Business acumen is “keenness and speed in understanding and deciding on a business situation.”
Companies want to develop these traits, especially in their senior managers – but also in the workforce at large. Most companies would like a corporate culture that nurtures these qualities, although some recognize that you introduce an element of unpredictability, even anarchy, when you encourage people to make their own decisions. So the culture has to be strong enough to benefit from independent thought, and the company goals and needs have to be clearly and widely understood.
The component pieces for a culture of business acumen are:
- A common language – the language of finance
- Speed and accuracy in the flow of information
- Teamwork, with understanding and respect for other departments
- The ability to visualize the issues clearly and simply
- Support and rewards for decision-making
- Feedback on the results of decisions
- Awareness of the company’s evolving strategic position, its needs and goals.
All seven of these aspects of business acumen are developed in each and every person who attends an Income/Outcome workshop.
Teams of participants compete against each other, running simulated businesses, trying to be the most successful. They have decision-making control over strategy, borrowing, expansion, niche markets, cash flow, cost structure, and pricing. They are fully responsible for their results, and all teams publically analyze their financial results each round of the game.
There is, deliberately, a lot of information to be absorbed, discussed, analyzed and acted on. Especially in the longer workshops you can tell at the end of the first day which couple of teams are likely to win, and which don’t have a hope in hell. It has nothing to do with the strategy they choose (any strategy can win, if well implemented) or the financial results posted thus far. It has to do with which team is working well together – sharing information, discussing ideas, making plans. As in the real world, the ability to work as a team is a crucial aspect of business success.
The game-board itself develops the ability to visualize business concepts as well as to discuss business in financial terms, because the board is organized to reflect the structure of financial statements. The Income Statement is in one area, with costs and expenses grouped formally; the Balance Sheet takes up the remainder of the board, with separate areas for Assets, Liabilities and Equity. All fundamental concepts, from cost structure to cash flow to key ratios, are demonstrated on the board itself. The visualization is powerful, and unique to Income/Outcome.
The visualization is then transferred, through The Company Board module and the iPad app, to the real-world client. The real-world financials are modeled on a game-board, and participants review the company’s strategic position and, typically, argue about the best way forward. We encourage a CFO or Controller to visit the end of a workshop and make a presentation – they are invariably amazed and delighted at the energy level and engagement, at the end of a long workshop on finance!
We have been teaching business acumen for 20 years, with consistently positive feedback and results. One of our largest clients used Income/Outcome to change the corporate culture as part of a turn-around from losses of half a billion dollars a year to profit within three years.
Two others of our clients merged in an effort to combat competition from China, then restructured the entire company, shedding the old cores of the business and evolving into new and more profitable areas. Income/Outcome not only developed the skills for the necessary strategic thinking, it clarified the need for radical changes and thereby helped create support and ease the pain.
Yet another client has become so enchanted with the game-board visualization of their company that they have bought separate boards with all the additonal game pieces to model each of their recent financial reports, glueing each together as a permanent display. They bring them to senior meetings to help engage and focus discussion of the strategic issues.
Yes, business acumen can be taught. And one good simulation-based workshop can develop every aspect of it in every participant. Not just financial terminology and basic ratios, but the big picture of what makes a company healthy, and the importance of information, and improved teamwork – and the ability to actually visualize all key business concepts.
We do it every day.