In for a Penne ... What Are the Organisational Issues That Hamper Companies When They Try to Introduce Modern Management Accounting Systems? Alberto Asquer Draws on His Research at an Italian Food Manufacturer to Propose a Recipe for Success. (Business Implementing Innovation)
Asquer, Alberto, Financial Management (UK)
Many state-of-the-art technologies that help managers to keep things on track--activity-based costing and management systems, for instance--use a range of tools to assess operational efficiency and the achievement of organisational goals. Yet many firms are far from adopting most of these innovations, let alone using them to their full advantage.
One reason for this is that the task of introducing a whole set of new practices in an organisation is not easy. A lot of companies step back before making a serious effort in implementing new accounting systems once they see the amount of resources they will need to commit. Many others see the problems of overcoming organisational resistance to such changes.
This is a challenge to both financial managers and researchers studying innovation in management accounting. Research findings in this area point to the influence of both technical and behavioural factors. For example, we at the London School of Economics have found that certain organisational factors, such as support from senior management, are generally required for a successful implementation. But we're still missing many pieces of the picture. A deeper understanding of how all the various factors interact would allow us to improve the chances of success.
The approach of my CIMA-funded research project was to consider innovation as a process of accepting new management accounting knowledge that ultimately results in a change in organisational routines. These routines are defined as relatively stable patterns of behaviour bound by rules and customs. Examples of organisational routines are the activities performed for computing product costs, the practices followed for production scheduling and the procedures involved in negotiating the budget. Any management accounting innovation should ultimately affect some of these organisational routines by making them more efficient.
Acquiring new knowledge is an arduous task, because people need both to understand the management accounting innovation and reconcile it with their previous experiences. But, if they succeed in doing this, it allows the innovation to exert a positive effect on the organisation's routines. One explanation for the failure to implement innovations points to people's problems in learning new knowledge and their resistance to challenging routines. My research aimed to contribute specifically to this line of inquiry. Its results suggest that people's subjective interests in the implementation and the presence of devices to aid their learning play a key role in determining whether they accept the innovation or not.
The study focused on the early stages of the implementation of a management accounting innovation in a small food manufacturing firm in Sardinia. I took the role of project initiator, proposing the introduction of a new activity-based costing and management system to the senior managers, who eagerly endorsed the initiative. In the early stages of the implementation I also retained a role in sustaining the attention and effort of key players in the organisation and ultimately gained the involvement of several managers and some external consultants. On the whole, the benefits of my unusually close involvement with the organisation's dynamics more than offset the limitations caused by the specificity of the case and any subjectivity on my part.
The firm had a seasonal production period concentrated into 40 to 45 days in the summer. …