September 13, 2011
So often in our attempts to get on the same page, we overlook the fact that organizations—like books—have many different pages. It’s how all of the pages combine to create the entire book, or the entire organization, that is most important. In your company (and most others), the various functions and departments (the pages) have different areas of focus, specific divisions of labor. But when they work together, they should all have unity of purpose.
The chart below shows some of the key functions that exist in many organizations and the drivers they usually focus on.
It’s entirely appropriate for different functions to focus on the 5 Key Drivers in different ways at different times. But with this focus, they need to make sure they are not sub-optimizing the whole. They must continually see the big picture and understand how their actions are affecting all of the drivers (cash, profit, assets, growth & people). You can see from the chart above that most senior leaders and CEOs of public companies focus primarily on growth and profit, as these tend to drive stock prices higher. You will often hear CEOs state that the goal of the company is something like “To build a profitable, growing, and enduring company.”
It seems simple when presented, but not so obvious in daily practice. When you talk with people in other departments, look at the issue or topic at hand from their perspective and from their functional responsibility. One of the most important applications of business acumen is communicating with colleagues from other departments on the basis of what’s important to them. When a human resources officer speaks with a finance manager about a key initiative, talking about employee satisfaction might result in impatient yawns. However, discussing cost of capital, return on investment, and the expense reductions realized from the initiative will get the finance manager’s attention. If you connect with what’s important to people in other departments, they’ll pay more attention to your ideas.
August 9, 2011
Some VP over at Netflix has had it with HR not getting it. They recently posted a job opening for a Director of HR who, “…thinks business first, customer second, team and talent third.”
Further, they make it clear that they are NOT looking for, “A Change Agent, an OD Practitioner, a SHRM Certificate, a People Person, a policy or guideline writer.”
Gees! Tell us what you really think Mr. VP.
Now before you go off spouting comments like these…
- “I see it as a sad “tough guy” type ad that could lead to real problems if taken and “executed” as stated.”
- “I am not sure what they are looking for, and I am not sure they are either.”
- “They’re trying WAAAAY too hard to sound trendy and current. In their attempt to be edgy, they come off sounding like they’re missing the boat. Without talent, they don’t have “business first” at all.”
- “I have a huge issue with ‘talent third’. Goes against every bone in my body I’m afraid, not just as a HR professional, but as someone who actually cares about people on a personal level.”
- They drive and are driven by the business.
- They regularly partner with line executives in developing and implementing business and HR strategies.
- They are focused on the key levers that determine competitive advantage and performance.
- They set and stick to a few critical priorities.
- They regularly measure progress and impact and use the data to stay on course.
- They develop and work toward a coherent and integrated HR system.
- They ultimately create a situation in which their organizations’ executives cannot imagine running the business without paying careful attention to HR.
Sound like Netflix and SHRM have more in common than one would think.
Here’s the bottom line, it’s important. We’ve been preaching for years that professional excellence is not enough, and that your most valuable employees are great business people first and great HR leaders, great engineers, great sales people, great _________ (fill in the blank) – second.
If you really want to build your career and your credibility, you need to get “it” (the business of your business). Or in other words you need to develop your business acumen.
July 13, 2011
Cash is fuel. Without it, the engine of a business can’t run, the various moving parts can’t function, and eventually the business slows down and dies. But for businesses flush with cash, the engine keeps revving faster and faster. In a 1979 interview, Fred Smith the founder of Federal Express said, “People thought we were bananas. We were too ignorant to know that we weren’t supposed to be able to do certain things” (New York Times, January 7, 1979). Federal Express’s first two years were grim. In fact, on its first night of business, the fledgling company shipped only 186 packages onto its 14 Falcon jets routed to 22 cities. It was not uncommon for Federal Express drivers to dig into their own pockets to pay for gas. Despite Fred’s $84 million in start-up capital (another term for cash), Business Week reported that within a few months of delivering his first packages in March 1973, he was desperate for cash. The challenges and risks of starting a major global business were significant. Federal regulations were severely hampering his efforts to compete with the U.S. Postal Service. Suddenly, he didn’t have enough cash to cover a $24,000 jet fuel bill. So what did he do? He went to Las Vegas and played the blackjack tables. He won $27,000 and wired it back to headquarters. Fred’s company was the first American business to hit $10 billion in profits…and you know the rest of the story.
I wouldn’t recommend using this strategy (blackjack) to get cash for your business—or your life! But it’s tempting for people and businesses to take risks when they need cash now to ensure future survival.
Depending upon your role in your company, you will have different opportunities to impact cash. Just remember that fundamentally you can impact cash by increasing revenues (cash in) or reducing expenses (cash out). For example, if you’re in sales or marketing, you can help generate more cash faster by increasing sales revenue. If you work directly with customers, you can provide excellent service so that customers are more likely to continue buying from the company. If you’re in accounting, you might negotiate longer payment terms with suppliers (but be careful that you don’t negatively impact the relationship or give up discounts for early payment) to hold on to cash as long as possible. Or you might work to make sure more customers pay their bills on time or early. If you’re part of the financial management staff, you might be responsible for looking for better financing terms on loans for new equipment.
HR professionals need to be able to clearly articulate the relationship between their people strategy and the company’s financial strength. A study conducted by Cornell University suggests that employees that are managed with progressive HR best practices are more committed to the company, and that this commitment leads them to exhibit proper role behaviors (thus lower workers’ compensation costs, higher quality, and higher productivity) and not to engage in dysfunctional behaviors (that would result in shrinkage). HR professionals who see the big picture and know how to talk about their people initiatives within the context of strengthening the company’s cash position are seen as leaders in the HR field and earn a seat at the table of the big meetings.
