When change feels stuck, the barrier is often low trust, not poor intent. Nathan Kracklauer shows how business acumen, understood as the logic behind strategy, helps managers align across functions. Position it in business language, resist the skills-only trap, and target confidence, courage and empathy that leaders can act on.
At a recent training industry conference, I heard something along these lines from several learning leaders: ‘Our organisation needs to change. We’re not flexible enough; too siloed; too hierarchical.’ I’m sure their diagnosis is right. The greatest barrier to an organisation’s performance is rarely that its managers don’t know how to read a balance sheet. It’s almost certainly about how they structure human relationships to achieve coordination.
When I heard their pain points, I started sharing how I’d seen many organisations address these kinds of challenges with experiential leadership development programmes focused on cross-functional decision-making. Their eyes would light up.
They would open up about the difficulties they had convincing their stakeholders
But then they would open up about the difficulties they had convincing their stakeholders: ‘I can’t get the business decision-makers to even recognise the problem. Partly, they don’t like the mirror held up to them. Partly, they discount it as just the kind of thing HR always says.’
Indeed. ‘Our organisation isn’t good at collective decision-making’ may be an accurate assessment. But it might not resonate with decision-makers.
Strategic logic
That’s why I suggested making a different pitch to business stakeholders initially: ‘We need our managers to understand the logic behind our strategic decisions so they can execute them better.’
The logic of business decision-making: that is what business acumen is about.
Business acumen is an essential and often underdeveloped capability in organisations in which managers are promoted based on their functional expertise. It goes far beyond number-crunching and bean-counting. Instead, it’s a pillar of the trust that enables cross-functional alignment.
One of those problems of cross-functional alignment? Getting business stakeholders to fully understand the value HR and learning and development bring to the organisation. Talking about business acumen is also a way for learning and development leaders to build trust with senior leadership.
What outcomes should a business acumen programme for leaders target?
The value(s) of business acumen: confidence, courage, and empathy
Eighteen years ago, I led a team tasked with developing an experiential programme in business finance for non-financial managers. Not originally a business native myself, my first task was to figure out what non-financial managers need to know about business finance.
Nearly two decades later, after having delivered hundreds of business acumen programmes for non-financial managers at major corporations, I have not stopped challenging myself to answer ‘Does anyone really need to know this stuff?’
‘Yes, they need it,’ has been my conclusion.
But the ‘why’ and the ‘what’ have shifted considerably since I first dipped my toes in financial waters. It’s been my long-term interaction with alumni of our corporate and open enrolment programmes that has shaped my vision of what business acumen is really about.
One of the most compelling alumni stories I ever heard was from a Director of Compliance at a medium-sized business. They went from being the wallflower on the executive team to having weekly meetings with both the CEO and the finance and accounting team. All because they started asking questions based on what they had learned about financial management; but asking with confidence.
There are many more stories like this. One person’s newly developed financial analysis skills had forced them to conclude that a portion of their business was not adding value. They prepared a business case for shuttering that business and delivered it to the CEO. They gained the toolkit to look at his decision through the lens of economic value creation, the language in which to frame the argument, and the courage to make it, even though the conclusion was uncomfortable.
‘It was very useful to see how the C-level views the bigger picture.’ That’s another takeaway, this time from someone in one of our corporate programmes. It says succinctly what I’ve heard many other times. Learning business finance is also about empathy, about walking in the shoes of those whose decisions create and destroy livelihoods.
The ‘skill’ trap
Confidence, courage, and empathy: that all sounds inspiring, especially to many of us in the L&D industry who thrill at the development of characters as much as careers. We also know that character development is not easy to sell at the best of times, and times aren’t always the best in our industry. Compared to our colleagues in many other business functions, we may struggle to provide quick measures of return on investment, especially for investments like leadership development whose impact accrues over the long haul.
