Business Acumen and the Leadership Coach

“Don’t send me any more psychologists! I need a coach who understands business!”

This was the cry of one of my clients a couple of years ago who was fed up with the local executive coaches, all of whom were apparently recycled clinicians. When I came to CCL as a coach 10 years ago, the majority of coaches, even at CCL, were mental health professionals who loved working with leaders. Many were and are outstanding coaches because they have the socratic interviewing skills that encourage those they coach to think more deeply, reflect on how they affect others, and develop greater self-awareness; all of which are critical abilities for self-development as a leader. At the same time, their lack of familiarity with the realities of managing a business could frustrate the leader who didn’t want to spend time educating the coach on real life. For a number of years now, CCL has recruited coaches with real world business experience. Sometimes they have to learn to throttle the advice and stories based on their own experiences, but they “get” the world their coachees operate in.

In setting standards for CCL coaches, I’ve given significant thought to what business acumen is and how it is developed. It’s clear that just having business experience doesn’t give that to you: there are plenty of business leaders who need more of it, too. Here are four of the key pieces of business smarts that make a coach useful to the business leaders they coach:

1. The most important bit of business acumen is always the understanding of how a particular company makes its money. What does it create and offer that customers want to pay for? How is that different from others who are trying to convince customers to pay them for similar or related services and products?

2. The second element is knowledge of the marketplace in which a company is selling. Who are the competitors? What are the dynamics that drive relationships in it?

3. Element three is the business: Do you understand the interlocking chain of activities and functions that it takes to make a business work? This is the system of essential operations that is the business: sales, marketing, research, supply chain, purchasing, human resources, learning and development, production, etc.

4. Fourth element is language: Do you know the secret language of business? The club handshake? The etiquette of spreadsheets? This is a dynamic language, always in flux, and it requires continuous language lessons. For instance, in the U.S. the top dogs are called “executives,” but in some parts of the world, the “executive” is the staff person who executes what his or her seniors direct.

What’s your experience of business acumen? I’d love to hear how you frame the business background needed to effectively work with top leadership. Talk back to me.


11 thoughts on “Business Acumen and the Leadership Coach

  1. Doug,
    Great article. And I agree with your points. It is definitely key that coaches speak the language of business–if they don’t, it’s akin to the footbal coach who actually doesn’t understand the fundamentals of the game at all.
    The question I have is this: In a situation where many key internal coaches have a background rooted in psychology, how do you propose such types build business acumen capability to be able to effectively engage leaders?

  2. Interesting comments Doug and Chris. I agree absolutely in term of the need for business acumen in coaching relationships. As an external coach coming from a business rather than a psychology background your comments reinforce for me, the need to ensure the right fit is made when companies employ coaches externally.I’m perhaps being a little controversial but I’m not so sure the two streams of psychology and business acumen work so effectively together. People who have business acumen tend to come from a different perspective than those who’s background is psychology.
    Clearly establishing the needs of the person being coached and the desired result should be the driver in determining the appropriate support, which may be more business focussed or grounded in a more reflective psychological perspective.

  3. Thanks for the commentary, Chris and Shirley. From my pov there are symmetric errors from each background that can lead astray. Psychotherapy can verge on irrelevance because the questions a clinical coach asks may lack the foundation of business or organizational context that anchor the coachee’s thinking. However, a business background sometimes subverts the coaching relationship by keeping it on the safe territory of business advice (of which we have plenty already, I think).
    The fundamental contribution of a coach is the liberation of the thinking, feeling, and intention of the person or group being coached from the limitations to which we are all subject. Those limitations are built-in for all of us and tend to be reinforced by education and experience. We all need broader backgrounds than we have and leadership coaches have the obligation to be in constant self-development and rigorous self-challenge. Only in this way can we be assured we are lengthening the ropes by which coachees are tied to their own traditions. Especially in times of crisis and overwhelming challenge, leaders need to think beyond the self- and other-generated boundaries that hold us to last year’s solutions.
    What do you think?

