Over the years, lots of our seminar participants have reported how they've applied their business acumen skills.  Our seminars inspire them to ask questions they wouldn't otherwise ask.  Also, their learning gives them the confidence their asking is necessary and appropriate.

Our CEO clients couldn't agree more!

A great question has two characteristics as it relates to business acumen:

1. It's focused on the business
2. It requires an answer

So, here they are.  Four questions that our CEO clients want their leaders to ask.


1. Why does it take so long to get paid?
Cash is king.  Cash is freedom to act.  The speed at which a company can convert sales to cash is a critical indicator of overall success.  If a company does not have the cash it needs, it has to get it, and these 'other' sources can be expensive.

A company will send an invoice to a customer and wait as long as 150 days for the invoice to be paid.  Yes, it seems odd to say, but the longer it takes a customer to pay, the more pressure is put on the company's cash.  

Don't be tempted to blame your customers for the delay, however.  Shortening the contracted payment terms may not be the answer.  The opportunities for improvement are in your internal invoicing processes.  Can you confidently say that you get it right every time?  Probably not.  Work to answer this question candidly.  Take steps to get paid faster.  Your CEO will be delighted. 

2. When we spend a dollar, when will we earn it back?
Managing a business is managing the circulation of capital.  That circuit begins and ends with cash on hand.  When a company commits to spend a dollar from cash, it's reasonable to expect that this commitment will earn MORE cash over time.  Right?  Right.

Too often, leaders make decisions to spend money without any expectation or discipline on how that money will be earned back.  A client company purchased bulk raw materials (polymers) to earn a low price from the vendor. It was enough material to last 300 days of three shifts' production.  Considering waste, rework, accounts payable days, and the like, that last dollar spent on excess inventory was not recovered for over 18 months after it was spent.

Of course, that purchasing leader was rewarded for 'saving' the company money with bulk purchasing.  The CEO was not pleased.

3. What are our most profitable products and services?
The goal of any business, as Eli Goldratt pointed out, is to make as much money as possible for as long as possible.  We won't stay in business for long if we continue to offer unprofitable products and services.  That principle is sometimes lost on people.  Your CEO wants you to know and act on this information.

Many companies track their new products launched and monitor the revenues from them.  What portion of our total sales is from products recently launched?  What can we do to accelerate and improve these efforts?

Sales = Price X Volume.  So, if you want high sales, you can either have high prices with low volume, or low prices and high volume.  Rare is the company that can have both high volume and high prices (but see Apple as an exception).  So, if you are working with low profit per unit products, you'll need to get on board with higher volume.  What can you do to sell more?  If you're working with high profit per unit products, you'll need to work to maintain that value to customers.  The CEO needs you to understand these differences and act on them.

4. What can be done to eliminate bad costs?
Bad costs are the "face palm" of the business world.  A colleague of mine defines bad cost as "a dollar out and nothing back."  We can quickly and easily name lots of bad costs around the company.  These include wasted material, poor yield, aimless meetings, lack of timely decision making, etc.

Consider the relationship between cost and profits.  One client of ours earned a penny of profit for every dollar of sales.  That's a factor of 100.  So, to earn another dollar in profits, they needed to sell the equivalent of 100 dollars of sales.  It was much more effective for them to find that dollar of profits by eliminating bad costs as much as possible.   Coupled with new product launches, increased sales volume, and innovative engineering, their leadership set their company on a the road to success. 

Go ahead, ask these questions.  You'll show your company that you are focused on results and that you're putting your business acumen to work.  Your CEO will thank you. 

"Sure, we could do it that way, but we want it to work."

Often, I'm confronted with this seemingly age-old challenge in my work. That is, can we find the right balance to collaborate with our clients, engage the client organization, and do what it takes to increase the likelihood our project will be successful?

Too often, however, our decision makers in organizations support training for outdated or inappropriate reasons.  Are you doing training for the wrong reasons?  Here are a few (Adapted from Langevin Learning Services):

1. There's money left in the budget.
2. You want to address "the issue of the day"
3. You want to show you care
4. It's a hot topic
5. You have lots of requests
6. You can do it online

Resources are scarce.  Time is tight.  We only meet every so often.  These are all good reasons that we ought to focus on what works, and avoid things that don't.  As a Certified Performance Technologist, I'm always looking for things that work and add value for my clients.

Integrating business simulations into leadership development works.

I don't mean "works" as in the advertising, doublespeak meaning of the word.  I mean it actually increases the likelihood that we will achieve the results we're looking for.

