When a client reaches out to us to discuss the creation of a Business Acumen leadership development course, they typically begin by stressing that they would like to help their leaders understand “the Big Picture.” As the design process unfolds, we discuss their overarching corporate goals and how the target population impacts those goals. This sets the priorities for the course, considerations such as: how much time to spend on revenue recognition and accounts receivable; whether to include investment analysis; and how closely to examine the competitive performance in key markets.
At Insight Experience our goal in business acumen leadership development programs is to increase participants’ fluency in financial terminology and decision-making, rather than turning them into finance or accounting professionals. We use business simulations to highlight key leadership decisions and trade-offs, trace the impact of our participants’ everyday decisions through their own company financial statements, and challenge them to find opportunities for improvement. Their stories during and after the programs inspire us every day. It’s hard to pick favorites, but here today we share a few such success stories from the field.
For the past two decades the service sector has been the fastest growing portion of the economy. Service businesses including consultants, contractors, hospitality and professional services are reshaping the business landscape. As many of these fast growing businesses mature, they are now looking to fine tune their business models. And yet, many business leaders either don’t understand or cannot articulate the economic flows that make these businesses tick, the dynamics that keep them cash-positive and ultimately enable them to grow profitably.
A growing chorus of business leaders is questioning the singular notion of maximizing shareholder value. In a recent Forbes article, Jack Welch and Marc Benioff, Chairman and CEO of Salesforce, both label it the “World’s Dumbest Idea”. Neither of these CEOs think shareholder value is unimportant, but without using the label they advocate a more Balanced Leadership™ approach. Marc Benoiff in an essay in the Huffington Post calls for maximizing stakeholder value while Jack Welch says, “Shareholder value is an outcome—not a strategy.”
This December the world watched the hacking drama at Sony Pictures unfold, and the real world handed us a “disruptive event” we couldn’t have made up. When we use business simulations to teach strategic finance and strategic thinking to senior leaders, we often add a disruptive event to a final round to really challenge the participants’ strategic agility. Of course, one of the concerns with this approach is that it can seem unrealistic to suddenly encounter an unforeseen event with business changing short- and long-term consequences. Even when we do, our clients usually tell us, “Nothing like that could happen here.” Until now!
Who would have thought this would be the year terms like “tax inversion” and “strategic finance” became cocktail party conversation? Thanks to proposed restructurings by Walgreens’ and Burger King, that’s just what’s happening. People are talking. And, they’re realizing the importance of financial strategy and its application. In this case, the tradeoffs were clear and interesting – cost savings versus local presence. Walgreens leaned towards local presence and Burger King towards lower cost structure.