Introduction: The Financial Strategy and Investing in Transformational Change

In this section, we examine the idea that financial strategies are more than the patterns and strategies used across an organisation for obtaining and using financial capital to advance its financial objectives. We argue that an organisation’s decision-makers must always consider how institutional constraints and stakeholder objectives could be of relevance. We take the view that the debt versus equity mix that underpins an organisation’s strategies and other such considerations are important but not the be-all and end-all of an effective financial strategy. If an organisation is to develop its nonfinancial capital base—its resources, risk capital, and human capital bases, as a distinct part of its strategies, it must use its financial resources discerningly. Thus, sound internal capital markets and processes through which managers compete for funding within the organisation need to be used to develop and implement strategies, complemented by effective resource allocation processes and, where appropriate, effective project selection and management methods. The two chapters in this section explore these phenomena, albeit in complementary yet in unambiguously different ways. They both assume that the internal and external contexts are just as important as each other when making strategic financial decisions. However, one explains these phenomena through an accountant’s lens, while the other through a project management lens. We present two frameworks in this chapter to further clarify what is involved here. Both of these frameworks can be used in a practice setting or to conduct further research.