By contrast, I am saying that we should integrate business simulations, rather than deploy them as stand alone learning events.  Surely, we learn a great deal from the experience of stand-alone business learning, but we learn much more if we integrate it into the bigger picture of learning, performance, and business results.

Why is this worthwhile?  Well, most if not all learning and training nowadays is delivered from a distance.  We get together for training and learning in-person meetings infrequently.  This time is precious.  We should focus on what that forum offers that you cannot get through other means.  We ought to get the most out of it that we can.

Integration is the way to get the most out of business simulations and in-person learning events.

Integrating doesn't need to be complicated.  Here is an example of how I use this simple, yet powerful integration principle:

Often, a client will engage me to deliver a simulation.  My first step is to interview the program sponsor, learn the context of the program, learn what is coming before and after my simulation, and define the specific learning and performance results we're aiming for.  I collaborate with the client sponsor, leadership, and other instructors to touch on themes, skill practices and messaging.  

In delivery, I look for opportunities to reference, reinforce, and encourage learners to apply their new learning and take action, consistent with the overall goals of the program.  I adapt in real time.  We integrate impact maps, mission/vision, strategic goals, leadership models, and performance expectations into the experience.  As a result, the learners experience a simulation aligned with their learning and business goals.

In short, we should focus more energy on what comes BEFORE and AFTER our programs, and use that knowledge to inform us on what we do DURING our programs.  Read even more on this point here.

Other integration tactics include:

1. Engaging company leaders and managers as real-time coaches in the business simulation (This also has the side benefit of increasing the visibility of your leader development work!)
   
2. Engage professional coaches to observe, assess, and provide targeted feedback and encouragement
3. Include executive leaders and others to serve on panels to discuss issues uncovered in the business simulation (strategy, markets, plans, etc.) through their own Teachable Point of View.
4. Tie-in relevant reading and research (e.g. Blue Ocean Strategy) to business simulation debriefs
5. Connect business simulations to relevant, specific skill development efforts (e.g. decision making training/skills)
6. Direct learners to speak to their bosses about what they learned in the program.  Use a Success Case Method of evaluation to determine what worked and what had impact and why.

Just a few of these tactics can make a world of difference.  The program is much less likely to be seen as a once-and-done seminar that has no chance of impact.  We can't afford to be "once-and-done."  We need to adopt integration tactics that assure our sponsors that learning will have an impact on business performance.

It really works!

"My front line guys don't need this."

This quote from one of my executive sponsors troubled me.  It troubled me a lot.  So much so I decided to (finally) blog about it today.

We were getting ready to deliver a business acumen program for middle managers.  We discussed the broader implications of the content to other audiences.  He could not see why in the world his front line employees, his workers, the people he depends upon to actually DO the work, would need to know about things like:

• The company's strategy and strategic vision
• The company's brand promise to customers
• The company's financial performance scorecards
• How all of this fits together
• What they're supposed to do to get the results he wants

Sure, I understand that as a CPT, I partner with clients to add value.  The value in my services aligns content and learning with performance.  Our work must be relevant and useful to get the most impact.  Yes, I get that. But, I'm afraid this executive wasn't thinking that way. I asked lots of follow up questions.  What I learned was that he was assuming, "My front line guys aren't smart enough."   

Anytime you underestimate the intelligence or capability of your employees, you are asking for trouble. Deming's 14 Points seem to support this conclusion.  At least they do for me.

My direct experience indicates that employees are MORE than smart enough.  They get it.  They get it faster than most and will do more than you expect with the knowledge.  They'll cut out bad costs.  They'll work for simpler work procedures.  They'll advocate for safety.  They'll add value.  They'll improve quality.  In short, the'll do a good job for you.  You simply have to let them in on the bigger picture, the scoreboard, and what's in it for them.  That's all.

Yes.  Everyone needs business acumen.  The best companies in the world engage everyone in learning about business in general and their business in particular.    Keeping things from people is bad for business.

My son has a high school biology textbook that's more than three inches (7.5 cm) thick. It's "advanced placement," so the there's more content presented during the semester than the run-of-the-mill biology course.

I recently attended a conference presentation.  The speaker's 100+ slides were displayed for an average of 15 seconds each.  I estimated 50 words per slide, plus graphs, diagrams, and lots and lots of arrows.

One of my clients recently complained, "We don't have time for the activities because the CFO needs to present last quarter's financials."  She had a dozen or so slides of screen shots from the budgeting software system, in teeny, tiny print, with values in the millions taken to the penny.

In a recent ISPI PerformanceXpress blog post, John Messer marvels at our continued emphasis on content over performance in training. That somehow, by including more content, more information, more description, and more stuff, that more learning will occur.  He says, "We act as if the business of training is finished when we have purveyed some content."  All this, when the evidence shows overwhelmingly that this is a fool's errand.

