We are living and working in extraordinary times. It’s safe to say that business leaders at all levels and across all industries have been tested – and will continue to be tested – unlike any other time in their careers. Navigating through the turbulence created by the Coronavirus pandemic requires two important leadership traits: competence and courage.
If there was ever a time a company and its leaders need deep financial acumen it is now. Many of us have experienced periods of financial turbulence in our lifetimes. Black Monday on October 17, 1987, the aftermath of September 11, and the Global Financial Crisis of 2007 and 2008 are some of the more memorable. But these events, as extreme as they were, pale in comparison to the current Coronavirus pandemic.
It’s no secret that strong leadership is required for a company to achieve ambitious and aspirational goals. Increasing the collective capabilities of your leadership team is essential if you want your organization to continue to grow, to capitalize on opportunities, and to respond to an ever-changing and increasingly complex global business environment.
Over the past ten years, I’ve led dozens of simulation-based workshops focused on executing strategy. I’ve learned much from the hundreds of students I’ve had the pleasure of teaching. But if there’s one thing I’ve learned – and one universal truth – that is common among the many companies with whom I’ve worked, it’s that there are “more good ideas than resources available to pursue them.”
WHAT IS FINANCIAL LITERACY? Financial literacy is the ability to read and use common financial reports and ratios to assess business performance. There is enormous value to a leader in understanding this building block of business acumen. It allows a leader to make informed decisions and project the financial impact of their day to day choices. It makes a leader more confident and more competent in his or her role. It is difficult to be a strong player in any game if you can’t read the scorecard.
You’ve heard the expressions before, “Cash is king” and “Cash is the lifeblood of a company.” Sounds sensible, but what does it really mean? If cash is king, what about profitability?