No matter your role or your experience, you can work to contain expenses and reduce the outflow of cash by cutting down on all waste. You can get the most out of resources like computers. You can find ways to get jobs done more efficiently so that less money is spent. You can provide amazing service to those that drive revenues (you’re either selling or supporting those who do). If you can contribute to your company’s cash and cash flow, you’ll be valued as employee who practices business acumen – and you’ll help keep the motor running.
June 7, 2011
We understand our jobs. The big picture, on the other hand, seems so complex.
Complexity is an underlying challenge in any business, regardless of size, industry, or stage of development. Large companies, especially, have many moving parts—departments and divisions (always reorganizing), product lines (always changing), layers of management, unclear decision-making processes, shifting budgets, new strategies. A small problem within any single element might produce a ripple effect throughout the organization, requiring major repairs. But without knowing the true source of the difficulty (not always readily identifiable), we might “tinker” and fix the wrong thing.
Developing business acumen helps us cut through this complexity, get a bird’s eye view of a business, and understand our specialized roles within it. Simplifying complexity and broadening our understanding of our business better enables us to fix present problems, prevent new ones, and take advantage of opportunities to grow.
How do we simplify the complex? By looking at the key drivers that make all the parts run. When you break down even the largest, most complex multinational company—like Exxon Mobil or Boeing—into its most fundamental elements, you’ll find the same drivers that power your business, or any business. What are those drivers?
How did we distill it down to these five? We used the core financial statements—the income statement (profit), the balance sheet (assets), and the statement of cash flows (cash)—as the foundation. These are the statements every company uses to judge its current strength and its future prospects. The fourth driver—growth—is reflected in all of these statements and for public companies is an important objective for shareholders. And the fifth driver is quite simple—without good employees and vendors providing value to paying customers, the other four drivers cease to exist.
Like the twenty-six characters of the English alphabet, the 5 Key Drivers combine in a multitude of ways to form the foundation of organization, products, market position, financing, human resource decisions, and every other strategy or decision in a company. Leaders must set and achieve goals and obtain results in these five areas in order to achieve the most important objective for any company: long-term, sustainable profitability.
The 5 Key Drivers will help you to understand and visualize how even the most complicated business can be analyzed and improved. And to learn how you can better contribute to your company’s success, to become more visible and valuable.
You’ve probably heard of these essential elements, but you may not really understand their full importance and interdependence in creating sustainable financial success. While each driver is unique, it is also completely dependent on all of the other drivers. You cannot affect one without influencing performance of another. Leaders have to take the connections between the drivers into account as they make their decisions, or they risk becoming overly focused on one driver and leading a business into the ground.
Your ability to understand these relationships and affect these drivers through your decisions and actions can increase your own ability to contribute to the long-term profitability and growth of your company. But to do this, you need to understand how people communicate about these drivers.
The language of business is finance. And finance means numbers. And numbers intimidate many people. But if you think of financial statements like you would a health report from your doctor, you may not be as intimidated. You don’t need to understand every number or how it was calculated, but recognizing a critical few pieces of information—those that reflect the 5 Key Drivers—will help you understand the health of any company.
- If you want to be more visible and valued, then demonstrate that you understand how your department or unit fits into the big picture of the overall business.
- If you want to influence the thinking and decisions of your supervisor or manager, address the topics that senior leaders, including your boss, are concerned about. Communicate your ideas and proposals in language that he or she understands.
- If you want to be seen as a major contributor, show that you understand the relationships among the key drivers of your overall business—not just how your department works.
- If you want to be a more effective leader, better able to engage your team, link your team’s actions with the overall needs and strategic goals of the company identified by senior management.
Keep in mind, even your manager might not be as knowledgeable in some of these areas as you think. But I encourage you to ask questions and be willing to act on the answers. You’ll be recognized as a contributor—somebody who demonstrates business acumen through savvy questions and effective actions. In short, you’ll be acknowledged as someone who sees the big picture.
May 9, 2011
Each time I present the asset portion of our Building Business Acumen course one of the participants will usually suggest, “in our company people are our greatest asset”. I will usually push back to determine how strong their conviction is and will find the class as a whole defending their colleague’s expression in adamant agreement.
After multiple experiences such as this, I find myself contemplating two questions on this topic. First, why is this important for our employees to feel like valued contributors, “our greatest assets”, and second, what are some basic business acumen principles that help to establish this type of culture.
Why is it important for employees to feel like our greatest asset?
First, when employees feel as though they are engaged and contributing to the overall success of the organization their intrinsic drive will motivate them to build greater competencies and skills, become more productive, and create an environment ripe for success.
Second, this environment nurtures the desire to succeed. No one is walking into work thinking, “I hope I stink it up today”. Employees want to do a good job. They want the autonomy to make decisions that add value; they want to be in control of their success, and they want to feel a connection to the team and the cause. Engaged cultures breed individual and organizational success.
Finally, business leaders have not had to worry as much about retention during the last few years. Employees for the most part have been grateful to have a job (as we recover from the great recession though this may change). Employees that question their value or ability to contribute will begin to exit and move to other opportunities. Business may loose strong employees all because they do not feel as though they are successfully contributing to the overall success of the company.
Three Best Practices for Engagement Culture
So, what do business leaders do to build a valued contributor culture? How do these leaders help their employees feel like they are the company’s “greatest asset”?
