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Balancing business acumen and functional excellence

Businesses need to be taking a closer look at how they balance business acumen

By Linda Irwin . 02 May 2014

Linda Irwin, Client Director, Executive Education, comments on how in today’s turbulent environment businesses need to be taking a closer look at how they balance business acumen and functional excellence within their organisation. 



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The focus and legitimacy of business schools are in essence a reflection of rapidly changing client requirements that mirror the complexity and challenge of their own environment. 


Traditionally business schools have seen a large proportion of their custom programme revenue derived from organisations that are able to devote the necessary time and financial investment to build their leadership bench strength and organisational capability. The focus of this investment would be in the main to transition functional high potentials to more senior general management roles as well as placing emphasis on senior leaders developing greater strategic change leadership capability. 


However in an ever increasing VUCA world (Volatile Uncertain Complex and Ambiguous) there is an ever increasing need to go beyond this development remit to build sustainable competitive advantage for the organisation, across the enterprise.


A shifting strategic focus 


Today, there is a much clearer and acknowledged remit for business leaders to recognise talented individuals and intact teams who choose to remain as technical specialists and functional experts and who wish to stay in a ‘vertical career pathway ‘. 


More importantly is the shift in recognizing the need for an ‘and /both approach to T‘ shaped talent with both functional and technical depth alongside breadth of commercial and financial literacy, and overall business acumen. This centres on developing an understanding of a more holistic ‘business in the round ‘. 


This organisational capability requirement is seldom confined to industry or function as was often the case. Challenges such as creating a more strategic HR business partner role, or helping the finance function move from a compliance role to a value creation role, are no longer the only considerations for a business. 


Today we increasingly see there is a strategic imperative to ensure collaboration, coherence and alignment which are the foundational building blocks for enhancing strategic agility. 


Our experience with clients is that this requirement for functional excellence as a given with the added value of ‘business savvy’ spans multiple sectors and geographies and is no longer confined to a few key functions.


During the last 6-12 months we have collaborated with our partners in co-designing high impact interventions for finance, risk, HR, communications, and technology and innovation functions. And these interventions have encompassed a range of industries from financial services and chemicals to FMCG and technology. 


What do we mean when we speak about ‘business acumen’? 


So what is business acumen and how do you foster it as a core individual and organisational capability? 


It's defined as ’the ability to make judgements and quick decisions...keenness and depth of perception’. 


 What it is not is simply teaching executives to understand finance and strategy. 


  • Business acumen is holistic in essence and is a mixture of: 
  • IQ …new knowledge and understanding 
  • EQ ...better understanding of the soft skills, influencing with integrity, stakeholder management 
  • And XQ ... Execution and implementation 


At an organisational level it is in essence a key component of risk mitigation as too functionally orientated senior executives often create silo or fiefdom driven cultures; they sometimes struggle to formulate and implement coherent and integrated strategies for sustainable success. 


A balancing act 


It’s often commented that enterprises who cannot flex and adapt internal change at the same rate as external change have little long term chance of survival. Thus as the business context becomes increasingly complex, so too must an organisation’s inherent capability to mobilise the ‘moving parts’ to interact. 


Recent research focussing on the field of neuroscience and the knowledge domain of good strategic decision making evidences the legitimacy of broader business acumen. Challenging assumptions, functional bias and myopia, and looking at problems through a different lens of others are as an important requirement for success as is the cognitive ability to analyse data and facts. 


From a talent development perspective we also see that the notion of career lattice rather than career ladder for functional specialists is demanding much greater focus on integrative business skills and boundary spanning perspectives. 


The 5Cs


During a recent client custom intervention with a senior functional intact team from a global chemicals business, the definition of enhanced ‘business savvy’ was articulated as the need to:


  • Better understand the levers and drivers of value creation
  • Have a more future orientated and external perspective
  • Develop the ability to constantly scan the external environment
  • Develop greater financial literacy, strategic fluency and political acumen
  • Enhance the ability to reconcile trade-offs paradox and dilemmas
  • Have the ability to make meaning and sense out of complexity  and ’connect the dots'


This is often seen as the 5cs in building superior business performance:


  • Commercial acumen and business savvy - understanding value creation for customers
  • Curiosity - of the future, the external environment and the competitor whilst better understanding the value of other internal functions
  • Courage - experiment and explore options for change
  • Collaboration - proactive stakeholder engagement and building coalitions for success
  • Change - Building strategic and functional agility for transformation


Developing this core capability for success in functional teams is addressed in many ways based on the 70/20/10 formula. For example job rotations, cross functional internal mentoring, knowledge management and transfer and external cross industry functional mentoring.


How to adapt in a VUCA environment


Such current volatility and fast change, however, often requires more as functional experts need to develop greater cognitive versatility and both a broader intellectual and behavioural repertoire.

In terms of customised executive development, the challenge is always how to fast track and accelerate ‘wisdom’. Embracing internal experienced ‘leaders as teachers’ as well as external perspectives from our client or senior alumni base adds relevance to the faculty academic rigour.

Real time simulations and gaming become more prevalent, as do integrative measures focusing on impact. At London Business School we deliver value creating supported inter and post modular strategic projects or experiments. This is to ensure that we bridge the gap between thinking and acting, between knowing and doing and ever more importantly the ‘being’ to ensure sustainable coalitions for success.

As Warren Buffet states "the chains of habit are too light to be felt until they are too heavy to be broken”.

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