization’s strengths and weaknesses, to recommending adding or dropping products or services, CMAs implement strategies that inform performance.
- “Many Strategies Fail Because They’re Not Actually Strategies,” Harvard Business Review, November 8, 2017
- “How Elon Musk Used This Simple Mental Strategy to Build Billion-Dollar Businesses,” Inc., December 20, 2017
- “The Case for Digital Reinvention,” McKinsey, February 2017
- “The Global Forces Inspiring a New Narrative of Progress,” McKinsey, April 2017