First, trust your employees—When a leader exhibits trust in the employee the employee develops confidence, which produces better performance. When an employee feels as though they are not trusted, they doubt their performance and they’re fearful of making mistakes, thus decreasing performance. Trust requires a business leader to let go of control and allow for autonomy. It is a must for business to succeed.
Second, recognize employee contribution—Leaders are often pretty good at identifying when things have gone wrong. Work to identify those things that are going right. Never forget that most of the time employees are doing things right, recognize it!
Finally, include employees in decision making—As a leader increases employee involvement in the business, employee commitment to the success of that business increases. Great leaders recognize that they may not have all of the answers and see the value of including others in business decisions.
In the final analysis, employees are the greatest assets for any company. Although cliché, the more a leader recognizes and works to reinforce the expression, the greater the company will succeed.
April 11, 2011
Up at 5 am and off to the office two hours early to help your team finish up that big project that’s expected to be the next most pivotal moment for your company and personal career. Well, at least that is what you tell yourself as you race in and battle the daily grind. But do you really know if your two hours of overtime is good for your company? Like it or not, your seemingly insignificant decisions make a bigger difference than you probably think.
So how do you make sure your making a positive difference? Think of your company like it’s one giant machine with many different levers – when someone from HR pulls a lever it impacts how the machine operates whether you like it or not. Likewise, someone from IT can change the output of the machine by simply pulling a lever. Pull the wrong lever, or pull it at the wrong time, and the machine simply doesn’t produce its potential. To consistently make a positive difference you need a better understanding of the machine (your business) and a better understanding of what happens when you pull a lever (your decisions).
Your two hours of over-time to complete a project is a seemingly small decision, but what about the impact of fifty or even hundreds of individuals requiring two hours of over-time? Now we are looking at a significant impact to the bottom-line and the way the business makes, or does not make, money.
The shortsighted manager in charge of the overtime lever will insist that the customer is counting on their team to put them first and complete the project as originally proposed… and so they pull the lever. The manager with business acumen is digging deeper because he or she understands how the decision to work overtime is impacting the company as whole… Are we setting the right expectations up front? Do we need more training on contract negotiations? Do we need to better communicate internally about project priorities? They’re using their business acumen to tap into the right processes, people, and resources to improve their decisions.
The more you know and understand the business, the more you are inclined to adjust your decisions to positively impact the bottom-line. Perhaps today was more of a pivotal moment in the company and your career than first thought. And to think it came down to a better understanding of the impact that two measly hours of over-time has on your company.
March 8, 2011
Recently a leader in the aerospace and defense industry hired MetrixGlobal (an independent Training ROI research firm) to evaluate their Building Business Acumen® course (that’s us). At the beginning of the course we asked the participants the same ten questions that we’ve been asking at the beginning of every course since 2002.
- How much cash is on hand?
- How much cash is generated from operating activities?
- What are total revenues (sales)?
- What is the net income?
- What is the net profit margin?
- What is your inventory turnover?
- What is your return on assets (ROA)?
- How much are sales growing year over year?
- How much is net income growing year over year?
- How much is earnings per share (EPS) growing year over year?
This little pop-quiz has probably been conducted tens of thousands of times to over 75,000 business people in over 20 different countries – and the results are pretty consistent: 80% of employees don’t know the answers. This client was no different.
So we got to work helping them understand why these measures are important, how to find the answers to these questions, and how to make better and faster decision based upon their understanding of these questions.
This sounds all very number-ish, but MetrixGlobal’s study didn’t evaluate a participant’s financial understanding, rather they measured how well participants applied what they learned and the impact these actions had on their organization.
The study found that overall two-thirds of participants applied what they learned, resulting in improved business performance, teamwork, collaboration, and communication. It went on to report that manager’s decision-making and people’s actions are now more tightly aligned to business priorities. The report estimated that these benefits produced more than a 300% return on investment (we’ll take that).
There’s no question that participants increased their financial literacy, but that wasn’t the end goal. The client was looking to…
- Increase bench strength
- Accelerate the development of their high-potentials
- Clearly communicate vision and strategy
- Address key business challenges
- Create alignment around their executive initiatives
They recognized business acumen as part of the solution and this study has validated their strategy. But the study also validates what we’ve been pushing for years, when you help employees understand the measures and teach them how to tap into the right people, processes, and corporate knowledge you get better results – you get people with business acumen – you get business leaders.
You can download the report here: MetrixGlobal Business Acumen Evaluation
February 14, 2011
Consumers are spending less, and therefore businesses can’t spend as much. And when businesses can’t spend as much, they have to make cuts to maintain profits (profits being the largest driver of stock-price…and stock price going up is what shareholders and boards are demanding). Customers recognize these cuts when their service diminishes (the business reduced headcount), store locations shut down (the business consolidated locations), or when products lack innovations and standout features (the business pushed projects out). These cuts impact a business’s long-term ability to be relevant to the very customers that they’re trying to sell to. Kind of a vicious cycle, isn’t it?
This cycle is justified by businesses who tell themselves,“we just have to white-knuckle our way through this in the short-term,” or “these cuts won’t really hurt the customer.” Others feel as though their hands are tied,“our shareholders are demanding cuts so we don’t have a choice.”
The temptation is to rationalize that a small cut here – a little slice there – won’t hurt a business’s ability to get and keep the customers that they desperately need to achieve sales growth. Such myopic thinking misses the point… the customer is the way out of this cycle.
