Managerial Accounting thru the I's of the Other

In addition to deeply thought provoking and insightful, Jacques Lacan is hilarious. If you haven’t spent some time with his works, I highly recommend it! He’s constantly cracking inside jokes of language and is wonderfully obsessed with Freud. He’s the Woody Allen of French theorists.

Freud was a systemic thinker. His theories were rigid, interdependent, and all had to add up to the bottom line of his overarching thinking — usually tying out to your mother and/or father in some rigidly unpleasant way.

Lacan was a Freudian, but what he did with and for Freud was, in a way, anti-Freudian. Lacan reclaimed Freud’s work by treating it as metaphorical rather than literal. The rapport of elements within the system was more important than their absolute value or nominative location. To reference the thinking of another noted Frenchman, it was as if he said there’s “truthiness” to Freud’s thinking; so, let’s not dismiss it entirely without first taking another look at it — looking at it sideways and in broad stokes (letting lines blur to the abstract) might yield new structures and give rise to alternate understanding, and indeed it did.

Lacan reified Freud’s truthiness. His work yielded insights well beyond superficial readings of story and character (of the subject and her family) to the deeper structures of the making of meaning in society: the very building blocks of understanding.

Lacan : Freud : : Managerial Accounting : Financial Accounting

Financial Accounting (FA) is what we all grew up with (and what many believe is the full story of accounting) with debits and credits and everything adding up to the red or the black bottom line. FA = Bean Counting. There are two versions of FA in an organization, Tax Accounting (for for-profits forms) and Balance Sheet Accounting (for everyone). One version breaks down financial transactions to assess the taxable change/s in value over a period. The other version breaks down financial transactions to assess change/s in overall value over the period. Both are purely interested in …financial transactions.

Managerial Accounting (MA) may be the best kept secret in modern bidness. It is strategic and it is not at all interested in counting beans. It is metaphorical, subjunctive (i.e., future-facing and what if…? in nature), and as a result IMHO Humanities Majors probably have a greater ability to grasp the thinking behind it than most CPA-style accountants — which is pretty huge.

One downside – the results of MA are useless to FA purposes, so it must be undertaken adjunct to FA duties. The upside/s – MA tools, once built, are brilliantly useful to managers!!!

The contextual recipe for profitability

It’s a shame, but understandable, that accountants often get a bum rap in the humanities. Many loss-leaders are needed to find one gem. Humanities majors (who probably dated painters, poets, and band members in college) will get this. A Financial Accountant will blow a gasket when multiple loss-leaders (financial losers) hit the books. This alone will set many humanities and FA folks at odds.

MA, on the other hand, can take loss-leaders and almost any “fuzzy logic” that you can describe into account — in fact, creative application of MA tools such as Activity Based Costing analysis can reveal not only what prices would support projects of a certain type and maintain success for a firm (or describe and defend needs for subventions), but with the help of a little FA and modeling it can also reveal how many must be undertaken in the next season specifically (of each type, selling at varying rates, and into uncertain markets, and given the ongoing performance of the last several lists, back- and mid-) to give rise to the increasing overarching success of the firm — with that success being defined as progress toward any number goals (financial and/or missionary).

In a word, Managerial Accounting reifies bean-counting's truthiness. It yields insights beyond superficial readings of the bottom line (of debits and credits with respect to the budget) of what happened yesterday in the business to the deeper structures of creating and adding value in society, how the firm can contribute more to the top line in a meaningful and lasting way on into the future: the very building blocks of profitability.

Perhaps most importantly, MA tools can be used to illustrate (to the more FA-minded members of staff) that the firm is in fact right on track and making the desired progress toward its broadly agreed-upon goals when that next wave loss-leaders or seasonal slumps in sales hits the books — so those discussions don’t have to begin again.

Admittedly, though they are pretty simple to master, Lacan’s concepts can seem complicated to get a hold of the first time you see them. Likewise, MA tools can seem complicated to build when you look them over, though in the end, as with most things, they’re not.

Lacan is hilarious and highly recommended, but I've found MA reading thoroughly enlightening as well. I'd say add some to your wish list, and even if you don't ever get to it, it's worth keeping in mind that there is another kind of accounting out there, a future-facing accounting, for measuring the strategic potential for the creation of value (financial and/or missionary) by a firm beyond the typical postmortem approach of an FA breakdown of how value was destroyed (and should rather be destroyed less--duh) in the comparisons of budgets with debits and credits.