Business Acumen Reclaimed

Recently, I was reflecting on the dissimilarities of working with MBA learners and employees brought together for a simulation activity as part of a wider development initiative in a $12bn firm. In many respects, there was much to favourably compare. On an individual level participants were committed, bright and capable. They attacked the activity with gusto and were unfailingly interrogative, both with respect to the technology and the underpinning concepts it sought to elucidate. Yet, the absence of context – the specifics of the organisation – make for two very different experiences. In an MBA there is the luxury of time removed from the structured bedlam of organisational life, albeit replaced by an assault course of assessments and reading which can be equally demanding. But any learning taking place within the auspices of a firm immediately demands an anchoring, a fundamental requirement that everything be considered in relation to the context of the company. This is as it should be. The wider application of concepts to multiple contexts in an MBA warrants an appreciation of the generalisability of much research work, whereas, the specificity of encountering concepts in the crucible of a particular market demands focus on their application.

In many respects, both sets of learners are expected to discern the same ultimate goal: the acquisition of (improved) business acumen. Before beginning to look at the term in more detail here are a couple of definitions:

Oxford defines acumen as: The ability to make good judgements and take quick decisions. From Latin, ‘sharpness, point’, from acuere ‘sharpen’.

The Financial Times defines it as: Business acumen is keenness and speed in understanding and deciding on a business situation.

Interestingly the FT goes into considerable depth regarding the use of business acumen in practice with a notable observation:

Business acumen is learned, not innate.  A person develops business acumen through some combination of business experience and formal training.  Such personal development requires an understanding and application of the management processes to ensure a disciplined and consistent approach to analysis and decision making.

Of course, from the standpoint of an educator I am bound to endorse the premise that business acumen is a learned phenomena. Yet that is not always how it is represented. And it has led me to the belief that not only is ‘business acumen’ as a phrase misunderstood, it also appears in contexts which completely confuse the currency of the term as I understand it. To the extent that I would now argue the term needs not only redefined, but also reclaimed. For it has come to be synonymous with a range of perspectives which are unhelpfully taken as one. Confused, and just as often misinterpreted.

Let me cover them here.

Functional Perspective

In many cases this is the most common of all perspectives. Business acumen training and development is largely concerned with introducing the main principles associated with different functional disciplines that individuals may not have explored previously. This encompasses programmes such as ‘Finance for Non-finance Managers’, introduction to marketing concepts such as segmentation or the four ‘P’s’, and economic principles of demand and supply curves, price elasticities and more. In each case the goal is to ensure the individual gains critical insight into the workings of the organisation and is therefore better placed to interact with colleagues in multi-functional teams.

Industry Perspective

In other cases business acumen is taken to mean a deep appreciation and understanding of the workings of a particular industry, the competitive behaviours which shape it and the trends which define both its history but also its present and near future. Here the emphasis is on data analytics and competitor analysis, typically.

Business Perspective

This can be contrasted with a focus on the business itself where it is the ability to demonstrate superior product and/or technical knowledge which is viewed as evidence of business acumen. In an applied sense it translates as the capacity to leverage core competence and identifying the unique value proposition which distinguishes a business from its rivals.

Behavioural Aspects

For others, business acumen refers to an intangible ability which can be decoupled from knowledge driven approaches which emphasise specific functions, industries or technical expertise. Instead, business acumen is described as an intuitive ability to make decisions which are superior and which variously demonstrate a capacity across functional disciplines, product knowledge and industry awareness. It is the ability to focus on the necessary, to eliminate valueless activity and interrogate data with precision. Where the manager is able to cope with ambiguity and display courage in their decision making. This perspective values the manager’s singularity above all.

Process Perspective

The final approach views business acumen from a process perspective rather than being content based. It highlights the managerial role as that of the individual who must link objectives and deliver on strategic objectives through the effective alignment of people, products and resources. Their skill in this domain is demonstrable by their ability to make the organisation function harmoniously.

These five approaches are distinct and each, undoubtedly, has their own value. Yet they fail in numerous ways to explain what managers actually require within their job roles. It is increasingly clear to me that these perspectives do not help managers fully understand how their organisations work, the culture which drives performance and defines how the company secures success in the marketplace. A fundamental principle of business acumen when applied to any business must include the capacity to identify how it operates on both a macro and micro level.