Only meaningful, relevant, and guided practice improves learning.  Engaging in the content, relating it to prior knowledge, and providing real-world application result in learning that improves performance.  We've known this for many years.  

Learners should work harder than the instructor.  That's right.  Think about that for a moment.  If we are engaging learners in real, meaningful, relevant, real-world, and "I'm going to remember this forever" training, they will work hard.  Really hard.

What would you rather do:  Fly with an airline pilot who trained IN the Boeing 787 Dreamliner; or, fly with a pilot who attended a presentation ABOUT flying in the Boeing 787 Dreamliner?  

I thought so.

Well designed simulations provide exceptional practice opportunities.  It gives learners a chance to learn, do, and reflect in a real-world way that has prima facie relevance to their work.  Simulations provide learners a way to learn from the experience and from the simulation.  It gives them a way to self-assess their mastery of declarative and procedural knowledge for performance.  It's personal.  It's relevant.  It works!

Of course, we can say these things about other practice strategies.  Scrimmages, role plays, drills, mock-ups, and experimentation are also examples.  It's through these learner-centered, performance driven approaches to learning that we get tremendous results from training.

Yet, content-heavy presentations (a.k.a. Lectures) are used far more often than can be reasonably justified.  Some say presentation is the best way to assure the content is "covered."  Yet, whatever the presenter is "covering," your learners most assuredly are not also "covering" it.

But do simulations, activities, and exercises actually teach?  Of course they do, but with some important caveats. Their design must include learner feedback and real-world relevance.  Simulations, coupled with a skilled facilitation or instruction, can unlock the learning process for learners.  Effective facilitator-led debriefing, peer feedback, confirming and corrective feedback, rubrics, and other techniques are vital in providing learners essential guidance in learning how they're learning, and seeing its relevance.  

No, more content does not result in more learning.  Instead, more practice, engagement, application, feedback, and relevance does.  

So, turn off the PowerPoint slides and turn on the simulator for real-world practice.  It works.

"Boy, these young people really know their stuff nowadays!"  This is a quote I recently overheard at a youth leadership development program.  The program is designed for college-aged students who aspire to make a real difference in their communities, for their employers, and for the State of Iowa.  Learn more here.

So what was so impressive?  Their questions.  Interestingly, none of them even pretended to know any answers.  They asked questions.  Lots of them.  And, truth be told, we adults really like getting good questions.  They challenge us to come up with good and reasonable answers, and they reflect positively on the questioner.  Ask good questions!

In my seminar with these same students, we delved deeply into business.  We conducted a three year simulation in which teams of these students took on several executive roles.  They struggled with cash flow, product development strategies, inventory management, forecasting, financial results, and the like.  Working in teams, they came up with plans and tactics to maximize their results.  They diagnosed problems in their businesses and then derived ways to improve the outcomes.  Lots of questions came up.  Lots.

The students immediately put their insights to work in the real world.  They listed questions they encountered in the simulation that are relevant to their mentors, their employers, and their sponsors.  They practiced asking and researching them as well.  All of this is based upon their understanding of business in general and their simulation experience in particular.

Leaders need not have all the answers.  They do need to know the questions.  A great question is one that is relevant and compelling.  It begs to be answered.  It has immediate application to the issues at hand.  

Our students listed these questions that they viewed as "good":

1. What's your most profitable product/service?  Why?
2. Where do you derive most of your sales revenue?  Market, product, service?
3. How much of your revenue comes from products/services launched in the last five years?
4. Who are your best customers?  Who is the best fit for your products/services?
5. How do you make money?
6. If performance begins to slip, where do you look first for causes?  Why?
7. How's business?

Yes.  Good questions.  We all could do well with an improvement in our questioning.  A good question comes from an insight, an understanding, or even a gut feeling that says, "this is worth asking."  Try it.  You'll be amazed at what you learn.

Overheard in the break area . . .

“You guys going to that financial presentation?”

“I don’t know.  I hate finance.  It’s so boring.”

“Yeah.  I think I’d rather work.”

“Yeah.”

Recently, one of my clients was confronted with this attitude about his finance PowerPoint presentation. He presents a ½ day module on company performance for the new supervisor’s course.  He’s done it for years.  This time, about half of the planned group actually showed up.  He was quite frustrated.  But, after further reflection and collecting some data, we determined that it wasn’t WHAT he was teaching that caused the no-shows, but HOW he was teaching it.  He started to feel a little better.

