CAs have natural management abilities and a good understanding of revenue as well as costs. No wonder they often move into executive positions

Are you executive material? Do you challenge business assumptions in a way that enables your company to handle change successfully? Consider this: In a recent advertisement for a management seminar, one manager says, "I figured out how to save the company money." A second manager says, "I figured out how to save the company." These statements clearly demonstrate the difference between tactical and strategic thinking. In other words, one describes the role of the CA-accountant and the other, the CA-executive.

Here are six areas to consider in improving your strategic contribution to your organization.

1. Managing business growth
Organizations take one of two strategies in managing growth: they either
innovate or follow. CA-executives contribute to this choice and understand its implications.

As CA-executive, you should be a sounding board — the voice of reason that brings people back to earth. You must take a leading role in contributing solutions to critical issues. It's a delicate and vital task, and you must execute it in a way that will not diminish the company's enthusiasm or desire to continuously improve.

New products or concepts can open doors to new opportunities, strategic alliances, and, of course, funds. But an unsuccessful product or concept can lead to months of hardship and financial difficulty as money and effort get diverted from other potentially profitable ventures.

We tend to shy away from things we are unsure of, especially when the projected benefits are based on assumptions and estimates. Yet we also have an innate curiosity to explore, a desire to improve our lot and to push the envelope. As a CA, you should play a role in determining the degree to which your organization will push that envelope and how it will manage the changes that these decisions trigger.

2. Anticipating market reaction to change
Companies that embark on an innovative course will readily admit that change is often feared for the simple reason that it creates uncertainty and requires everyone to adjust.

But many managers fail to realize customers are also often reluctant to change. Even if you have built a better mousetrap — one that is faster, more efficient and cheaper than any other product on the market — it does not guarantee your customers will beat a path to your door.

A recent PBS documentary on fire departments showed how change is viewed negatively even when the benefits are clear and desirable. Around the turn of the last century, fire departments used hand pumps that took several men to operate. Of course, they were a big improvement over the bucket brigade, but they were still inefficient and dangerous. Then one day, somebody invented a steam-powered pump. It moved more water, faster and for longer periods than anything ever seen.

Eureka, right? Not quite. While many firefighters had seen a demo of the steam pump, many were dead set against it. They were convinced man was better than machine; they were also fighting for their jobs, their machismo, their way of life, and the status their positions brought them. To win them over, the city held a competition between the two technologies. While the men got off to a great start, the steam pump soon took over and the men eventually succumbed to exhaustion.

While the benefits appeared obvious, the firefighters' resistance to change resulted in
a longer-than-expected delay before adoption. Keep this in mind the next time you plan on introducing a new product.

As a CA-executive, you should be actively involved in discussions about the growth of the organization: new products, projects, markets, and so on. You should identify issues, both positive and negative, and contribute to solutions.

3. Understanding market dynamics
Take any industry with a number of competitors and relatively stable growth. As companies in that industry plan for upcoming fiscal periods, they will forecast not only growth, but increased market share. We have rarely seen a business plan that calls for a decline in an organization's revenue. But since everyone cannot outpace the market; there will be some losers.

As a CA, you are well positioned to understand these market dynamics and to challenge planning assumptions. The consequences of accepting unchallenged growth assumptions can be much more serious than simply missing the plan numbers.

If we continue with a scenario where most competitors plan for increased market share, the first few projected periods may proceed as planned. However, one or more companies will eventually realize they won't meet their objectives. They will try to make up for lost ground by changing the way they operate. They may become increasingly aggressive in pricing and promotion or attempt other short-term strategies to deliver on the original plan. This, in turn, will trigger reaction from the competition. While competition stimulates innovation, it can lead in some cases to a very dangerous situation, resulting in consolidation of the industry. You should be in a position to recognize this and help the organization plan accordingly.

Again, your role is to understand and challenge the assumptions being made about market dynamics and their long-term impact on the organization.

4. Preparing for constant change
Imagine a totally stagnant industry, with no new products, promotion or changes in distribution methods. This inactivity will encourage consumers to try new products or services from new suppliers. Products that were once considered to be no threat to a given industry will begin to encroach on the territory of organizations that fail to change with the market's demands. For example, look at how the Internet has affected the post office.

Similarly, non-business issues can seriously affect the way your organization operates. The mad-cow syndrome in Europe has affected not only the beef and dairy industries, but fish, poultry and tofu as well.

In your role as business adviser, you must be aware of competitive threats, and of regulatory, environmental and social issues that may affect the company.

5. Understanding demographics
With many industrialized countries reproducing below the population replacement rate of 2:1, some demographers are predicting a massive drop in demand for certain consumer goods. Basically, they're saying aging baby boomers have acquired most of what they need. So you have to wonder how companies will manage if their markets are declining by, say, 5% to 10 % a year. This is the kind of information that the CA-executive should be bringing to the table on a regular basis.

One CA who has taken advantage of this changing demographic landscape is Howard Board, president & COO of White Rose in Ontario. This home-and garden company is cashing in on the growing wave of baby boomers who are taking a greater interest in gardening (Going concern, CAmagazine, June/July 2002, p. 12).

Of course, demographics are simple. But translating that knowledge into opportunities requires skill and foresight. "Demography," said Auguste Comte, a 19th-century philosopher, "is destiny" (The Economist, August 24, 2002).

6. Managing corporate turbulence
The decisions you make will cause your own organization to change, be it through new ventures, new alliances, transformed business processes or remodeled organizational structures. The company might merge with a competitor, possibly in a foreign country, and that might lead to a difficult-to-swallow change in the organizational structure. Your executives might be faced with a sudden restructuring or the expatriation of some management members. This requires change management with a capital C.

In many cases, the responsibility for managing this turbulence falls to the CA. In this situation, you must be integrally involved in such decisions and be acutely aware of their impact. While culture is difficult to change, that change must be managed in order to ensure the desired result. This takes time, commitment and a great deal of effort. It is a task that is often underestimated.

Preparing for the role
At some point in your career, you will have to decide whether you will make the transition from CA-accountant to CA-executive. Many CAs have done so and become leading forces behind major Canadian corporations. Within the ROB 1000 last year, firms led by CAs performed better on several fronts than other companies.

For those who are wondering how to make the transition, the answer is simple: get out of your office. Go to conferences and trade shows, walk the shop floor often, be active in associations and chambers of commerce, talk to colleagues, read trade publications, visit suppliers and clients. Try competing products, call your own customer-service line and talk to the representative. Put yourself in the customer's shoes.

It is the CA's responsibility to keep an eye on, understand, anticipate and prepare for what might happen in the future, not only to report the effects of the past. By improving your knowledge base, you can take preventive measures and reduce the negative impact these changes may bring or conversely, act sooner and take advantage of opportunities.

As we noted at the outset, do you want to be the person who will "save the company money" or the person who will "save the company"?