Moreover, even the totality of these perspectives neglect at least three vital components:

1. The need to understand how your own company works
2. The need to view creativity and innovation as inherent to this collective ideal
3. The need for empathy with customers

Let me expand. A functional approach can certainly help managers recognise the activities and pressures which influence the organisation at a functional level but this is distinct from grasping how exactly the company operates, how it captures value and leverages its capacities. There is a holistic, business model aspect to this which is frequently ignored where business acumen development is concerned. More obviously there is no room in any of these approaches for creativity or innovation, the ability to become a conduit for these value-based  activities rather than just the source. And, finally, where is the customer in these approaches? It would no doubt be argued that they are present in all – most typically in the industry and business perspectives – but this usually translates as a conflation between the mechanics of the organisation’s activities versus a genuine customer orientation. Here business acumen is proxy for knowing what makes a business a success in a particular industry which presumes a detailed knowledge of customer needs. How else would anyone have been successful? Although there is some unavoidable truth in this statement you have to look for it. The reality is that it is not ‘front and centre’.

Business Acumen Redefined

A new approach to business acumen would encompass each of the three components which I’ve outlined. No doubt there will be sound arguments for others but I introduced the ones which seemed immediately pressing to me. Which leads to an alternative perspective on business acumen. A (hopefully) more dynamic and purposive explication of its true meaning, founded on three descriptive principles from which the concept can be progressed.

In my view, business acumen develops individuals who are:

1. Master Curators: the organisers of accumulated knowledge across numerous distinct yet inter-related fields; they are collectors, inquisitive, dynamic, perceptive and knowledgeable.

2. Active Practitioners: business acumen is only ever acknowledged by action; intervention and subsequent outcomes define the level of acumen any individual displays; they make active use of the material they curate.

3. Social Collaborators: marshalling expertise in a business context is fundamentally linked to behaviours in groups, either formal or informal, and equally as participants or leaders; creating and nurturing networks is their hallmark.

These qualities need exploration and, as with the majority of work in any discipline, we stand on the shoulders of those who have brought us to this point. To paraphrase Sugata Mitra, it is not that the concept of business acumen is broken, just that it is no longer needed in its current form. It is time for it to evolve.

Do Business Simulation Games Work: The Evidence Case Pt 2

Conceptual Understanding in Simulation Games

In the second article in a series drawn from the research work of Ranchhod et al (2014), available here, I will focus on the use of an online simulation environment to develop conceptual understanding of business concepts, predominantly strategic marketing based decisions, all under the watchful gaze of my countryman Hume.

The scholars set an inventory of learning goals which also included experience generation, skills development and affective evaluation each of which will be covered separately in more detail. However, the focus on ‘experience generation’ is particularly noteworthy as the researchers sought to test for a phenomena that is in many ways the raison d’être of business simulation use, namely the ability of participants to experiment with business ideas and use the simulated environment to take risks that cannot be taken in a real business environment. That is almost precisely how the learning goal was described. If confirmed, it offered credible empirical evidence that supports one of the main claims business simulation specialists make in support of their work.

Conceptual understanding was also to be tested and related specifically to cognitive ability (from Bloom) where the emphasis is on “understanding and retention at conceptual, procedural and strategic level”, further disaggregated by the scholars to include aspects such as terminology, concepts, and principles as well as the interdependence between business functions. The crux being that these concepts require application in complex situations which are, crucially, realistic for the participant. In this vein it was noted from the research that the simulation provides a simplified representation of the business world, yet is also an accurate one. The experience is one of a dynamic system which requires analysis, decision making and implementation of strategy over multiple phases. As such, it is a ‘concrete experience’ to use experiential learning terminology. This then means that it allows for a Lewinian learning cycle where concrete experience is followed by reflection and observation and the formation of abstract concepts and generalisations. Essentially, the ability of participants to be able to formulate their own conceptual models and explanations for the learning experience. In this particular study a main hypothesis was that there would be a causal relationship between the environment of the simulated business world and conceptual understanding of business issues.

