415 Conclusion

This paper used the Brinberg and McGrath (1985) research setup in combination with the idea of ‘analytics’ to document the possibilities of designing and using the SDM approach for the Balanced Scorecard model. To further focus our model we also used two other themes that are often discussed in relation to system dynamics: the Double-Loop Learning (Senge, 1990; Sterman, 2000) and Bounded Rationality (Simon, 1957, 1991). The double-loop learning concept has been used in the model development phase, where the iterative feedback structure has contributed to changes in the pre-conceived mental sub-models of the people in the service department, and has increased the understanding of the department’s dynamic structure and mental behavior. The use of bounded rationality has helped us simplify the choice variables by focusing on only three input KPIs in the de- sign stage, as described earlier (user recommendation of the department, workload and competence fi t). The principles of system dynamics provide a rigorous ap- proach to strategy that is grounded in solid evidence from the situation concerned (Warren, 2005) and can be used for many decision problems in management accounting.

The paper also shows that the SDM approach can overcome some of the inherent limitations of using only unidirectional cause-eff ect relationships and statistical methods (e.g. multiple regressions) and the static structure over time, meaning us- ing feed-forward and feedback for testing diff erent strategy scenarios. Compared to earlier research (e.g. Akkermans and Oorschot, 2005), this paper has included some fi nancial KPIs and thereby emphasized the value of the learning outcome from the project modeling project.

Given the huge amount of ‘big data’ available both from internal but also from external databases (e.g. Orbit or Bloomberg) today, researchers in the fi eld of management accounting will be able to construct and test diff erent types of more generic cost management models (in the same way as within fi nance), but practi- cal managers will also have the potential to quickly assess their strategic options and opportunities and to design their fi rst version of a dynamic BSC.

Therefore, great opportunities exist now for designers of management accounting programs to develop the right skills for CFO and controllers to be able to handle these challenges in future, by combining ‘business analytics’ with management ac- counting and control as also noted by Kaplan.3

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Notes

1. The authors would like to thank two anonymous reviewers for their comments and suggestions. The authors are also grateful to the company in our case study for allowing us to use their materi- als and other documentation and for their support and comments on this research.

2. It should be noted that the above model consists of far more loops than the eight loops shown in fi gure 2. The eight loops shown here are considered to be of primary importance for the dynamics of the model.

3. This challenge has already been taken up by CIMA (the Chartered Institute of Management Accountants) in UK (see e.g.: http://www.cimaglobal.com/Events-and-cpd-courses/Events/ Mastercourses/Strategic-Management/Business-analytics/).

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