Carl von Clausewitz, a giant of both military theory and war strategy.
The conclusion of Financial and Managerial Accounting wrapped up the first course for the 2014 full-time MBA cohort. Doug Hayhurst, who spends most of his time as a board member of several major organizations following a career working at PWC and IBM, provided a serious dosage of real-world insight while teaching our class. It was challenging to get reacquainted with studying some fairly heavy numbers based material—last time I saw this type of stuff was in high school, albeit the accounting prep course had warmed me up a bit—there were certain notable highlights along the way. One which stuck out for me was related to strategy.
I’ve spent a fair bit of time in my previous life doing research for the military intelligence world looking at strategy. The conception of it I’d had related more to considerations of building nuclear weapons systems, picking apart how cognitively Sinn Fein and the IRA shifted their strategy in the mid-1990s, or how shifts in the nature of Israel’s deterrence strategy is presaged by psychological changes in its leadership. Strategy, to me, is something Generals’ and high political office holders set to wage war. So what is it doing in business?
One of the underlying themes stressed throughout Financial and Managerial Accounting is how the mission of an organization—that is, its unifying purpose—links with goals. Achieve the goals and the organization moves towards its overarching vision by realizing this mission. Managerial accounting factors in as the process of meeting the goals of an organization by making decisions based on understanding the risks and rewards that might impact an organization financially. How an organization achieves its mission is partly answered simply if revenue exceeds costs; is a profit being made? It is also answered by how well the executive team implements a strategy to move the organization closer to attaining its mission.
The link between business and military strategy came to a forefront when I approached Doug after one of his typically engaging classes and commented on what I saw as the link between the two types of strategy. A very successful military strategy is doomed to fail if logistics can’t support an operation while even a mediocre strategy may win in the end if the logistics feeding the front line are stronger than an opponents’. The connection I saw is between the logistics requirements for a successful military strategy and the need for strong business fundamentals to underpin business strategy. As I should have assumed, my thought wasn’t entirely unique as Doug immediately agreed and gave several detailed examples; an excellent conversation ensued.
So what’s the take-away message? This has reinforced to me why the pedagogy of the program has hit us hard with financial intensive courses from the start (finance, economics, managerial accounting, etc.). In studying the military world, an axiom which makes a not too infrequent appearance, is that “Amateurs talk strategy. Professionals study logistics.” As we’re very quickly finding out, something similar seems to be the case in the business world whereby if something doesn’t work financially, it doesn’t matter if you have the best business idea in the world. Clearly this is a key reason new businesses fail with startling certainty: fundamental financial problems.
Ryan Cross is a current MBA student at Beedie. He spent a number of years prior to starting his MBA conducting research and publishing on military intelligence tools, as well as on UN peacekeeping operations, and the ethics of war. Ryan can be contacted at ca34@sfu.ca , http://about.me/ryan.cross or LinkedIn.