In sum, the conceptual understanding learning goals were:

• Understand the theoretical foundations of market competition
• Understand the concept of the strategic perspective
• Understand the theoretical foundations of market behaviour
• Understand the concepts and theory of marketing communications
• Understand the concepts and theory of distribution
• Understand the concepts and theory of pricing
• Understand the theoretical foundations of product management
• Understand the theories and models of information management
• Understand the theoretical foundation of business finance

From experience as an educator working with MBA and MSc Management cohorts I would say this list is pretty intimidating. Even taking relatively experienced and well-educated employees into a simulation with an expectation that they will assimilate this type of knowledge is a considerable challenge. How many senior managers or L&D professionals would be thrilled if they could describe their employees’ acumen in such terms? Many I would warrant.

So what did they find?

Since I’ve taken the time to report this study in such detail it may not surprise you to know that the hypotheses were confirmed with moderate to high value in terms of conceptual understanding from a  single simulation experience. The statistical data demonstrated that the experience value generated by the simulation had “a very strong impact on conceptual understanding” and so reinforced the cognitive outcomes from the pedagogical process. Significantly, the authors highlighted the ability of the simulation to engender effective decision making skills in complex and dynamic situations despite the “simplification and abstraction of the simulated environment”.

Herein lies the single most salient finding from my perspective. Simulation games are inevitably judged in relation to the real world and it is the authors who make a tremendous contribution here by describing the world of the managers working in medium and large sized firms. They are characterised as taking decisions following a process of analysis and interpretation of the available data, working with specialists usually without direct contact with the actual products they sell. They may have tremendous technical knowledge of the commercial offer and value proposition, but it is the value of interpersonal communication and the capacity to analyse abstract information in a market context which affords them success. They operate with high flexibility in unexpected competitive situations and are charged with continuously advancing the organisation’s objectives through the balancing of tactical decisions with long-term strategic goals. Phew. According to the authors this is precisely the process which occurs in a well organised and effective simulation experience.

Empirical evidence. Proof.

And whilst this is only one study I would ask that you take a second to think about the research process. This was no short course with a hastily derived set of learning goals scribbled in bullet point. It was a scientifically designed study which specified in detail not only the method but the precise meaning of every learning goal under scrutiny. It is the antithesis of the generic ‘business acumen’ programme.

Next we will hear what the study had to say about skills development and the affective domain.

The Learning Styles Myth and the Case for Engagement

As the excellent infographic here explains new research seriously questions the validity of designing courses or lessons which target individual’s preferred learning styles. In truth, there is little evidence which supports the view that such designs improve the learner’s experience or that they are more effective.

 

For practitioners this knowledge will be met with an audible sigh of relief. Mostly because the practicality of designing a short intervention which accommodates multiple learning styles whilst engaging the majority of learners is both contradictory and incongruous, if not impossible. At the heart of the theory is the suggestion that learners are more engaged (and thus inversely disengaged) when their preferred learning style is being met. Using graphs, images and video will engage the visual learners in a group but most likely at the expense of kinesthetic learners who would rather be doing something practical. You can see the problem straight off. Add to the mix the truly incompatible interpersonal and intrapersonal preferences and the chances of pleasing everybody slide to zero.

 

What I’ve personally always disliked about the theory is that there is an implicit assumption that everyone cannot be engaged at the same time to the same degree. Whilst this is logical it’s also incompatible with my experience, and I’m sure that of most people. For proof, think of any performance which enraptured an entire audience you were part of. Perhaps you start to think about the Arts or a TED talk, or even a meeting in work. Or what about during a team-based simulation?

 

Every tutor has experienced the moment when they know they have the majority of a class spell-bound only to notice the two individuals having their own conversation or sending a text. It’s accepted as a common trait of human nature. That our attention flits between subject matter and that commanding the unadulterated focus of an entire audience is one the greatest challenges most of us will encounter. For me that all changed when I began delivering business simulations. I remember being almost dumbstruck that an audience of 90 individuals could be so immersed and engaged in a  learning task that there was literally not one person remote from the experience. They were all in.

 

Now, since these 90 individuals were Masters level students in a University with tremendous international links they came from across the globe where, no doubt, the learning methodologies they had experienced would encompass enormous variety. Yet here they were. United in a single purpose with a level of engagement and energy which actually gained in ferocity the closer we came to the simulation’s denouement, when a winner would be crowned. It wasn’t a surprise when they lined up to tell me how amazing a learning experience it had been.