So, what now? What can you do to help maintain the exact thing that will keep a company viable, a shareholder happy, and actually help a company grow with so little growing these days?
Focus on your customer now…
more than ever. Period.
Here’s one idea: On a monthly, maybe even weekly, basis take an inventory of your ability to exceeded your customer’s expectations by answering four questions:
- Who’s your most important customer?
Write it down and post it on your wall where you can see it.
- What do they most want from you?
Write that down too. Share your answer to this question with your customer (or ask your customer to answer this question for you).
- How are you doing currently?
Grade yourself on how you are doing on #2 and ask your customer to give you a grade too. See how close your assessment is to theirs.
- What will you do from here?
Write-down 2 action items that you will do this month to improve your score (and if you don’t have answers for #2 and #3, then getting those answers should be your starting point).
Answering these 4 questions consistently will help you win in a time when there aren’t many winners. Today, it’s not enough to merely meet a customer’s expectations – you have to exceed them, and even anticipate them. As Drucker famously wrote, “The purpose of business is to create and keep a customer.”This adage is as true today as it has ever been, and it’s a sure-fire way to practice your business acumen to gain and sustain sales growth in a down economy.
January 6, 2011
If you’ve ever taken our course, or sat in one of Kevin’s presentations you’ve seen our Five Business Drivers model.
Cash is measured on the Cash Flow Statement, Profits are measured on the P&L, Assets are measured on the Balance Sheet, and analyzing these financials over a period of time will help you measure Growth. And then there’s that Fifth Element: People, which sometimes takes a backseat. Just ask any business Executive how they measure the success of their company and they’re likely to have an answer that has something to do with one of the first four drivers. Sure everyone agrees that people are our most important asset, and we all get it… it’s the decisions of people that drive the numbers, but we struggle to measure the performance of people.
Look, in an increasingly complex and global business environment, producing and recruiting top level talent who aren’t afraid of change, who take the right strategic risks, who bring about unseen opportunities, and who don’t flinch when it comes to creating and recreating a competitive advantage will make all of those numbers on your financials look healthy. But too often we measure people by measuring the financial statements; Assuming that if we’re reaching some agreed upon financial goal that we must be managing our people well. While that’s one way to look at, it’s probably not the smartest.
Take Mark Little, his story is shared in Ram Charan’s latest book that he co-authored with Bill Conaty, “The Talent Masters”. Mark was on the path to success as GE’s Vice President of Engineering for their power systems division. This made him one of the top 125 executives at one of the world’s biggest companies. And then disaster.
The rotors that run GE’s turbines were failing, the media picked up on the story, and panic set in that GE would struggle to compete in a very profitable market. The divisions numbers plummeted and Mark was replaced, but he was not let go. Instead he was told that the CEO and Senior Vice President in charge of HR wanted to meet with him personally. What he must of thought would be an exit interview, was anything but. The executives assured him that he had a bright future at GE.
Bill Conaty was that Senior Vice President over HR, and in the book he recalls, “Mark wasn’t just a name on our list, but a guy we knew thoroughly.” If GE would have managed Mark based upon the P&L of his division he would have surly been let go. Today Mark is one of 12 executives that report directly to the CEO. He is a key player in driving the success (the numbers) of General Electric.
Business demands that we measure cash, profits, assets, and growth. If you’re a public company it’s the law that you measure these numbers. There’s a science, agreed upon measurements, and a formulaic system for measuring the numbers. But what about measuring people? Charan and Conaty’s opening sentence hits like a piledrive to the face, “If businesses managed their money as carelessly as they managed their people, most would be bankrupt,” they continue…
“Managing people with precision is without question harder than managing numbers, but it is doable and gets easier once you know how. Companies such as GE, P&G, Hindustan Unilever, and some others analyze talent, understand it, shape it, and build it through a combination of disciplined routines and processes, and something even rarer and harder to observe from outside: a collective expertise, honed through years of continuous improvement in recognizing and developing talent.”
Remember that the Fifth Business Driver is the true measurement of a company’s success, but it doesn’t (and can’t) stand alone. There’s an opportunity for HR professionals to elevate their departments from second class, to mission critical. The CFO and the Senior HR Executive should be seeing the same things, tackling the same problems, and architecting plans to capitalize on an ever changing marketplace. Of course, in order to do this you need to be respected as a business leader first and an HR professional second. Practice and perfect your business acumen to position the Fifth Driver at the center of your company’s success, champion the interdependence of the Five Drivers, and be obsessed with measuring people and numbers.
December 7, 2010
The IBM Institute for Business Value and IBM Strategy & Change recently published the results of their biennial study that attempts to better understand the challenges and goals of today’s CEOs (a link to this report is at the end of this article). IBM’s own CEO, Samuel J. Palmisano, gives a concise summary of their findings…
- The world’s private and public sector leaders believe that a rapid escalation of “complexity” is the biggest challenge confronting them. They expect it to continue—indeed, to accelerate—in the coming years.
- They are equally clear that their enterprises today are not equipped to cope effectively with this complexity in the global environment.
- Finally, they identify “creativity” as the single most important leadership competency for enterprises seeking a path through this complexity.
Ok, I get it – the world is becoming increasingly complex, businesses don’t know for sure how to navigate these complexities, but hey… creativity will save the day?
Now if you’re like me, the word “creativity” instantly conjures up images like this…
…and I start thinking, “We’re doomed.”
