ICAEW.com works better with JavaScript enabled.

The CFO and strategy – part 1: the nature of strategy

In this series of four reports we aim to help CFOs and aspiring CFOs think about strategy and what they might do differently while recognising there is no one best approach. In part 1 we suggest how CFOs can explore the nature of strategy as a first step in supporting CFOs in their strategic role.

Strategy is about how organisations deliver their vision, mission and high-level objectives. Board members and executives CFOs and FDs have a key role to play in strategising. It became clear from conversations we’ve had with CFOs that they tend to favour a pragmatic approach to strategy and tailor their approach to individual circumstances, rather than advocating strategic theories.

Fundamental to their success in strategy is the application of judgement to the inherent tensions in strategy. In this first part – The nature of strategy – we focus on the tension between planned and emergent strategies.

Planned strategy Emergent strategy

 A planned strategy is conceived and well-structured before it is executed. A step-by-step process is followed as much as this is possible. This usually entails an analysis of an organisation’s circumstances and potential, the development of a vision, mission and high-level objectives, followed by establishing how the organisation will achieve them. A planned strategy is articulated in a top-down plan at a sufficient level of detail to guide team and individual actions.

The plan, supported by detailed budgets, serves to allocate resources in advance and provides the basis for assessing progress towards the organisation’s vision and objectives. The strategy and plan is reviewed and amended periodically.

 An emergent strategy comes together without detailed planning. As the organisation reacts to the environment, experiments with different ideas and seizes opportunities, a coherent pattern of actions emerges which coalesce into a strategy.

The organisation’s vision, mission and culture provide some sense of direction and place boundaries on the business ideas that are explored and developed. However, the focus is on agility and empowering people throughout the organisation to experiment, pursue successful ideas and make decisions. As a result the strategy constantly evolves.

We conclude our findings by off ering advice on strategising in practice and how to facilitate effective strategic discussions and develop strategic understanding.

The full report will be available in print and to download online in mid-March.