The Lived Experience of Business Acumen
The Lived Experience of Business Acumen
What is Business Acumen and what is your exit strategy?
Business acumen is keenness and quickness in understanding and dealing with a “business situation” (risks and opportunities) in a manner that is likely to lead to a good outcome. Additionally, business acumen has emerged as a vehicle for improving financial performance and leadership development.Consequently, several different types of strategies have developed around improving business acumen.
After months of planning of how to start our visionary business and discussing our passionate belief for thirty minutes, this question left us as “two deer in the headlights”, each hoping the other would be brave enough to nudge them out of the path of the oncoming truck..
This was the very first interaction we (Leaders of Evolution) had with our business coach, back in early 2015. We affectionately call this our ‘punch in the face’ moment and little did we know from that time we were on our path to a whirlwind, at times painful (usually metaphorically) and exhilarating path to business acumen growth.
When we now analyse organisations with effective structures, who live and breathe their values and ultimately deliver on their strategy we often marvel at the sum of the parts and the cohesion between vision, skill and behaviour.
When in start-up mode and with a team of two, the need to fast track development of business acumen and a similar cohesion and structure to that mentioned previously is critical. This reality is never more stark as I write this piece and take a long look in the rear view mirror.
Enter, David Ryan. David, our now business coach and provider of the aforementioned moment of stark reality, has graciously provided Leaders of Evolution with his expertise since this seminal moment in 2015. For us, this is our lived experience of business acumen, a pseudo MBA punctured with a litany of ‘a-ha’, deer in headlights and high five moments.
With global experience coaching executives at the highest levels for over two decades and a highly experienced business leader, David has had intimate insights of observing what success looks like and how individuals and teams can develop the competencies to achieve this. The result of these years of observation and research have culminated in the Business Acumen Gauge (BAG), a world leading diagnostic tool designed to enhance the competency framework of leaders.
The fortunate position we have been in for the last four years is to have lived the coaching implementation of the BAG. Through a mix of facilitation, open dialogue, goal setting, analogy-based coaching and feedback our growth has indeed been fast tracked through this critical element of learning and development.
David’s ability to make the complex not only seem simple but also relevant and actionable is one of the many facets of why coaching is so important for any leader wishing to improve.
Through this relationship we have developed a broader leadership framework and the skills required to effectively grow a business. Elements such as decision making, financial literacy, mindset, foresight and strategic alignment are but a few of the areas that we have been challenged on and developed competency in. These areas form part of the 11 capabilities of the BAG.
This is merely the start of what will no doubt be a life-long pursuit of learning and a desire to share this learning with others. We have many more scars to wear (remember the analogy-based coaching?!) and no doubt a few punches to duck and weave – and we’d have it no other way.
Without these experiences and support we would not be where we are, both as a start-up business but also as people. The ah-ha moments and the scars we wear are but another layer of our lived experience of business acumen and this experience is what continues to help us move ahead to achieve our goals and take care of our team.
For anyone wanting to take their leadership to the next level or learn more about the Business Acumen Gauge, Leaders of Evolution encourages you to visit the website www.bagauge.com.au or contact David Ryan for a free 20 minute phone consult on firstname.lastname@example.org
11 Business Acumen Gauge Capabilities
In general terms the mindset of a leader can be oriented towards a growth mindset or a fixed mindset. Growth mindset oriented leaders seek to challenge their thinking, are open to new ways of doing things and avoid fixed, static attitudes. Fixed mindset leaders on the other hand tend to focus on how things have always been done and are reluctant to challenge the status quo.
There are seven different mindsets assessed in the Business Acumen Gauge that represent a spectrum of thinking and ways of interpreting the world that are crucial to the effective application of Business Acumen. Some of these are listed below.
The reflective mindset refers to a leader’s ability to learn from the past and demonstrate learning agility for the future. The behaviour tracks a leader’s tendency to actively reflect on what has happened historically and pragmatically apply those learnings to future situations
The analytical mindset refers to a leader’s tendency to gather relevant data, both quantitative and qualitative, and then makes sense of it through careful evaluation, ultimately drawing accurate conclusions.
The change mindset oriented leader takes responsibility for initiating and leading change. They are proactive in change, and open to change initiatives
Action oriented leaders have an orientation towards getting things done efficiently and effectively. They aren’t shy to take on initiatives and see tasks through to completion.
Foresight is the ability of a leader to detect discontinuous change early, interpret the consequences for the organisation and formulate effective responses to ensure long-term survival and success. To consider the future of an organisation one must be connected to the organisations purpose and be conscious of how strategies that help an organisation adapt to the future align with this. Effective leaders translate these insights into a clear vision and goal(s) and communicate to key stakeholder groups.
