To make an impact, the most important ingredient for any business leader is their level of business insight. Irrespective whether you are the CEO, Strategy Manager, Product Manager, Software Development Team Leader, HR Manager, Engineer or Financial Controller – no leader can add significant value without business acumen and if they don’t:
- know how their business works,
- have a good handle on how to measure performance,
- know their competitors and markets inside out, and
- have a deep connection with customers, suppliers and partners.
A Sales Manager adds value by combining customer insights with business insights. Factory Leaders add value by combining operation insights with business insights. A Finance Manager adds value by combing financial insights with business insights, and similarly, an HR manager adds value by combining people insights with business insights.
This, of course, is a pretty obvious observation. And yet when I speak with leaders from different disciplines, especially the more internally focused functions, most aren’t able to answer the following questions:
- What’s the gross margin of your biggest product / service?
- Who is your largest supplier?
- What’s the competitive advantage of your most aggressive competitor?
- What’s the total invested capital in your company?
- What’s your companies EPS and how does this compare to other competitors?
- What’s the market share of your top 3 product / services?
- What’s the largest growth driver of the company?
- How do the shareholders in your company measure success and how did you perform against this yardstick?
- What’s the gross margin of your distributors / retail partners?
- Who are your three largest clients?
These are the baseline questions you as a leader should be able to answer. So if you want to build your understanding of your business here are 4 innovative ideas you can do on your own in order to increase your business acumen.
1. Business Model Canvas
I personally love this exercise as it provides you with an opportunity to capture your company’s business model (how you make money and what are the most important elements) in a single A4-sized sheet. Focus specifically on identifying the different customer segments, what value proposition the company offers them, how you serve them and what partnerships you need to create these value propositions.
Another opportunity in doing the business model canvas (if possible with your team) is that it gives an opportunity to come up with innovative business opportunities.
2. Be the CEO
In this exercise, you have to pretend that you are the CEO and that you have to represent the company to outside investors who are interested in acquiring a share in the company. Articulate:
- the beginnings of the company and what made it successful,
- where it stands now, including the company’s unique strengths and weaknesses,
- where it’s going (your strategy and plan to execute it), and
- how you’re doing against targets and measures.
A variation of this exercise is to regularly ask yourself, if you were appointed CEO tomorrow what are the three things you would do to achieve your company’s business objectives.
3. Pop Quiz
Take a colleague from a completely different function out for lunch. During lunch ask them to give you a pop quiz on their function. These can be similar to the questions above. You can of course also do this with your own team during your monthly review meetings and organize a pop quiz with prices.
4. Business Challenges
This exercise is aimed to first identify the top 3 business challenges that the company currently faces. Translate those business challenges into what you think the leadership challenge of the company is. Last, but not least, convert these leadership challenges into challenges for your department, function and job.
Ask feedback from your bosses and ensure that the challenges you have identified for yourselves are aligned with where the company is going.
If you look at it, there’s no function within the organization that isn’t contributing to its topline, directly or indirectly. For you to be a strategic partner to the business you’ll need to know your contributions and how you can impact it to a greater extent. And you can’t achieve this if you remain closed within your function and don’t enhance your business acumen.