Developing business savvy

Last week I was in Shanghai teaching organization design to thirty people from various national and international companies. It was an amazingly interesting workshop – I learned so much and have come back with a raft of questions to answer on approaches to organization design. Several of them are complex and very worthwhile to answer but I'm still thinking about them.

One of them is somewhat less complex but no less worthwhile to answer. It's about getting and maintaining what in the jargon is called 'business savvy'. Why were the Shanghai participants in the organization design program interested in this? Because they felt that that HR people there (in China) are not thought of as 'business' people but as 'people' people. These HR practitioners wanted to know how they could develop their own skills so that they can have credible, forward thinking business conversations with their colleagues who are running the organizations and managing the business of it.

They want to move on from the notion that all they do is recruit , train, pay people, and make sure that the organization complies with employment law. They want to be trusted as business advisors skilled at developing business growth, profitability and performance through careful attention to the 'people asset.'

What they need to do this is 'business savvy'. This is explained by Ed Griffin (development partner at D3 Partners and interim HR director at Chime Marketing) in an engaging podcast from the CIPD as being

"About a deep and comprehensive understanding of the organization. I think fundamentally it's about understanding what makes your organization viable. So that's about understanding where does the funding or the finances come into the organization. It's knowing who are the people who bring that in and who are the people who support those who bring in the money. So what's the relationship between what your people do and the value that achieves the purpose of the organization. I think there's also something about understanding how your organization really works in terms of its processes, its procedures and its systems, and then there's a piece which is about the human dynamics. So it's about understanding what you might call organizational politics, who's really influential and who's not, who are the noise makers but not necessarily the powerbrokers.

And then there's a massive external piece. So actually business savvy is about understanding what's going on outside your organization, what's the context within which your organization sits. It's about understanding your customers, it's understanding the competition, it's understanding how products and services are developing in your field. It's about being able to get in the mind. I think somebody said once if you're not serving a customer you'd better be serving someone who is. So it's that proximity to the people who are the beneficiaries of your organization and its work.

Without 'business savvy' organization development practitioners (largely seen as part of HR) will not get their desired 'seat at the table' that is – a place on the management/executive team of the business. Some who have business savvy already are succeeding. Take Richard Booker, HR director at BG Group PLC, a global natural gas organization who speaks in the podcast. And note – he is a trained accountant. He left his finance job and joined HR out of sheer frustration with the HR function in his own organization. As he explains:

"I went through a variety of different iterations of a finance career, ended up at Citigroup in New York looking after risk management for derivatives and structured products. It was a great job but I had an awakening one morning that I realized I spent more than half my time on people-related issues as a manager and the HR function were generally the 'No' police."

A few years ago, in 2005 – Fast Company published an article more or less on the "'No' Police" theme. It was called Why We Hate HR, and describes the high level of barrier HR faced to get that 'seat at the table'. Five years later 2010 the magazine published a sequel to it Why We (Shouldn't) Hate HR, suggesting that.

The real problem isn't that HR executives aren't financially savvy enough, or too focused on delivering programs rather than enhancing value, or unable to conduct themselves as the equals of the traditional power players in the organization–all points the original essay makes. The real problem is that too many organizations aren't as demanding, as rigorous, as creative about the human element in business as they are about finance, marketing, and R&D. If companies and their CEOs aren't serious about the people side of their organizations, how can we expect HR people in those organizations to play as a serious a role as we (and they) want them to play?

I think that's a good point but it doesn't address the issue that many OD/HR people are not skilled at challenging their colleagues' conventional thinking about the human element in the business. OD/HR professionals lack the internal reputation, credibility, and authority to argue their case because they don't speak the language of business and don't know how to. It's a bit of a circular argument because to be credible they need the business savvy. How do they do this if they are not an accountant, or other trained business person? What is going to help them develop and then keep their business skills honed?

Well there are lots of ways but begin by taking small steps. Anyone in an organization who wants to develop and maintain business savvy can start by asking these ten questions, about their own organization. If they don't know the answers then they should set themselves the challenge of finding out and then keeping up to date as they are not likely to stay the same for very long.

  1. If you work in a for-profit publicly traded company do you know what today's share price is?
  2. Who are your company's current competitors?
  3. What are they competing with you on? (Price, quality, customer service, product innovation, etc)?
  4. What do your business colleagues worry about most in terms of operating the business?
  5. What are the main strategies in moving this organization to being more successful?
  6. What are the key short-term goals to achieve these strategies?
  7. What are the main constraints in executing these strategies?
  8. How confident are you that these strategies are the right ones?
  9. Why should your customers be committed to your company?
  10. What is the value proposition you offer your customers?

I go along with Ed Griffin and think that the main stumbling block to being business savvy is not knowing enough about the external operational context of the organization. So step 2 is to develop a personal strategy to keep up with the social, technological, environmental, economic, political, legal, and ethical backdrop that are the main drivers of change in a company. There are literally hundreds of sources of information but as a starter here is are the main things that I look at every week, they all come, in the first instance as an email alert to my inbox, but now I have a Twitter account I'm converting them to look at them on that.

  • Co design (from Fast Company)
  • Economist
  • Emergent by design
  • Fast Company
  • Financial Times
  • Idea Cast (HBR podcast)
  • McKinsey Quarterly
  • New York Times
  • Psyblog
  • Science Daily
  • Stanford GSB-Knowledgebase
  • Stanford Social Innovation Review
  • Strategy+Business
  • TechCrunch
  • Technology Review
  • The Mix Fix
  • Wall Street Journal

It's a big mixed bag of stuff to look at, but covers the main areas that give me confidence to talk with the various business leaders and managers I meet with in the course of my work, and I find what I learn fascinating. For example, yesterday, from Technology Review, I found out about Baxter, the industrial robot, which uses technology that could bring automation to new areas of manual work – useful in my thinking about types of work and how organization designers need to be forecasting about how to design with such technology in mind.

How and where do you get your business savvy? Let me know.