We confuse this cause and effect all the time.  “I’m not good at math.” Or “I am not an artist.” Or “Actuaries scare me.”  We may be right.  These statements could be correct; however, consider for a moment that perhaps we aren’t good at something because of how we were taught.  Teaching does not equal learning.  Teaching effectiveness results in learner engagement, motivation, and persistence.  Here’s another thing to think about:  Evidence suggests that college students follow their best professors to their undergraduate major.  If they have a good professor, they’ll tend to stay in that field and discover their passion.

So, my client discovered that if he used a different method of instruction, namely Celemi Apples & Oranges , his students would be pleasantly surprised.  Guess what?  Yep.  They were.  He got high marks and positive reaction from his students.  He had fun teaching.  And, he had many in-depth discussions that made the time pass quickly.

And here’s the best part.  After conducting Celemi Apples & Oranges the word got out.  Students told one another that his finance presentation was fun, interesting, and worthwhile.  Students signed up, and later, they showed up.  Absenteeism went down, and learning went up. 

Several years ago, Dr. John DeJoy of Union Graduate College did his doctoral research on learner preference in topics related to business finance.  His findings suggest that there is a connection between learner enjoyment of the learning methods and their actual learning performance.  Yeah, they like it because it works.

Anecdotally, I can count on these methods as winners.  I know intuitively and through direct experience that my presentations, seminars, and workshops that include simulations, discussions, engagement, and relevance are better received.  I can count on things going well every time.  My learners are sometimes effusive in their praise of their learning experience, and the evidence we collect seems to support these opinions.  Besides, it isn’t in my long-term personal interest to deliver services customers don’t like. Yeah, it works.

We all need better understanding of business and business finance.  Our stakeholders are depending on all of us to put resources where they’ll do the most good.  Only after we ‘show up’ and learn will we stand a chance to harvesting that business value. 

Yeah.

The other day in one of my seminars I asked the participants to describe the goal of business.  After some back and forth, I quoted Eli Goldratt, in "The Goal."  He said "The goal of any business is to make as much money as possible for as long as possible."  My students seem to agree.  What is the indicator of "making money?"  Profit.

Let's discuss profit for a second.  Yes, profits are what it's all about.  It's the bottom line.  It's money we made.  Let's make some money!

Well, not so fast.  What is profit?  Well, that depends on a lot of things, like GAAP rules, Statutory Accounting, IFRS, and so on.  It depends on managerial and non-GAAP measures.  It depends on tax law and your local jurisdictions.  Also, a company may take a "one-time charge" or include "other comprehensive income."   Finally, we may need to consider if we're looking at Gross Profit, Operating Profit, or Net Profit.

When we consider these things, a novice might say "Wait a minute, mister!  You're just cooking the books to get the numbers you like!"  

There are lots of examples of company fraud in financial reporting.  That's not what I'm describing here.  What I am saying is that there are lots of legal and legitimate ways to make the income statement look a lot better than it otherwise would.  When financial and executive leaders build financial statements, they're following a lot of rules. They also have a great deal of discretion, as long as they disclose how and why they're accounting for things the way they are.  

"Wait a minute, mister!  You mean to tell me that the black and white world of finance and accounting is not so black and white after all?"  

Well, yes.

There is a lot more art than science in our financial statements.  A lot more discretion by the CFO to express costs, revenues, gains, losses, assets, and liabilities in ways that make the company look the way the CFO wants the company to look.  But before we indict an entire profession, keep in mind that these leaders are working from limited data.  It's impossible to know exactly what everyone in the company is doing every day so they can allocate costs exactly where they belong.  Suffice to say that the financial statements reflect reality, but they are not reality.  A biased reflection nonetheless.

What's all this mean to us?  What are we to do?  Well, that's where our business acumen comes in.  You see, by learning the assumptions, biases, and rules for financial reporting, accounting, and decision making, we can better understand what that numbers mean and what we can do to improve them.  That is, improve them through business improvements -- meaningful, sustainable, and valuable business performance improvement.  That's the only way.  Learn how the numbers are derived and your ability to interpret them will improve.  

"Wait a minute, mister!  If profit is an opinion, I better ask more questions around the office!"

Yes.  Yes you should!

We all want to see our learners nodding in agreement to the things we say.  I certainly do. We also want them to smile, show agreement in their body language, and well, show us that we're right.

We may be fooling ourselves.  Their nods may really mean, "Okay, I see you want us to move on, so yeah, I'll nod in agreement."  Funny thing, both kinds of nods look the same.

