The role of General Manager (GM) is a demanding leadership position. It requires adopting new perspectives on business and orchestrating myriad activities. The General Manager needs to assume a balcony perspective and is responsible for managing a business system. A well-designed business simulation can provide leaders aspiring to or identified as potential General Managers with a risk-free learning experience to practice the skills, behaviors, and perspective necessary to succeed in the role.
Balcony Perspective
Getting on the balcony is a leadership practice popularized by Ron Heifetz and Marty Linsky in their book Leadership on the Line. This metaphor affords a broad and systemic view of business. It requires leaders to pull themselves out of day-to-day functional activities and details and to consider more broadly the marketplace a business participates in and how it is equipped to thrive within it. From the balcony, a leader can better see how markets and industries are evolving and how the different elements of a business work together to deliver products and services to customers.
Insight Experience’s own Leah Carey discusses the balcony metaphor here:
Business System
A General Manager must understand and manage the business system that supports a company and enables it to function effectively and productively. There are several elements of the business system that require the GM’s leadership. Each of these elements needs to align and integrate with the other.
General Managers are responsible for setting the company’s direction by creating a vision and crafting a strategy. In Playing to Win, A.G. Lafley and Roger L. Martin define strategy as an integrated set of choices, including a winning aspiration, where to play, how to win, and core capabilities. These elements provide a useful framework for developing and evolving strategy. Let’s examine the choices they identify:
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Winning aspiration articulates the purpose of an organization. Like a company vision, it describes a future state that a company aspires to. It establishes the boundaries and framework for the strategic choices a business makes.
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Where to play determines the markets and customers a business serves. These choices can range from global to local, or mass to niche markets. It identifies key competitors, partners, regulatory agencies, suppliers, and their relative importance. Additionally, it defines the products and services a company provides its customers.
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How to win describes a company’s value proposition to its customers. It provides the compelling reason for customers to do business with the company rather than its competitors. It defines a business’s competitive advantage and the unique products and services it offers to its customers. It also provides focus for a company’s innovation initiatives, investments, and capabilities.
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Core capabilities identify the human capital, necessary systems, and supporting business processes required to realize the business’s winning aspiration. It identifies the expertise, knowledge, and skills its employees need to succeed in the markets it serves.
General Managers are responsible for the bottom-line financial performance of the business. They must understand and manage the drivers of financial performance and identify key metrics to monitor it effectively. The General Manager must pay attention to:
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Profitability: What are the drivers of profitability? What is the relationship between revenue and expenses? How do different lines of business and functions contribute to bottom-line performance? Do some business units act as cash generators while others serve to incubate new revenue streams? Which functions are revenue-generating? Which are cost centers or focused on improving productivity? Is the business generating enough profits to invest in the growth and long-term sustainability of the business?
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Asset Management: What assets are required to operate the business? How well are the company’s assets being managed? How are the assets funded, and what is the cost of capital required to fund them?
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Cash flow: Is the business generating sufficient cash to fund its operating expenses? Is it quickly and efficiently converting receivables into collections? Is there excess cash to pay for investments in talent, capital expenditures, or acquisitions? Does the business need additional sources of capital to fund its plans?
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Key metrics: What metrics are important to monitor the health of the business? Do the business’s metrics align with and support the company’s winning aspiration and strategy? Do they drive the correct behavior among employees?
As the General Manager charts a strategy for the organization, a key element is identifying the capabilities required for successful execution. A company can have a brilliant, well-crafted strategy, but if it lacks the capabilities necessary to execute its plans, then its results will be disappointing. Bear in mind that capabilities include more than just the skills of its people. They encompass a broad range of resources and processes necessary for execution. Let’s explore those capabilities further:
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People capabilities: Does the business have the human capital necessary to successfully execute its strategy? What specific functional and technical skills are required? What skills are necessary to be successful today? What skills and capabilities will the business need in a year or in five years? Does it have the leadership skills it needs today and a succession plan in place to identify the leaders of tomorrow?
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Process capabilities: Does the business have the processes in place to manage itself efficiently? Such processes can range from employee and customer onboarding, customer invoicing, manufacturing or service delivery processes, and project management.
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Systems: Is the business investing in the systems needed to support its operations? These systems may range from the mundane, such as email, to the sophisticated, like enterprise resource planning (ERP) or customer relationship management (CRM) systems. They could also include financial management or accounting systems, as well as specialized tools tailored to the company’s unique needs.
The General Manager must continuously assess the organization’s performance. Is it firing on all cylinders? Is it structured to maximize success? What changes are needed to optimize performance? Here are some of the critical questions a General Manager must consider and address:
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Structure: Is the business organized appropriately? Do new functions need to be created, merged, or eliminated? Are the business’s functions staffed by the right leaders? Do new positions need to be created? Is it time to hire a CTO, CHRO, or perhaps a CISO?
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Functional interdependence: How well are different functions working with one another? Is there active communication and planning among them? Do they willingly share resources? Do they craft common goals that align with the broader organization’s strategy and winning aspiration? Are synergies exploited? Are redundancies in effort eliminated?
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Delivery systems: Are products and services efficiently delivered to customers when and where they need them? How well is the company’s supply chain operating? Does the company have adequate product inventory for customers? Is there too much? Does the business have sufficient capacity to provide services to its customers?
The range of activities described above is extensive, and the list of questions the General Manager must address is virtually endless. Although a General Manager has a team of leaders to help run the business, they are ultimately accountable for the results.
The transition from functional manager to General Manager is significant. Using a business simulation to prepare rising leaders for the General Manager role is a powerful and risk-free method. A well-designed simulation presents participants with the diverse array of activities, issues, and decisions required to be a successful General Manager.
To learn more about how your organization can use a business simulation to prepare its next generation of General Managers, contact us.
