Your leaders run major parts of the business, but have a weak understanding of their own financials and entrepreneurial thinking.

Challenge

A friend who'd just taken a new executive position said to me, "I've got good people. They're technically competent, hard working, good at managing others, and loyal. They just don't have a clue how to run a business."

Senior manager, even executives, may have risen through the ranks based on their professional competence. Along the way, they acquired supervisory skills -- the ability to manage and motivate others.

But few have actually run businesses. They may know how to read budgets and financial statements. But they've never had a chance to develop entrepreneurial skills.

As a result, they're not contributing all they might to the strategic thinking of the enterprise. And where will the next generation of leaders come from?

How can an enterprise cultivate entrepreneurial skills in all its up and coming leaders?

Solution

This is one of many reasons to treat every group at every level of the enterprise as a business within a business -- there to produce well-defined products and services for peers within the enterprise or external customers.

In this kind of organization, every manager has a business to run, has customers to please, has suppliers (other managers) to motivate, and has competition to beat (decentralization and outsourcing).

Step One in implementing a business-within-a-business organization is an annual business and budget planning process such as FullCost.

In it, managers learn to define a catalog of products and services that customers want to buy. They forecast expected sales in an annual business plan, and figure out how they're going to fulfill those sales. They manage their costs, knowing that customers may choose to buy from their competitors if they don't offer good value.

As much as any technical competencies, this experience prepares them for the next level of their careers (or quickly filters those who'd rather remain at technical levels).

Through participation, managers also contribute their in-depth knowledge of their portions of the organization to the business plan, and they make commitments that become the basis of measurable accountabilities.

"...it was like a mini-MBA. It's given me grounding in finance and changed the way I manage my unit and approach my customers."

Cindy Mitchell Director, Applications Engineering, University of Maine

Comprehensive solution....

Other Resources

Case Study: Developing Leaders' Business Acumen
how a new budget process turned into Entrepreneurship 101 at the University of Maine