Klas Mellander, the chief designer at Celemi wants to invent a special hat that learners would wear in his seminars.  It would have a light on the front that goes red when learners nod and yet they do not understand, and goes green when they nod and truly understand.  He even made a short video about this idea that's available here.

Have a look at the graphic I've used for this post.  What do you see?  Would it help if I said, "It's a cow?"  Keep looking.  Once you see it, you'll likely vocalize your learning with an "Oh" or "Okay!"   We make meaning from the dots and shapes.  It's a natural thing.  We do it all the time.  When we finally do "see the cow" we have difficulty un-seeing it.  Cool, huh?

Yes, we are always looking for evidence that our learners have learned, and more importantly, can perform.  It's well established in the literature that just because someone has learned something does not mean they can do something.  Yet, learning is an essential step in the process.  The light has to come on!  The "ah-ha" needs to happen.  The lesson needs to go from working memory to the more sustainable long-term memory.  We need this in order for the learning to have a chance to be applied back on the job.

And when real learning happens, your learners will try to apply their learning back on the job.  It's natural.  It's important.  Your best people will persist with application until the work environment (boss, reward system, etc.) either goes along with them or snuffs them out.  Either way, with real learning, learners will feel obligated to 'have a go" at applying it.

We should engage learners in the content so you have lots of opportunities to observe it.  The only way to observe, really, is to stop talking so much.  Have your learners work through the content in a meaningful way.  They'll connect the dots and create meaning.  Have them show you.  Once they show you, assess their learning and correct or confirm it.  Provide simulation, application, feedback.  Provide worked out examples of what you really mean, and what you don't.  

If we do more of this, we'll see only "green" nods in our seminars, and that is certainly a wonderful thing.

Leadership performance, in a business context, ought to result business performance.  I may be stating the obvious, but too often our leadership development programs miss the mark.  They are discussions of leadership traits.  They are exercises in feedback on characteristics.  They are assessments of personal competencies.  They are explorations of "know thyself."  They provide feedback on style, characteristics, and behaviors.  

That's not enough.  Sorry to say, but that is not enough.

Yes, leadership development requires competency development, trait identification, and feedback from your peers and others.  Yes, that's important.  It's not enough though.

What's missing?  What else do we need?  Performance.  Oh.  Yeah.  That's what's missing.  

Recently, I partnered with an Talent Development team to build a Fortune 500 leadership development program.  At first, we identified these prospective leaders' competency needs.  We had a list of thirteen competencies.  Thirteen!!  Despite the cognitive research that suggests we can only hold about 4 things in short term memory, we wanted leaders to develop thirteen 'key' competencies.  To what end?  What competencies does the business need?  Well, we didn't know.  We realized we needed to find out.  Fast.

So, we re-calibrated the program to business performance.  With a bit of legwork, we found the company priorities included: growth, innovative products, operational execution, and talent.  The firm was making promises to Wall Street and others around these few themes.  Once we had business results clearly defined, we found that we could narrow to just 4 or 5 competencies, rather than thirteen.  Whew!  These four or five things could logically and compellingly be tied to business performance.  We also could engage executives and other business stakeholders in leader development in a much more precise way.

That's the one-two punch that makes leadership development efforts return so much value to their companies.  With a blended perspective on competency AND performance, we can really make a big difference.  Leadership is happening in a business after all, and this fact should influence leadership development. 

There are three universal score sheets in business -- The Balance Sheet, the Income Statement, and the Statement of Cash Flows. All companies have them.  They are used to determine how well the company is performing.  That's a good thing.

Too often, professionals who mean well begin teaching business and finance by showing people these statements.  They'll direct people to the annual reports online, or to a company's 10-K in order to teach them about the business. From there, they'll explain each line item in depth, with figures in the millions taken to the penny.  Sigh.   That's not a good thing.  

Using this approach is not much different than teaching soccer starting with lessons in reading a scoreboard.  Imagine: A dad coach brings his U8 team to their first practice, and brings the kids together around the scoreboard to train them how to play soccer.  Right.  That makes no sense.  So, when we try to teach business by starting with those financial statements, we're doing the same thing.

We should engage people in playing a position on the pitch (to continue with the soccer analogy).  We need simulations, case studies, engaging discussions, and scenarios to show how businesses work. Our learners should work harder than the instructor.  Companies are a complex mix of people, circumstances, operations, and so forth.  In order to see how it all works, and how to play the game, we need to play the game.  Then, and only then, do the scoreboards make sense.  We can more easily fill in the white space between the scores we earned and what we did to get them.

Let's focus on engaging in business learning to build business acumen.  Let's save the scoreboard watching for some other time.  When it's time to learn the business, the best thing is to learn by doing.