Academic journal article Journal of Accountancy

Flexing the Strategy Muscles

Academic journal article Journal of Accountancy

Flexing the Strategy Muscles

Article excerpt

Finance teams have long been tasked with gazing into the past. They were the ones with the answers about how the company has performed over time, how it did in the past month, and how it just did compared with how it used to do. But now finance professionals are being asked to turn the time machine around, using their skills to guide companies into the future.

It's no wonder. During the past 10 years, two-thirds of incidents causing market-value drops of 50% or more occurred because of corporate strategy missteps, according to a Corporate Executive Board (CEB) report in which chief auditors listed contingency planning and strategy development and execution as top concerns.

Strategic planning also was the top priority for capability improvement identified by North American CFOs in a recent Deloitte survey CFOs participating in that survey were asked to name the three capabilities they most want their finance teams to improve; strategic planning was the only capability named by more than half the respondents.

"They need to be the one that helps facilitate decision-making," said Jim Morrison, CPA, CGMA, the CFO of Pawtucket, R.I., materials science company Teknor Apex. "And for them to be there, they need to be integrated within the organization.... The more our finance people think of themselves as a business analyst-and I mean every one of them up and down the line--the better we'll be serving the business."

Charting a course for the business isn't enough. In the era of big data, finance executives are charged with determining whether the strategy is creating the proper results. CFOs have increasingly acknowledged that finance teams could be more effective in ensuring that initiatives achieve desired business outcomes, according to Deloitte.

Delivering information to support strategy to management plays a big role. But that critical responsibility for me finance function--the delivery of metrics and tools needed for sound business decisions--has consistently been identified as one of the top challenges for finance, according to Deloitte. Another challenge: influencing business strategy and operational priorities.

"Communication, in the presentation of data in a clear and understandable format as well as verbal communication, is extremely important," said James R. Blake, CPA, CGMA, the CFO of Morey's Piers & Beachfront Waterparks in Wildwood, N.J. He added that young people entering the profession need to be trained to deliver the numbers to management as effectively as they crunch the numbers. …

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