Management Accounting Education Priorities Jim Reeve, University of Tennessee

The Teachers Dilemma with The New Idea Practice Understanding – We dont know much – However, I know more now than I did 15 years ago. So we cope – Teach technologies before they are understood – Suggest taxonomies incorporating organizational, control, strategy, and decision interactions.

The Teachers Dilemma with Students Students believe observation is truth. Why? is not in their vocabularyonly What? and How? If why? is asked, its usually at a level direct to their experience. We want to avoid management accounting being treated as isolated tools and techniques. Stuff to be put in the tool bag and stored for later reference.

Some Priorities Dont Change Improbability of single solutions (intensity of complexity, volatility, and uncertainty) – Budgeting is still appropriate in many settings – Feedback control appropriate (facilitate learning) – Costing will still be needed – Traditional investment controls will still apply in many settings – Issues of capacity and fixed costs

Some Priorities are Evolving Hybrid Governance Structure Controls (Supply Chains) – Target costing, value chain analysis, open book – Customer and supplier surplus generation and sharing Organizational Controls – Incentive systems, systems and procedures, non-market pricing Controls in highly adaptive environments Causal Performance Chains (Strategy Mapping)

Increase ROCE to 12% Revenue Growth Strategy Productivity Strategy New Sources of Non- Gasoline Revenue Increase Customer Profitability Through Premium Brands Become Industry Cost Leader Maximize Use of Existing Assets ROCE Net Margin (vs. industry) Non-Gasoline Revenue & Margin Volume vs. Industry Premium Ratio Cash Expense (cpg) vs. Industry Cash Flow Speedy Purchase Clean Safe Quality Product Trusted Brand Friendly Helpful Employees Financial Perspective Customer Perspective Help Develop Business Skills More Consumer Products Recognize Loyalty Share of Targeted Segment Mystery Shopper Score Dealer Profit Growth Dealer Satisfaction Differentiators Delight the ConsumerWin-Win Dealer Relations Basic Create Non- Gasoline Products & Services Build the FranchiseIncrease Customer Value Achieve Operational Excellence Be a Good Neighbor Improve Environmental, Health and Safety Understand Consumer Segments Best-In-Class Franchise Teams Improve Hardware Performance Improve Inventory Management On-Spec On-Time Industry Cost Leader New Product Acceptance Rate Environment Incidents Safety Incidents Dealer Quality Rating Yield Gap Unplanned Downtime Inventory Levels Run-Out Rate Activity Cost vs. Competition Internal Perspective A Motivated and Prepared Workforce Aligned Personal Growth Climate for Action Functional Excellence Leadership Skills Integrated View Competencies Process Improvement Technology Personal BSC Employee Feedback Strategic Skill Coverage Ratio Systems Milestones Learning & Growth Perspective Mobil NAM&R Strategy Map: Kaplan and Norton

Some New Priorities to Consider Long Lag Causal Chains – R&D pipelines – Environmental spending – Geographic expansion – Employee investments Fragile Causal Chains – Organizational learning and adaptation – Environmental scanning Control Systems and Gov./Org/Inst. Structures Budgetless organizational control (Hope and Frasier) vs. RCA

Some Pedagogical Requirements Complex, volatile, and uncertain Causal performance chains can be discovered and applied Compressed time phasing Environmental scanning required Risk taking and decision responsibility Conflict and tradeoffs Discovery of leading indicators

Some new pedagogies: Marketplace simulation ( ) Team-based Global Competitive Environment Deep decision complexity – Assess customer values by market segment – Design product to fit segment(s), design ads – Open sales offices and web portals, place ads – Determine HR policies and incentive schemes – Intangible time phased investments (training, web enhancements, product enhancements, manufacturing process enhancements) – Plant capacities, Min/Max rules, setup, quality control studies – R&D joint ventures

Sample Time Phased Decision: Quality Study

Sample Tradeoff Decision: Min Max Production Rules

Environmental Screening Exercise

Developing Causal Linkages: Sales Performance

Developing Causal Linkages: Leading indicators

Developing Causal Linkages: Competitor Data

Some New Pedagogies: Scenario Planning Images of the Future – Plausible – Internally consistent – Challenging for users, out of the box Method (The Art of the Long View, Schwartz) – Issue – Factors and Forces – Dimensions – Scenarios and guideposts

A DECISION: OUR NUCLEAR LEGACY AND REMEDIATION Public Concern (high) Private IngenuityFull Speed Ahead Public Funding (low)Public Funding (high) Not EnoughThe Greater Good Public Concern (low)