- Published: 02 August 2009
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Organizational Development and Business Acumen
The traditional definition of OD focuses on developing organizational strategies, structures and processes in order to improve the effectiveness of the organization in achieving its goals.
A key goal of any organization is to improve its value. In the case of the private sector, this means increasing its market value and valuation relative to its competitors.
However in the past, there has been no way to formally link OD with market value and valuation. Thus OD practitioners focus on non-financial drivers of organizational performance, including emotional, psychological and sociological. Whilst these are valuable they have left a major gap in terms of showing OD how to link financial and valuation goals with OD practices and strategies.
This situation is now changing as the disciplines of behavioral finance and economics have started to emerge and have had an impact in the investment and financial areas and whose impact is now moving into the areas of leadership and management development. It is becoming increasingly clear that these disciplines hold the key to linking OD formally with valuation and financial performance.
The research by the Perth Leadership Institute is at the forefront of this movement, and is reflected in its many publications on this topic. The import of behavioral finance advances and its research is that OD needs to add also a focus on business acumen and financial impact in order to improve the ability of an organization to achieve its market valuation goals, a key issue for shareholders.
In sum, emerging trends are emphasizing the necessity for OD practitioners to become aware of behavioral finance and to use this to improve business acumen at the individual, team and enterprise levels as a way to increase the valuation of the overall enterprise.
Perth’s leadership assessments are based on an innovative behavioral finance approach which is receiving increasing attention from both the academic and the business worlds. This approach adds a new dimension to OD, allowing financial and business factors to be formally linked to OD via a new type of behavioral assessment.