If you think of creativity as the ability to create something new which has value (a new strategy, a new management style, a new product offering, a new IT system, etc.) then it becomes clearer why CEOs would value creative leadership as the single most important competency in today’s marketplace. In light of this report, professionals in business would be wise to develop their creativity within the context of creating value (i.e. making money). Doing so will help you navigate the complexities of business, and as the report says, “see around corners, predict outcomes where possible, act despite some uncertainty, and then start all over again.” Or in short, capitalize on complexity. Check out the study…
November 3, 2010
I recently read that Oprah was invited to give the commencement address at Stanford University, and that she gave each graduate a copy of the book A Whole New Mind: Why Right-Brainers Will Rule the Future, by business writer Daniel Pink. Well I wasn’t about ready to let all of those Stanford grads rule the world, so I picked up my own copy and began to read. Here are the first two lines of Daniel’s book…
“The last few decades have belonged to a certain kind of person with a certain kind of mind—computer programmers who could crank code, lawyers who could craft contracts, MBAs who could crunch numbers. But the keys to the kingdom are changing hands.”
How’s that for laying it all out? After reading the introduction I was a little skeptical (ok a lot skeptical), especially since I work for an office full of number crunching, spreadsheet lovin’, financial geeks. Not to mention that we’re in the business of teaching people how to read financial statements (i.e. crunch numbers). So I had my guard way up and was prepared to punch holes in Daniel’s ideas, but quickly discovered that Daniel was on to something. Further, to my surprise, I found many of his ideas in lockstep with the concept of business acumen. Read this for example…
“Much of the Industrial and Information Ages required focus and specialization. But as white-collar work gets routed to Asia and reduced to software, there’s a new premium on the opposite aptitude: putting the pieces together, or what I call Symphony. What’s in greatest demand today isn’t analysis but synthesis—seeing the big picture, crossing boundaries, and being able to combine disparate pieces into an arresting new whole.”
And now compare that to this statement on our website…
“We find that business acumen is often a missing link in leadership and management training today. While many aspects of business are taught in colleges and universities (i.e. accounting, legal, marketing, medicine), these skills are specialized and segmented. This practice produces an excellent understanding of the profession, or skill set needed to get a degree, but creates distance from the whole of running or impacting a business. We believe that every employee needs to understand how his or her role fits into the big picture and how their decisions impact the business in it’s entirety.”
Our point is this; you can be financially literate and lack business acumen. And Daniel’s point aligns pretty closely with ours; employees who understand the big picture (business acumen) will be more valuable than number crunching MBAs (financial literacy). Now before you attempt to change your logical, linear, by-the-numbers, way of doing things – you need to know that Daniel argues that left-brain thinking still matters, but that it’s simply not enough. We make a similar argument to learning and development leaders every day – having an understanding of the financials matters, but it’s not enough. Think about it, who would you rather hire as your store manager: Someone who can read a P&L and define all of its terms, or someone who knows how to think creatively and make decisions that will positively impact the P&L?
Daniel challenges readers to develop a Whole New Mind, one that doesn’t rely exclusively on traditional left-brain attributes. Likewise, Acumen Learning challenges employees to develop their business acumen – to develop a new way of thinking about their role as a business leader. I think we’re onto something! In business the future will be ruled by employees who combine traditional left-brain thinking with right-brain qualities like artistry, empathy, inventiveness, and big-picture thinking – and to me that sounds like someone who could make a real difference at company – or in other words it sounds like someone with business acumen.
October 25, 2010
October 5, 2010
Benchmarks are an important consideration when looking at the overall change in improvement or success of a business. Decision makers that are looking to be an agent of change will typically look at three measurements:
- Internal benchmarks (ROI, ROE, ROA)
- External competitive benchmarks (company #1 ROI compared to company #2 ROI)
- External economic benchmarks (Sales growth compared with an average)
Internal benchmarks are the staple of smart employees that are trying to prepare for change or lead change. From a Sales Director trying to beat last quarter’s results, to an HR director measuring the ROI of a new on boarding initiative – thinking in terms of “return” will help you see the path forward and navigate inevitable changes to your business.
Likewise, looking to see how your company compares to those considered competitors is a smart exercise. Unfortunately, too often even the best employees can’t see the forest through the trees. It’s easy to look at personal performance, department performance, and even company performance and assume that all is well. When evaluating your company against a competitor or the economy try to step back and see the big picture.
For example, the S&P 500 has long been looked at as one of the benchmarks of the US economy and in recent years has seen a decline in the overall average revenue reported by each company ($17.9b in 2008 to $16.7b in 2009). That being said, it is important to point out that not every company and not every sector of the S&P 500 has declined in revenues. Take the telecommunications sector; you will see that the overall sector improved from $427b to $436b. Represented by just 9 companies, that’s approximately a $1b improvement per company in an economy that is showing a decline.
As much as external factors impact the success of the business they are less controllable than internal factors. Nevertheless, employees who practice and perfect their business acumen understand how their decisions play a role in impacting their department, which can impact the company, which can impact the competitive landscape, which can impact the economy. That’s not to say that employee X who decides to loaf around on the job will bring the economy to a halt, but it is to say that employee X is an important part of our economy. Helping employees understand the financial implications of their internal decisions translates to success and improvement externally.
For instance, encouraging internal best practices like continuous improvement, product development, customer relations, employee training, and the like can enable a business to grow and improve despite the external economy. The opposite also holds true; staying the course with what has worked internally for years could enable an external competitor to catch up and potentially surpass you.
