Sometimes we hear the phrase “street smarts” used to describe why someone has succeeded in business. Yes, some people do “luck out.” However, you can dramatically improve your odds of succeeding by understanding seven key concepts for navigating your business on a journey to success.
These seven concepts in total are referred to as “business acumen.” Leadership success emanates from a managerial process propelled by these focal points. Yes, great leaders can have great people skills and be popular with their employees. Successful leadership has common and ultimate measurements of success. Business leaders are supposed to make money and focus on achieving both strategic and financial goals and objectives.
According to management guru Ram Charan, “leaders have to focus on cash generation, margins, inventories (velocity), return on assets, customers and synchronization.”
Managing these seven elements contributes greatly to positive results, and positive results are what are of most interest to shareholders and to the survival of the business itself.
Leadership success often rests on asking the right questions, managing by prioritizing and communicating and seeing the organization has the skill sets in place to be successful. Let’s look at each of these three areas.
First, asking the right questions means being specific and getting down to what counts — asking about sales trends, growth, declines, or other significant patterns. Asking about profit margins — how they can increase, why they are declining, etc. Asking for comparative analyses of the sales trends and margins against the industry and top five competitors. Asking about inventory velocity (how fast are you moving goods off the shelf or “turning” around a perishable inventory) asking about return on assets. Further, asking about and discussing ways to increase cash generation or stem cash flow declines. Asking about market share trends and forecasts. Always asking ‘why?’ Always seeking to continually improve.
To receive intelligent answers to these questions and to formulate successful action steps leaders must possess (either themselves or within their organizational structure) skills in a variety of areas. Obviously, sales and revenue forecasting and inventory management skills are critical. Other skill sets include cash management; market and product mix analysis; operating cost control; pricing and advertising; and profit margin management. Also, feedback systems on customers, competitors, operating performance, and environment trends are equally important.
Leaders ask the right questions, have in place the resources and systems to provide intelligent answers and then manage, prioritize and communicate desired actions. This involves reducing complexity and establishing three or four important priorities usually related to the leadership focal points. Leaders who are successful know how to communicate goals clearly and often to all, and leaders continually seek to improve the fundamentals of the business. Finally, leaders are masters at “synchronization” by putting the right people in the right jobs, by consistently delivering results and by coaching and mentoring.
A synchronized organization is like a championship rowing team pulling together with flawless timing and smoothly moving to victory. Synchronization improves the performance of the whole group and organization. Leaders are responsible for synchronization. Great leaders employ synchronization techniques, which include SOMs (social operating mechanisms). SOMs involve meetings, which are designed to filter out information, delineate priorities and foster ideas. SOMs include conference calls focused on obtaining quick market intelligence and spotting trends (problems and opportunities) at the earliest possible moment. SOMs include using email, voice-mail and other technologies to expedite alerts, updates, etc. Leaders use meetings to cut through complexities, provide focus and, most of all, listen.
Leadership success involves not only knowing what to focus on, what skill sets are required, what questions to ask and synchronizing, but also personal example. Personal example usually establishes the environment (climate), reinforces the vision and mission statement, and motivates others to succeed on a daily basis. Most important of all, leaders understand business acumen and the focal points for successful performance.
Dr. Ronald A. Nykiel is the Dean of the College of Business at Husson University. His corporate career included senior management positions with Nestle: Grand Met, and a number of other large corporations. He has served as a chief financial officer, chief marketing officer and chief administrative officer.