There are seven behaviours of Foresight, some of which are listed below.
CHALLENGES ASSUMPTIONS TO UNCOVER NEW WAYS OF SEEING WHAT IS POSSIBLE
This refers to a leader’s ability to challenge the way their organisation does business in order to see what is possible for the future. This could mean challenging the direction product/service innovation is taking, challenging long held assumptions about the organisations customers or shaking up other commonly held beliefs to accommodate a possible future
IDENTIFIES FUTURE THREATS, CHALLENGES AND OPPORTUNITIES
Identifying future threats, challenges and opportunities is a responsibility often delegated to specific leaders or neglected entirely. This behaviour requires a specific thinking coupled with consistent action and needs to be identified as necessary or optional in your leaders.
ARTICULATES A CLEAR VISION AND GOALS FOR THE ORGANISATION’S FUTURE
Articulation of vision and goals is arguably one of the most fundamental attributes of experienced leaders. Yet this behaviour is often left for annual company meetings or made the responsibility of one or two senior leaders. When was the last time articulation of vision/goals for the organisations future was measured in a performance review? This area allows the review of a critical leadership behaviour
3. Broad Scanning
Modern day business requires leaders to be explorers, excited by opportunity and uncertainty. Broad scanning and inquisitiveness are the fuel for increasing business savvy, enhancing your ability to understand business mechanics and augmenting your capacity for dealing with ambiguity.
Some leaders seem to have their ‘finger on the pulse’. They are taking advantage of changing market trends rather than being caught by them. They are one step ahead of their competitors. They know what their customers want before their customers do.
There are 11 behaviours that comprise the Broad Scanning capability, some of which are outlined below.
TAKES A “TOTAL BUSINESS” APPROACH
This behaviour refers to a participants tendency to consider the broader business when making decisions, even those limited to their division. Take for example, the Human Resource Manager that creates a means of resource sharing between different silos to increase labour utilization or the Head of Technology who designs exceptional shared services infrastructure.
DRAWS ON MULTIPLE INFORMATION SOURCES
A leader measuring strongly on this behaviour draws on a significant variety of information sources to keep their thinking current. This includes, but is not limited to, external relationships, events, journals, news channels, internal relationships and so forth.
INSIGHTFULLY ASSESSES THE INFLUENCE OF THE EXTERNAL ENVIRONMENT ON THE ORGANISATION
A leader measuring high in this behaviour uses his/her depth and breadth of knowledge to understand the influence of the external environment on the organisation. They use consistent research and knowledge to be able to see cause and effect relationships and are significantly less likely to be caught off guard by an external event (i.e. market forces, competitor actions).
SEEKS INPUT FROM CUSTOMERS AND IS SENSITIVE TO THEIR CHANGING REQUIREMENTS
A leader scoring highly in demonstration of this behaviour proactively seeks customer feedback, is connected to the customer experience and can speak with insight and authority on a customer’s changing requirements.
4. Strategic Alignment
Strategy, at its simplest, can be seen as a collection of key choices and corresponding manoeuvres that an organisation (or department, team or individual) intends to take in pursuit of its vision, goals and objectives. Further, strategy describes the moves an organisation will take in order to achieve its desired future state and takes into account the expectations of the organisations key stakeholders (customers/clients, employees, shareholders etc).
The best organisations usually write their strategies down in an ‘strategic plan’ which covers the broad areas of activity that the organisation will pursue/not pursue. Strategy, however, is not planning. Planning is merely a part of the strategic process. Many organisations have a strategic plan, very few are effective at executing strategy and one of the key drivers of strategic execution is leadership.
There are 12 behaviours that make up the Strategic Alignment capability. Some of those are outlined below.
DEVELOPS AND DEPLOYS LONG AND SHORT-RANGE GOALS CONSISTENT WITH STRATEGY
This behaviour refers to a participant’s tendency to align short and long term goals with the organisations strategy in a way that makes sense to peers, direct reports and managers. Goal setting in alignment to strategy is a key step in strategic execution. This capability enables you to measure and manage this behaviour
EFFECTIVELY USES METRICS AND MILESTONES TO HOLD PEOPLE ACCOUNTABLE
It is interesting to note that organisational strategy changes frequently, yet KPI’s that drive organisations can remain constant for years. For example, sales KPI’s remain “revenue and conversion” while company strategy moves to initiatives like creating better customer experience and greater loyalty (neither driven purely by sales).
Critical to effective strategy execution is the intelligent use of metrics and milestones as a means of holding people accountable to the behaviours that drive the strategy.