Employees with business acumen understand how to benchmark company performance to consistently make better decisions. They’ll know what it takes to stay competitive despite economic challenges and they’ll lead teams that are a step ahead of the ever changing business environment.
September 24, 2010
If you’ve read our last two posts you are well aware that Kevin Cope gets raving feedback whenever he has an opportunity to speak. Well, the accolades continue to come in and I’m going to blog them, until someone tells me to stop.
Recently Kevin received a perfect 5 on his Speaker Evaluation and a 4.93 for his Session Average at Richmond Events CLO Forum (it doesn’t get much better than that).
The 2010 CLO & Talent Managemnt Forum has received excellent reviews from its attendees, thanks in huge part to your hard work for providing the Forum with enlightening and provocative conference session.
Each year, attendees are asked to provide feedback on the quality and content of the conference program, which allows us to gauge our effectiveness and level of success. As a speaker at the Forum, we’d like to share the results with you. The attendees were asked to give each session a rating between 1 and 5 (with 5 being excellent and 1 being poor).
We’ve analyzed the results from your session evaluations with the following results:
Overall Value as a Learning Experience
4.91 Content Quality
4.91 Content match to program description
4.96 Needs met
4.93 Session Average
5.00 Presentation delivery
The following comments were also made about your session:
- Excellent session. Could easily be a keynote with more time
- All presentations should be at this level
- Increased our xxx on the spot! The proof is in the pudding. It was delicious!
- Excellent presentation
- Excellent job showcasing your offering. Well delivered, highly engaging
- Far and away the best presentation I’ve seen so far
- Have the impact list pre-printed.
- Loved interaction /w polling & videos & challenge to think bigger picture. Loved that this wasn’t a sales heavy pres. Painted big picture of the pain and an ‘easy’ solution
- Best session so far. Engaging & excellent. A bit less writing of bullets on screen so could attend. Some ok not so much
- Very helpful info
- Good interaction material. Real timer noting – good learning tool
- The presenter presented difficult info in a very simple, straightforward way. He made it interesting & engaging. I learned an awful lot
Kevin, thank you, again, so much, for all the time and effort you generously provided in putting together your session, and for your participation in making this year’s Forum another resounding success! Please feel free to call us if you have any questions.
September 22, 2010
The SHRM 2010 ANNUAL CONFERENCE & EXPOSITION featured more than 150 breakout sessions featuring leading experts speaking on some of the most important HR topics, including talent management, legislative compliance, strategic HR practices, and global HR issues.
Twenty-five of these experts received a speaker rating of 4.8 or higher (out of 5), making an exclusive list of SHRM’s Top Rated speakers.
Kevin Cope’s Building Business Acumen session almost made this list… just kidding! He made the list.
Here’s the list…
SHRM’s Top Rated Speakers PDF
And we’re not shy, here’s a scanned copy of Kevin’s scores and attendee comments…
Kevin’s Scores & Feedback
Keep in mind that Kevin doesn’t throw out stuffed carrots and talk about soft skills like positive thinking or inspiring creativity. He’s taking the subject of business acumen head on – a subject that most folks shy away from. So what is it about Kevin’s approach to finance that gets an HR person to comment, “Best session of the conference!”
There’s likely a lot of answers, but as I sat and listened to the boss-man give his spill, it struck me that financial conversations are too often reserved for the c-suite, and such a mentality creates a culture of exclusion. It must be refreshing for an attendee to be brought in on an intelligent dialogue about the inner-workings of business, to be regarded as a business person first, and an HR professional second.
One last observation, the room was full of HR professionals of varying degrees of experience. Surly some were well versed in the language of finance and could have easily walked us through their company’s latest financial results. Others would likely never admit this to their boss, but they find financial conversations painfully intimidating. But it’s interesting that the scores and feedback were universally kick-butt positive. Nobody made the comment that the material was too basic, and nobody said the material was over their head. I think this is a clear indication that Acumen Learning is onto something! Our approach to business acumen is unique and different from other ideas out there. It’s an approach that resonates with business people who want to make a difference within their sphere of responsibility.
September 3, 2010
We’ve received Kevin Cope’s “ASTD 2010 International Conference & Exposition Session Evaluation Summary Report” (that’s a mouthful). The scores and feedback were once again outstanding – and we’re going to prove it this year by posting the reports and all 101 comments (even the two comments that were not so positive) here on our blog. We’ve highlighted some of our favorite comments in green and our not-so-favorite comments in red.
Keep in mind that these were hand written comments and ASTD converted them, so some of the comments might read a little funny.
If you’re planning an executive retreat, a leadership summit, a sales conference… whatever… we’d love to be on your keynote shortlist. Give us a call today: 801-224-5444.
- My favorite class so far. Moved at a good speed & included audience nice skill! Liked the voting buttons. Good videos!
- Excellent info, great presentation skills & interaction great presentation in tough subject!
- 5 basic element were great loved the contracting content, and humor
- Know your business so that your ###
- Great session. Challenging concepts made easy! Interactive – great presenter.
- Loved the video clips to make a point polling was great will take some quotes back to the office & post them for everyone to see
- Best session I have attended so far. I have information to share with my business leaders that will help them see that value my team can add to the business…the impact of L & D!!
- I am now interested in knowing more about my company’s annual performance
- The content was to basic for me, but I did get a sense of how to approach teaching others who are at the beginner stage with business acumen.
- Great speaker – great info!