 

Simulations cannot be easily confined to the toolbox of learning style approaches. They are at once Aural, Visual and Kinesthetic. They require Interpersonal and Intrapersonal approaches, as well as Verbal and (frequently) Mathematical skillsets. Which sounds like there is an argument to be made that simulations offer such a rich learning experience simply because they cater to all preferred learning styles. But I doubt it. Rather, I’d make the case that it is their astonishing ability to immerse learners in a believable world where engagement levels can soar. Where meaning is brought to the activity. Meaning and Engagement. If you have those then you have the only ingredients you need for powerful learning.

 

As a final thought, consider a parallel with the world of gaming: it is inconceivable that the number of people playing video or mobile games regularly have similar learning styles or that they will like one form of game over another exclusively. The ubiquity of games such as Candy Crush, Farmville, Temple Run and Angry Birds proves this beyond doubt. Why is GTA the world’s most successful entertainment product, bigger than any album or film? The games are so popular because of the gameplay and the quality of the experience. They are immersive, each in very different ways. Gaming in its broadest sense, from physical sports to mobile apps, are incomparable as a method of engagement. We are hard-wired to respond to gameplay that is well-designed.

In the business world and business training how do you train for an activity without the ability to perform it without risk? If we want people to demonstrate a commitment to diversity and innovation, for instance, how do we cultivate that without damaging the business? Do you work on the balance of Slide Deck delivery to video to group debate? No. We place them in a simulated world which engages their senses fully. Which challenges their preconceptions and explicitly links action to consequence. We provide the Meaning and the Engagement, and then we watch them soar.

 

Riding a Virtual Beaufort Scale Wave

In a closely related post to the discussion on Nvidia’s virtual avatars and the so-called“Uncanny Vally” (available here) the link below will take you to an excellent post and video which demonstrates the awesome power of today’s simulators. Using state-of-the-art graphics Nvidia have managed to successfully apply the Beaufort Scale to their ocean simulation providing an environment that is extraordinarily realistic and impressive.

Traversing the Uncanny Valley

The Uncanny Valley is a term used within the field of robotics and 3D computer animation which refers to the revulsion people are meant to exhibit when a lifelike robot or human replica acts almost identically to a real human. Empirical studies demonstrate that we become more empathetic toward robots and avatars as they appear ever more human in their likeness but experience a sharp and negative reaction when we recognize flaws in those which are almost lifelike. This negativity recedes in line with the robot’s human-like appearance leaving a ‘dip’ in a graph of the process.

Leadership in Multiplayer Online Gaming Environments

What can business learn from leadership in gaming?  

An excellent research article from Timothy C. Lisk and colleagues available here presents a compelling picture of leadership development in MMOs (Massively Multiplayer Online Environments). In particular, they have focussed their research on the relatively new and burgeoning field of Distributed Teams, an area which should be of considerable interest to all businesses given the global nature of communication and work practices today. In fact, as I write this in Glasgow, Scotland my colleagues in the small but high-growth company I belong to are variously located in Brazil, Spain, USA, France and India, and our client list is drawn from an even greater number of countries across the globe. We are the very definition of the Distributed Team who could not exist without web-based communication tools and by developing new approaches to organizational development.

Searching for the Active Substance

What is it that makes computer-based simulation work? What is the magic ingredient that turns training into an event – an experience – instead of the slow, miserable death from a thousand slides we’ve all had the misfortune to witness? Whilst many practitioners would pinpoint the word ‘experience’ as the critical factor, the difference between passivity and involvement or engagement, a group of researchers have attempted to answer the question directly and completely.

What’s in a name?

Business simulation, gamification and serious games. Are they different or just forms of the same process? The answer, unhelpfully perhaps, is both ‘yes’ and ‘no’. Gamification is billed as the application of game dynamics to non-game environments and in that respect both simulation and serious games qualify. Whether it is a business board game with strategic decision making to the fore, an enterprise simulation which models a specific part of a business, or a 3D game where future surgeons practise open-heart surgery the essence of gameplay is present in all of them.