CLEARLY AND CONSISTENTLY COMMUNICATES STRATEGY TO ALL STAKEHOLDERS
Ideally corporate vision and objectives are cascaded throughout an organisation such that what happens at a grass roots level supports high level strategy. Gaining buy-in to what the organisation is trying to achieve is key. How a leader communicates with key stakeholders and how frequently and clearly is a critical lever for strategic execution.
TAKES ACCOUNTABILITY FOR STRATEGY EXECUTION
Strategy is the remit of all managers. A common misconception is that strategy is only for directors and senior managers. Nothing could be further from the truth. This behaviour seeks to ensure continuity between the expectations of senior leaders and the managers taking accountability (or not, as the case may be) for strategy execution.
Collaboration is your ability to work cooperatively with others, to be part of a team and to work together as opposed to working separately or competitively. It means working with others towards shared goals and creating group synergy in pursuing collective outcomes.
This does not mean leaders ‘get along’ with others. Instead, if you are high in this capability you actively participate with others and enjoy building the capability of those with whom you lead and collaborate. You actively engage and develop those around you to get the job done.
There are 5 behaviours that make up the Collaborative Capability. Some of these are outlined below.
IS COOPERATIVE AND SHARES INFORMATION WILLINGLY TO IMPROVE THE ORGANISATION
Sometimes leaders in particular business units and silos have poor habits around information sharing. A lack of awareness can cause leaders to not volunteer information until someone asks for it. This behaviour, therefore, measures the degree to which a leader proactively shares information and cooperates to improve the organisation.
BUILDS TEAMWORK AND FOSTERS COLLABORATION
This behaviour measures a leader’s tendency to actively foster teamwork and implement initiatives and management techniques that drive collaboration. This could mean rewarding teamwork and creating situations that engender collaboration rather than waiting for collaboration to occur organically.
COLLABORATES ACROSS TEAMS, FUNCTIONS AND REGIONS – FINDING COMMON GOALS
Most organisations have silos, even in shared office space working towards the same strategic outcomes. This behaviour therefore, seeks to measure the degree to which a leader drives collaboration across a variety of barriers (geography, business unit, country) and creates common goals to perpetuate collaboration.
6. Resource Management
Resource management refers to a leader’s ability to determine the resource requirements of a project, analyse what the organisation has, deduce what is else is needed and acquire what is left. The fundamental forces at work when considering resource management can be simplified to the concept of Have, Need and Get.
The Business Acumen Gauge measures how a leader aligns resources with strategic/tactical plans; how resource use is reviewed against plan; how organisational processes might be reviewed through a resource management lens and how a leader manages and reduces waste and inefficiency.
Resources in this instance refers to internal/external, financial, human capital and physical resources. There are five measured behaviours, some of which are outlined below.
KNOWS HOW TO GET THE APPROPRIATE RESOURCES TO DELIVER PROFITABLE OUTCOMES
The initial phase of any project is the assessment of the resources currently at hand, clearly defined working parameters, the goal and success measures. The “Get” function is directly linked to the projects overall goals and objectives, budgetary constraints and risk assessment.
PREDICTS FUTURE RESOURCE REQUIREMENTS IN AN APPROPRIATE TIME FRAME
A leader’s ability to predict resourcing requirements is essential for the function of any organisation. Take, for example, the Human Resource Manager that doesn’t plan ahead for a significant spike in human capital requirements to support growth in a particular area of the business (reactive hiring). Production requirements can’t be met and a significant opportunity is lost. Or consider an Operations Manager so caught up in the day to day that she/he neglects to see that current plant and equipment will be insufficient to meet an impending seasonal demand. A competitor will fill the gap left by under-supply. This capability allows you to measure and develop a leader’s ability to predict future resource requirements.
ELIMINATES WASTE AND INEFFICIENCY
Organisations pay consultancies to audit their businesses to eliminate waste and inefficiency. Yet daily leaders are presented with evidence of inefficient practice and resource waste. They may overlook this evidence for a variety of reasons including a lack of awareness or an assumption that the function is the responsibility of someone else. This behaviour allows you to set an expectation with leaders and develop their awareness of waste and inefficiency
7. Systems and Process
The System and Process capability refers to the arrangement of management and staff, their roles, functions and business administration requirements; the role of business systems, business equipment and inventory management systems; and policies and procedures pertaining to business functions.
It requires leaders to have a sensitivity to the balance between people based and automated processes, and to use their wisdom to identify, create and continuously improve business systems and processes. Some Systems and Process areas are explained below.
INTEGRATES AND COORDINATES APPROPRIATE SYSTEMS AND PROCESSES
A leader’s ability to integrate and coordinate appropriate systems and processes for their business unit or organisation is a key behaviour to ensure effective function. Such an integration may take a team of engineers or one or two support staff (i.e. to improve an administration function). The behaviour of the leader (to coordinate and integrate appropriate systems and processes) remains constant and is what is being measured here.
