Listen to The Podcast Here
2. Why Business Acumen Is Critical To Be A Extraordinary Leader
Mentioned in this video:
Summary - Why Business Acumen Is Critical To Be An Extraordinary Leader
The Key Attributes of the Top 10% of Leaders
What are the skills that are essential for a leader to get results?
Today, we look at research by Zenger Folkman. They looked at the leaders in a project capacity. They isolated the top 10% of leaders based on results. They called this top 10% the extraordinary leader. The researchers studied the relationship between two competencies: Acumen and Execution.
Acumen is defined as technical skill and financial literacy. Their definition is more narrow than our definition which is defined below. Execution is the ability to get the job done.
First, they looked at the probability of being an extraordinary if you had acumen alone, i.e., without execution skills. Only 7% of these leaders only had acumen skills without execution skills.
Next, they looked at the probability of having execution skills without acumen. They discovered only 12% of extraordinary leaders had execution skills alone.
The surprising discovery is that do be an extraordinary leader you require to have both acumen and execution skills. They discovered 79% of the top 10% of leaders had both acumen and execution skills.
Our definition of business acumen includes both financial literacy and strategic execution. The research reinforces our belief that business acumen is critical for leaders and business owners. If leaders increase their business acumen, it will reduce stress, provide better outcomes for customers and increase employee engagement.
What is Business Acumen? Our Definition
(FQ x SXQ)EQ = ER (Extraordinary Results)
Business acumen is 'knowing how your business makes money and how to drive execution within the companies’ strategy using your management style to deliver extraordinary results'.
Let's take another look at the formula.
Financial Intelligence (FQ) is defined as financial literacy. Financial literacy is not just being able to read financial reports. It includes knowing the critical numbers and their related activities and their impact on the bottom-line and bank account.
Strategic Execution Intelligence (SXQ) is executing according to the company's strategic intent. A business not only needs leader who can execute , they need leaders to execute within the framework of the strategy for the business to be cohesive. There is research that suggests up to 95% of employees do not understand their company's strategy.
Emotional Intelligence is understanding yourself and how you make decisions and interact with your peers. The top leaders in the Fortune 500 were studied for emotional intelligence. They found that emotional intelligence attributes include the ability to self-regulate, make judgements, work with people and resilience.
Business acumen is the combination of all three elements. When you have all three elements the results are exponential not additional. If you are missing one element, the results drop significantly.