- B.A. was an area which “needed improvement” on my 360: l learned a lot from this presentation to take back w/ me. Thanks ###, to remember cash, profit
- Presentation was invaluable!! Many take aways – knowing where my company stamps and asking my boss ### & question!
- Thank you for sharing your knowledge. I learned more in your 1-hr session then a year with my boss
- Great presenter.
- Great presenter. Awesome engaging
- Great session. Great presenter!
- Would have been better if we got the handout w/the slides I was taking dictation for most of the session.
- Entertaining, in formatting, challenging session. Encouraged to learn more on the topic
- This session was fairly disappointing. I think that Kevin knows some great information but presentation pace, etc. hampered the information. The pace in too fast in the number at slides, etc. ram slides on screen for about 20 in most cases which is ### and counter ###
- Thank you for sharing your knowledge and for making the printouts useful and not just a copy of your slide deck.
- Appreciated the presenter taking conceptual info & making it applicable
- Outstanding – very effective in a short time
- Present / describe as more relevant for “for profit org” consider – integrating a not for profit approach
- Nice info. But was I in the correct session. Look at the description of tu104.
- Excellent model to teach learning profession
- I work for Fed gov’t. There isn’t competition in our market. I will have conversation w/ customers regarding gaps, Great suggestion.
- Great interactive used during session.
- Great speaker, engaging, valuable information that you can relate too.
- Used survey technology to re-in force learning
- Very practical & I learned some new ways I can have an impact at my company. Excellent session
- Really build the pace & enthusiasm good refined delivered in an interesting & relevant way.
- Thank you for the interactivity
- The give aways were unexpected but not really needed because the session content and delivery were excellent. Really liked the way examples were integrated throughout that we could relate to.
- This discussion was by for the best investment of my time so far relative to others attended at this conference.
- Great session!!
- At row your company
- Define. ### how an impact on helps employees understand how they fit into the big picture
- Kevin used the AR ### well – was very engaging and covered a dry topic in an entertaining way.
- Words be helpful to ### skills to ### to the answerless of the model
- Business acumen – imperative to tie learning metrics to financials so learning can be seen as an investment, tangible & intangible, rather than as an experience – Kevin Cope nailed it – excellent content/ platform
- Very engaging presentation – informative, relatable & keep my interest
- Great interaction w/ audience. Put content into understandable terms great practical, usable information. Great videos
- Great presenter! Good topic to learn more about that we in L & D don’t always focus on, but need.
- Would be nice to have handout to make notes on
- Good facilitation skills. Compact but well – organized PT.
- Great presentation!
- Wow! Fun & interesting presentation! The best class I’ve seen to this year!
- Best presenter and applicable content. Loved it!
- Nice to use clackers
- Really helped me to decide to quit my team on our business. Puts big picture perspective.
- Session was good however, more attention could have been ### to ###
- I will get to know my company better – thanks for ### light to this
- Great communication
- Best thus far!
- Real time voting was a great activity. Helpful presentation – good info presented in engaging manner good pacing – great examples that brought principles to life
- Excellent! Best session of the conference so far! Well done
- Best session of conference so far! Will definitely follow-up after conference.
- This was great. Thanks!
- Realistic to today events
- High energy presenter. Excellent use of technology & facilitation methods to rein force concepts. Learned.
- Great session. Interactive, fun & informative. Well done!
- Best presenter I have seen at the conference so far. Thanks so much – guard task
- I expected this session to the buck to L & D more. However, I did learn ideas I can apply to work and personally. Good session
- Taught very systematically. Made it learnable..Taught there would be non about personal credibility – didn’t really feel like “gaining personal credibility”
- Excellent & very practiced & immediately can apply content.
- Excellent – best session this week
- Excellent speaker, format, learning aides. Fantastic!
- Great session! He really boiled down “business acumen” into understanding chunks.
- Learned a lot about, and refreshed my business acumen but difficult to align with ting & development. Very interactive session. Good use of a variety of presentation techniques that work.
- Great job – very valuable. Thank you.
- This session was phenomenal
- Excellent! Favorite/best ROI of all sessions so far!
- A lot of energy – excellent great audience participation
- This session alone was worth every penny I paid for the conference! It was so valuable I am going to completely change my approach to T & D.
- Great presentation!
- Great session!
- Excellent session!
- In my 40 years of owning business and working for a large corp, most still do not understand the importance of people.
- Repeat comments from audience so everyone can hear
- Good points except customer service – Nord stroms is not # 1 (Kohls is) and doesn’t have the highest profit margin
- Amazing session! Thank you
- Did not realize the focus was on sales. As a non-profit-did not apply. Thought it would be more introspective
- Better understanding in loyman’s terms of the fine bush, dreners. Will pick up job aid in your booth usp, appreciated how the handled feedback from bear of room of when he acknowledge answers from audience. Kudo’s & well done!
- Excellent session – one of the best so far interesting interaction lively session – clear, concise delivery. Presentation talks to rather talks at audience.
- The “how do you impact” questions were very helpful in terms of connecting concepts with application
- I’ve attended several financial intel sessions before, first one that actually , “stuck” with me!
- Very good
- My husband is a stockbroker & I know you were right on with the companies!
- Very useful information that was well delivered. Great session
- The best presentation I have attended at the conference. My take away is I need to show my company the cost (vs) return for building my corporate university institute… this is what I have been missing!
- Knew more than I realized made a detailed topic plainer & understandable
- Great presentation style
- Excellent clean presentation – not over the top; the applied it to all fields of business of life. Thanks!