That often forces us to focus on training measurable ‘skills’ that can be ‘applied on the job’ the week after training. That’s a conception of learning that’s going to overlook the confidence, courage, and empathy in the above examples, none of which are easily measured in on-the-job applications immediately.
When I first worked on the design and development of our business acumen programmes I felt compelled to talk about active, skill-based learning objectives like ‘performing breakeven analysis’ and ‘interpreting financial statements.’ I’ve spent the last eighteen years slowly getting over that defensive crouch and learning how to talk about the value of business acumen to both participants and corporate learning leaders.
In truth, few managers will have reason to ‘perform breakeven analysis’ and ‘interpret financial statements’ in the week after the training. Breakeven analysis and financial statements are instrumental to building confidence, courage, and empathy; they aren’t ends in their own right.
It’s about trust, not tools
Day-to-day, business acumen doesn’t come into play with specific skills and tools. But each and every moment, we need to execute our tasks and make the decisions in our span of control in alignment with the organisation’s overall strategy.
Executives might gain our trust on charisma alone… but we’ll have all the greater confidence in their strategies if we understand the underlying logic that guided them. Executives should extend trust as they delegate execution, and they’ll do so more quickly and more extensively if they know that we understand the logic behind their strategic decisions.
That’s why business acumen, understanding the logic of business decision-making, is one side of the coin of building an aligned organisation. Yes, an organisation may be hamstrung by rigid hierarchical structures, but that is partly a function of low trust. This isn’t low trust in people’s intentions, but in their ability to align their activities without detailed direction and tight supervision.
Some pointers on the best ways to position business acumen learning to business stakeholders:
- Speak the language of business
Be ready to talk about the drivers of economic value creation and adopt the terminology used to communicate about them. This isn’t about jargon-dropping, this is about demonstrating that you broadly understand what drives profit and how it’s measured; what drives growth and how your company tells its growth story; what risks your company faces, and broadly how it mitigates them.
If business acumen hasn’t been an underdeveloped competency in your people team, you might find that you charge through an open door when, as a first step, you ask for a modest budget for an HR-internal business acumen programme. - Focus on the benefits to senior business stakeholders
The organisation as a whole will reap the benefits of having mid and junior-level managers with better business acumen. But I’ve spoken with the CFO of a major carmaker, and I know that many of the daily frustrations experienced by senior leaders stem from the lack of understanding of financial constraints and economic trade-offs. People want to be heard and understood, and that’s true for executives, too. Hinting at empathy as an outcome will resonate. - Bite the bullet and avoid the “skill” trap
The benefits of a higher-trust environment that accrue when everyone understands the logic of business decision-making are not going to be measured the week after training. Pretending otherwise is not going to help build credibility. Not in the medium term when you try to measure people’s ability to interpret financial statements, something few managers need to be able to do, nor even in the short term: Many business stakeholders know perfectly well that these tools and skills aren’t required on the job every day. - Concentrate on business process improvement appraisal
The previous point notwithstanding, there are concepts and skills required to build the business case for improvement ideas. One of the things managers at all levels do is evaluate ideas for improving the business, whether new ways to improve customer value, gain efficiencies, or reduce unpredictability. Especially when stakeholders are excited about leveraging training programmes for generating new business ideas, validating their value, and building execution teams (aka “action learning projects”), building the competencies for business planning and project evaluation is essential. It ensures that programme participants focus on ideas that have real impact on economic value creation and gain faster buy-in from business champions.
The logic of strategy
When business stakeholders have recognised the need for change, they will be receptive to learning leaders’ suggestions about how to support cultural shifts and organisational redesigns. But when there is reluctance, by identifying business acumen as a core and under-developed organisational competency, learning teams can meet stakeholders where they are at, speak their language, and address their underlying anxieties.
Speaking with confidence, courage, and empathy about the logic of business decision-making can help build trust while exemplifying what cross-functional communication based on a mutual understanding of economic reality looks like.
Nathan Kracklauer is Chief Research Officer at Abilitie
