Business Leadership: The Essential Capabilities of an Effective Leader

Sunday, April 01, 2012 | Category :

Dr. Philios Andreou Sphika

Leading companies around the globe consider leadership development a critical challenge and are making the investment in their future leaders. However, most organizations rely on the traditional view that "leaders in an organization are business experts" and "leadership development is about the how to deal with people" which nowadays seem to be only partially true. Leaders identified seldom have a track-record for running multiple functions or achieving comprehensive P&L targets. More often than not, their roles typically have been those of a functional leader and business oriented leadership skills are much more than simple financial acumen or product/customer and sales expertise.

Historically, or even cinematically, effective leaders draw on a wide array of talents to inspire those who follow. In the film, Gladiator, there is a powerful scene where General Maximus is addressing his troops before going into battle. To motivate and inspire his troops, he says:

“Three weeks from now, I will be harvesting my crops. Imagine where you will be, and it will be so. Hold the line! Stay with me! If you find yourself alone, riding in the green fields with the sun on your face, do not be troubled. For you are in Elysium, and you're already dead! ... Brothers, what we do in life... echoes in eternity… "

The whole idea of the speech is “stay with me – I know how to keep you alive” – “follow my instructions and we will be where we all want to be very soon”. This speech becomes powerful because Maximus has credibility. He is credible because he understands the situation and the complexity of the battle; he has the capability to draw on a strategy to help his team win; and most importantly, Maximus has a clear vision.

People Leadership vs. Business Leadership

Great leaders encompass a range of skills that can be classified into two groups – people leadership and business leadership. There are distinct differences between the two. Often, we tend to focus on people leadership skills (the “How”) such as the ability to engage and inspire, collaborate, influence, manage stakeholder expectations, develop talent, and lead change. While these skills are essential, business skills (the “What”) are on the more strategic side of the capability spectrum and are often given minimal attention. Key capabilities that are included under the business leadership umbrella include strategic thinking, market savvy, business and financial acumen, competitive awareness, fact base analysis, scenario planning & evaluation, portfolio management and decision-making.

Leaders that exemplify strong business skills, including business acumen, are better equipped to understand and articulate the company strategy, and can make better decisions to execute more effectively. They are better equipped to manage the three tensions in business: profitability vs. growth, long term vs. short term, centralization vs. decentralization.1 Combine these characteristics with the ability to engage, inspire, collaborate and the result is an effective and successful leader.

Putting Business Leadership Skills to Practice

The good news is there is no need to go to the battlefield to practice business leadership skills. As one US Army General interviewed by BTS pointed out, “there are some things I really do not want my people to learn on the field,” meaning I would rather have them practice in a simulated risk free environment where learning is impactful and secure.2 The use of experiential methodologies like business simulations, Engage Maps and other discovery based learning techniques can help accelerate business acumen learning and allow people to practice business leadership skills in order to deliver meaningful results. Studies have shown that practice by doing increases the learning impact by 8-10 times over the traditional techniques of lecture and reading.

Finally, immersing leaders in discovery-based learning initiatives that are connected to desired organizational results creates valuable experiences that are more apt to stick as they return to their job. As Tim Mooney and Robert Brinkerhoff explain in their book, Courageous Training, leaders must understand how their new skills and capabilities are linked to their strategic objectives.3 Learners must leave the experiential learning program armed with an action plan and a clear understanding of how these new capabilities align to the company’s strategy.

In Conclusion

Leaders who exemplify a combination of strong business leadership skills and people leadership skills understand the key question to a company’s ultimate goals of value creation. They can combine the drivers of profitability and growth with a market focused approach whilst engaging, inspiring and collaborating with those around them to ensure agility and long-term success of the organization. As a friend who is a famous basketball pro told me once: “It is not your height that matters in basketball; it is the height of your game!"

About the Author: Dr. Philios Andreou Sphika is Managing Director, BTS Iberia and Latin America

1 Corporate Universities by Jeanne Meister, McGraw-Hill, 1998

2Interview with Brigadier General W.Chris King In

3Mooney & R. Brinkerhoff, “Courageous Training” Berrett-Koehler Publishers, 2008


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