- Learn more about my company’s financials!
September 1, 2010
Selecting the right priorities, understanding the laws of business (the Five Business Drivers), and knowing instinctively how to make money is one thing. But making it happen is something else. Leaders have to deliver results day in, and day out, over the long haul. And profitable and sustainable growth, according to Ram Charan, is what gives an organization energy, builds confidence, and generates the resources to go forward; but none of this happens without people (customers and employees).
Whether you’re a CEO, the head of your department, or just getting your business career started, you must be a leader of the business and a leader of people. Think about it, unless you’re a one-man or one-woman shop, you cannot possibly execute all of your priorities by yourself. A leader of the business knows what to do. A leader of people knows how to get it done. It’s no wonder that at the center of our Five Business Drivers model is People.
Jack Breen is an excellent example of an executive who recognized the importance of a strong people strategy. In 1978 Jack moved from the industrial sector to become the Chief Executive of The Sherwin-Williams Company, a position he would hold for more than twenty years. Jack began his tenure faced with major problems, sales figures had been steadily declining; increased market competition was taking its toll at both the retail and executive levels; and the company was fighting a takeover. After 112 years in the business, it seemed as though the company was on the verge of losing its identity.
“When I came to Sherwin-Williams, the company was in very dire financial straits,” said Breen. “I helped preserve the independence of the company and its determination to remain autonomous.”
There’s no doubt that Jack likely outlined priorities on sales figures, cost savings, cash generation, and other financial measures, but there’s a lesson to be learned from one of his top priorities… spend a full month working in Sherwin-Williams stores. Jack knew that he had to first learn the business, and the way to do this was to visit with customers, then talk to employees and learn from their eyes what they thought were the issues. Jack’s early efforts to connect with his customers and employees helped him sort out and sift out where to focus his energy.
So how did things work out for Jack? When he retired in 2000 the company had this to say about him, “His tenure has been marked by his unquestioned commitment to delivering quality products to the market place (customers), strong rewards to investors (customers & employees), and career enhancing and wealth building opportunities to employees (employees – duh).”
And the proof is in the numbers, under his leadership, the Company achieved twenty-two consecutive years of earnings improvement. Revenues grew from $1.1 billion to over $5.0 billion in 1999 and net income improved from $5 million to $304 million. Sherwin-Williams’ stock price (adjusted for five stock splits) increased from 62.5 cents per share to $27.00 per share.
While it’s true that business acumen has a lot to do with numbers and reports, don’t forget that people are at the center of cash, profits, assets, and growth. Those who understand how to exercise their business acumen to harness the efforts of other people will have an edge – an edge that will help them execute the right business priorities – priorities that will generate financial success.
August 2, 2010
You could say they have their self-interest at heart, since the company and the CEO are more successful when everyone knows how the business works. But it’s not just the CEO who benefits. People feel more connected to their work and have greater satisfaction from their job. And as the company has profitable growth – that is, both sales (the “top line”) and profits (the “bottom line”) increase year after year – there are greater opportunities for people to expand their careers and to make more money.
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July 11, 2010
I recently read the book “Rework” by Jason Fried and David Heinemeier Hansson. It begins with this statement…
“We have something new to say about building, running, and growing (or not growing) a business.”
Based on “Rework’s” opening statement, I expected to read about ideas and concepts that would fly in the face of what we teach to some of the world’s most profitable companies; that every business is the same inside and that there are universal principles of business that are the same whether you’re a street vendor or you’re running a billion dollar company. These rules vary of course, but they don’t change… and they are certainly not new.
The ideas presented in “Rework” will make you rethink hiring, growth, profitability, productivity, and other areas of your business. But with every turn of the page it became clear that the authors intimately understand the principles of cash, profit, assets, growth, and people… the principles we teach in our Building Business Acumen course. That’s not to say that all of their opinions on these principles are right. Nevertheless, the authors understand the principles.
Take Fried and Hansson’s argument for doing less and their call for embracing constraints. This logic doesn’t fit the image of the typical heads-down charging-forward business leader who is constantly pushing for growth. Our course teaches growth as an essential business driver, and one could easily conclude that we’d side with the heads-down charging-forward types. But really our teachings on growth are more closely aligned with Fried and Hansson. I’ve heard our owner, Kevin Cope, say a million times…
“The goal is not growth. The goal is profitable and sustainable growth.”
Unconstrained growth isn’t healthy, and it takes business acumen, or an understanding of the bigger picture, to truly understand why growth for growth’s sake shouldn’t be the goal of any business leader, employee, or entrepreneur. Growth must be balanced in relationship with the other four business drivers… cash, profits, assets, and people.
We echo the words of the authors…
“A business without a path to profit, isn’t a business.”
Employees need to be taught how to think through their decisions, and clearly see how their decisions impact profits and the business as a whole, not just how their decisions impact what they’re directly responsible for.
“Rework” takes aim at many traditional business ideas, but respects the essence of business. Some of the ideas are irreverent, and you may feel at times that the author’s crosshairs are squarely aimed at you (or rather your long-held ideas about work). With that said, you’ll close the book thankful for the author’s willingness to share how they approach building, running, and growing their business. Their version of business acumen is unique and worth reading about.
July 8, 2010
Surviving the recession takes intensity
Ram Charan speaks about his new book Leadership in the Era of Economic Uncertainty. He tells CEOs to go “granular” — be aware 24/7 of their companies’ cash position (Driver #1) and customers’ needs (Driver #5).
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