ENSURES EFFICIENT AND EFFECTIVE USE OF INFORMATION SYSTEMS
An information system may exist within an organisation that is poorly utilized resulting in lost resources or missed opportunity. Take, for example, a Customer Relationship Management (CRM) System. CRM’s can give priceless consumer insight and radically change the customer experience OR they can become an administration burden for employees and be plagued by technical difficulties. Leaders play a significant part in the effective and efficient use of these systems and this behaviour allows you to measure your leaders competency in this regard.
8. Decision Making
Decision making is based on insights gained through Broad Scanning, intuition and analytical and conceptual thinking. Essentially leaders make two basic kinds of decisions: those that ‘just happen’ and those that are arrived at by using a specific process.
Through the Business Acumen Gauge we break down decision making into repeatable behaviours that will produce good decision making when measured and addressed. These behaviours asses how leaders collect and evaluate information, how they use intuition and how they take into account the impact of their decisions on others. Examples of Decision Making behaviours are outlined below.
COLLECTS, EVALUATES AND TESTS INFORMATION TO FIND THE IMPORTANT ASPECTS OF THE ISSUES
Modern day business often compels leaders to make quick decisions. Though quick decisions can produce quick results they also fall victim to some key decision making pitfalls. This behaviour therefore seeks to measure the degree to which a leader consciously collects, evaluates and tests information to find important aspects of the issue before making a decision.
TAKES INTO ACCOUNT THE IMPACT OF DECISIONS AND ACTIONS ON BUSINESS PERFORMANCE
Almost every professional with more than a few years of working life under their belt has witnessed decisions that have an adverse effect on business performance. This can be for a variety of reasons. It is therefore important that leaders create a habit of taking into account the impact of decisions and actions on business performance. This behaviour allows you to measure this.
USES INTUITIVE INSIGHT, LOOKING BEYOND THE DATA, TO WEIGH UP OPTIONS
Big Data, advanced analytics and business intelligence software all present leaders with unparalleled amounts of data. Yet especially where human elements are involved, intuitive insight is critical to make a balanced decision. This behaviour measures the degree to which a leader uses intuition versus becoming over reliant on hard data during decision making.
9. Talent Development
The Talent Development capability is more than just wanting to improve an employee’s performance. This capability speaks to a leader’s tendency to give useful feedback, spend time with their people, have quality development plans in place and ensure their staff feel encouraged and supported. Leaders measuring strongly in this capability are focused on their teams long term development needs and are actively approached by members of their team for feedback and coaching.
Examples of Talent Development are outlines below.
ADEPT AT IDENTIFYING AND NURTURING DIVERSE TALENT
A sophisticated eye for talent is a rare and valuable leadership capability. Even where recruitment is external to the leaders function and their people are selected for them, a leader adept at identifying and nurturing diverse talent will create a high performing, loyal team. Recognising hidden talent in your existing staff, identifying transferable skill sets and nurturing talent from a variety of different employee demographics is the behaviour this competency will help you identify and measure.
USES QUALITY PROCESSES FOR BUILDING THE CAPACITY OF STAFF
Staff development is a journey. Performance reviews are more frequently something to be avoided than cherished. This behaviour identifies the degree to which leaders systematize the development of staff. Giving others opportunities to practice new skills and build capability is an element of great management/leadership, however, creating quality processes for building the capacity of staff will ensure individuals continue to improve over the months and years and reap the engagement and reward that comes as a consequence.
WORKS EFFECTIVELY WITH A DIVERSE WORKFORCE
Diversity is the reality of modern business. It is a function of the society we live in and a means of creating higher performing teams. This behaviour offers the rare chance to review, in simple, pragmatic terms, how effective leaders are at working with a diverse workforce.
10. Duty of Care
The Duty of Care capability starts with caring about the impact your actions and decisions have on others and extends to consideration for your organisation at large, the economy in which you operate and the environment and society you take from and contribute to.
A duty of care is entrusted to a leader but is not their possession. It is the choice of service over self-interest and requires one to be deeply accountable for the outcomes of their organisation. Some Duty of Care areas are outlined below.
TAKES RESPONSIBILITY FOR THE WELLBEING OF HIS/HER STAFF
This capability measures the degree to which a leader takes personal responsibility for the wellbeing of their staff. Balancing work load and work life balance, supporting staff when personal issues impact their work, ensuring staff have the facilities required to healthily fulfil their duties are all basic expressions of a responsibility for staff wellbeing. Wellbeing can sometimes fall to leaders with titles like People and Culture Manager, resulting in complacency or a lack of attention on behalf of the BU or division leader. As such this capability offers the opportunity to establish the responsibility of leaders and their actual capability.
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