  4. Hello Doug, Shirley, and Chris,
    I have really enjoyed reading your note and comments- this is an area of coaching that I feel is really important to keep massaging and getting clear about. Just a snippet of background for context – I have 25 yrs in organizations (primarily as a leadership devpt leader) and the last 4 as an external coach. My last internal role was a project role where I built the coaching initiative for my global organization and was quite careful about the process and approach, especially ensuring that coaches we put on our network would “do no harm.” Psychologists can do harm to the coachee without realizing it by having no business experience. I interviewed over 70 coaches at that time and since have interviewed over 100 more as I work with other organizations on their coaching programs. Some of those have been psychologists – some effectively making the adjustment (often due to having someone in the home who is in business), some not. I have my PhD in Human and Organizational Systems, where I studied quite a bit on exec coaching and leader development. (I also had the benefit of going thru the CCL LD prog – exc!) I love business and I get it, and I’ve been evaluated for many years on balancing my passion for human development with the need for business outcomes. When I look for coaches for other organizations I always interview with an internal HR or business colleague who knows their business particularly well and understands the goals of the organization. I also am looking for coaches who get the part you mentioned Doug, about continuous development of their own. Thank you for your insights! Janet

  5. Doug’s “four key pieces of business smarts” do summarize Business Acumen quite well. Often, though, many HR practitioners mistakenly think of BA as mostly Financial in nature. When we use our simulations to develop the BA of different employee groups, one of the most valued outcomes (as described by the participants) is the deep understanding of the cross-functional dependencies and their impact on a variety of business metrics.
    Coaches have to deal with very complex situations and personalities. Just like for any good leader, they too have to combine the “soft” and “hard” skills.

  6. I liked your reply to Shirley and Chris. I like your nautical references (anchor, ropes) and of course your “liberation” metaphor (is that the influence of your experience at Howard and the seminary? :-)). I agree that good coaching, therapy, business advice or whatever we call helping “liberate” corporate executives, is about unmooring people. Doug, could you be saying that it is the attachment of mind that may be the culprit, not only the coachees, but the coaches as well.
    As a coach who is a former psychologist, coporate officer and elected offical, business acumen is about managing the “stage” of the engagement. My understanding of the 4 elements of business acumen as you describe them allows me rapidly gain credibility and thereby access to the coachee’s “private, inner world,” to properly locate or contextualize if you will, the coachee’s “predicament,” thereby minimizing my projections, distortions and other biases. Lastly, the “languaging” issue you mention is more than knowing their code book so I can sound knowledgeable and credible. If we story our lives as the French post-structuralist might say; if language is also a verb and we “language” our lives through signs and symbols; then it is central to our work as coaches that we understand how our coaches construe their world. In understanding the “how” of their language, we might thereby help them rearrange their unique coding sequence so they can construct, construe, alter or in some way change their story to better align, their values, hopes, attitudes and goals towards taking conscious responsibility for the predicament they find themselves in–the one they are creating in this moment.
    Satir would have called what we do peoplemaking. And maybe peoplemaking includes what most of our mainstream religious traditions have described as voluntary renunciation–a method to attain liberation. Gandhi said, “Civilization is not the infinite multiplication of human wants but their deliberate limitation to essentials that can be equitably shared by all.”
    Maybe it’s just about growing up.

  7. Thanks Doug. Your article helps to emphasize the value of coaches and the special knowledge that is needed to be effective. As you point out, business acumen is more than just a straight line. I like Shirley’s comments, too, and the reminder that management must seek a good fit in matching needs with executive coaches.

  8. Leadership is all about the task and people. When it comes to the task, a coach has to have a business orientation to understand the context in which the leader is functioning. The coach has to help the leader reflect on the possibilities, should be able therefore to ask the right questions. Extending the coaching concept further, is it best to have coaches from different business verticals like engineering, manufacturing, automobiles, banking, etc? In my humble opinion, the real challenges in leadership lie on the people front, how to have a leader stand for his/her convictions when the odds are stacked up against him, how to be consistently ‘great’ in the eyes of his people, how to resist greed for the better of the organization and how to execute (implement) but in a way that the world admires. I keep going back to what Warren Bennis had said “America is over managed but underled”

  9. Doug,

    I enjoyed your post and the comments. I paused when reading the 4th element of business acumen in your list. I wondered if it should extend beyond understanding the language to understanding the culture of a particular business and/or company. Language seemed to me to be just one aspect of a broader set of beliefs and values that are critical to the context that the coach needs to understand.

  10. As a prospective leader only you know what’s important in realizing your vision of success. However, we all seek shared outcomes to provide a foundation for where we want to be. You can drastically increase your chances of succeeding in business and life when you learn from a coach or mentor – someone who once stood in your place and overcame all obstacles to earn success and happiness.

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