Susan was an excellent learning and development leader . . . or so she thought. She was dedicated to saving the company money because she worried the training function would be outsourced. She rarely recommended employees for recognition or raises. If her team presented ideas about new software or equipment that could improve productivity, she would listen but never take them to management for consideration. And she constantly harped on the importance of hanging on to their learning management system (LMS) for as long as possible. She was fanatical about doing her job well. If anyone ever questioned whether her team cost too much, she wanted to be quick with an answer.
Susan didn’t realize that her narrow focus on cost control and “doing her job well” ignored the bigger picture of how her company made money and sustained profitability. She wasn’t connecting the dots between her efforts, learning and development, and future sales revenue. She overlooked the huge cost of employee turnover the company incurred every time an employee left to work somewhere with better pay and a stronger focus employee development. She failed to consider the impact she had on efficiency, profits, and morale by refusing to raise her team’s ideas with management.
Ultimately, Susan was viewed by senior management as “a serviceable L&D leader in need of development; not likely senior management material.” While she wasn’t terminated, her performance reviews were never stellar. She could tell that she was being sidelined but she didn’t understand why. Susan missed out on seeing the big picture of her main job—to contribute to building a company experiencing long-term, sustainable, profitable growth.
So many of us fall into the same trap. Like Susan, over time we tend to become more specialized and become good at focusing on the specific parts of our jobs. Oftentimes this specialization leads us to failing to see the big picture—how what we do fits into the overall picture of helping the company make money, achieve its strategic objectives, and be profitable.
Some of us earn degrees in management, hoping to gain that big-picture perspective. But while management education provides excellent training in areas such as accounting, marketing, or finance, students can graduate without an overall knowledge of how a business runs successfully. Their knowledge of the key drivers of business and how they work together can be fragmented, disjointed from the reality of daily operations.
And as with Susan’s managers, many leaders assume their teams have a much stronger grasp of how their companies grow profitably—a greater business acumen—than they actually do; so, few take the time to provide on-the-job training to deepen that knowledge.
Do you think you’re better off than Susan—that you wouldn’t have made the same mistakes? Now’s your chance to prove it. Take the Big Picture Quick Quiz below. The questions were not picked at random; they are the result of research and interviews with hundreds of executives and CEOs from dozens of different industries. They reflect the areas of performance that senior leaders have on their minds and want employees to have on theirs.
We’ve administered the Big Picture Quick Quiz to more than 100 thousand people. On average, people know the answer to fewer than two of the questions.
These questions focus on the overall business, not the operations of your department or division. I suspect that you might be more familiar with some of the performance measures for your immediate team. But your senior management team wants the entire business to be profitable, not just a single unit. They want all employees to understand and better contribute to how the company makes money.
The Big Picture Quick QuizAnswer the following questions based on your company’s performance in the most recent fiscal year. (And don’t look up the answers!)
1. How much cash was on hand at year-end?
2. How much cash was generated from operations?
3. What was the net income (net earnings or net profit)?
4. What was the net profit (net income or net earnings) margin?
5. What was the total revenue (or total sales)?
6. What was the inventory turnover (for retail and manufacturing firms)?
7. What was your return on assets?
8. By what percentage did total revenue (sales) grow or decline over the previous year?
9. By what percentage did net income (net earnings or net profit) grow or decline over the previous year?
10. How do your results compare to your competition?
Now check your answers against any of the financial reports you have on hand. How did you do? How many questions did you get right? Do you even know where to get this information?
The problem is that while we understand our jobs, the big picture seems too complex to grasp. Complexity is an underlying challenge in any business, regardless of size, industry, or stage of development. Large companies, especially, have many moving parts—departments and divisions (always reorganizing), product lines (always changing), layers of management, competitive realities, unclear decision-making processes, regulatory pressure, shifting budgets, new strategies. A small problem within any single element might produce a ripple effect throughout the organization, requiring major repairs. But without knowing the true source of the difficulty (which is not always readily identifiable), we might “fix” the wrong thing as we tinker with the business.
Developing business acumen helps us cut through this complexity, get a bird’s-eye view of a business, and understand our specialized roles within it. Simplifying complexity and broadening our understanding of the business enables us to fix present problems, prevent new ones, and take advantage of opportunities to grow.
Want to learn more? Join me at the ATD 2019 International Conference & Exposition for my session TU405—What Your CEO Expects You to Know: Business Acumen to Build Your Credibility, Career, and Company.
(Note: Someone from your company may have already taken our training. You can check our alumni list to see if you qualify for a corporate discount or apply for your own.)