Developing Business Acumen – Lead to a Good Outcome
Developing business acumen is keenness and quickness in understanding and dealing with a business situation in a manner that is likely to lead to a good outcome. It is seen as a mechanism for improving financial performance and leadership development.
Business acumen, also known as business savvy and business sense is an ability to understand and deal with different business situations. We have to make clear that developing business acumen is not a single skill, but a wide complex of competencies, knowledge, and awareness of multiple aspects of a business.
It is a direct and appropriate understanding of how your company makes money. It includes a thorough understanding of what stimulates prosperity and cash flow, a market-focused approach to the business, and an overall understanding of the business and its interrelationships.
If you don’t understand financial metrics, it is really impossible to build a business If you lack financial skills, you are not able to understand the financial implications of your decisions. The results can be real disasters leading to wasted resources, wrong decisions, missed opportunities, and a decrease in the financial performance of your organization.
One who is unskilled has the following characteristics –
- Doesn’t understand the broader world of business.
- Maybe a very committed functional or professional expert.
- Doesn’t understand the “business” the organization is in.
- Maybe narrowly tactical.
- Lacks interest or experience in general business.
- Lacks empathy which is caring about people.
- They generally lack time management and aren’t interested in careful scheduling.
Let’s now list the main characteristics of competencies that individuals with strong business acumen competency have.
A person who is skilled will –
- Be able to obtain essential information.
- Be able to focus on the key objectives.
- Be able to recognize the options available for solving problems.
- Be able to select the right approach to overcome those obstacles.
- Be able to set in motion the plan that gets things done.
People with business acumen can create larger schemes and use them for the benefit of the business.
They are able to use the finer details to their advantage in the event of problems.
They possess the following characteristics –
- Know how businesses work and thus can be more efficient.
- Provide better solutions to business problems and threats.
- Have knowledge of current and possible future policies, practices, trends, and information affecting their business and organization.
- Know the competition.
- Are aware of how techniques and strategies work in the marketplace.
There are some people who overuse their skills. They may –
- Depend upon industry and business knowledge and skills sacrificing their personal, interpersonal, and leadership skills.
- Be inexperienced or new to the organization.
- Be lacking interest in general business.
- Have a narrow perspective.
- Have no exposure outside the function.
- Be overly dedicated to a profession, not the organization.
- Be very tactical and really oriented.
When developing business acumen becomes people’s need, it usually comes in two ways. The first is that you don’t seem to know enough about business. This means some of the suggestions you make are not practical. It may also mean what you are suggesting is known not to work and you are not aware.
The second is that you don’t know enough about this particular business and industry. That usually means you don’t understand the agenda, issues, and concerns of the people inside their organization and you make comments and have suggestions that don’t match their priorities. Your contributions are limited because you don’t have a broader view. Unless you associate with them, they’re not going to pay attention to you.
- Read The Right Periodicals – Reading the right publications will probably teach you most of what you need to know about business in general on a continuous basis. Subscribe and begin to scan those publications regularly. Try to see issues that relate to your business.
- Watch The Right Sources – There are several business channels that carry business news and information. They have interviews with business leaders, reviews of industries by experts, as well as general reviews of companies. Begin to watch one or two programs a week until you can focus on what you specifically need to know.
- Join The Conference Board – They distribute information about a business to its members by having conferences where many top leaders of business come and share their thoughts about business in general and their business specifications.
- Study Some Business Books – Go to any book store and pick books on general business principles with a financial and marketing incline and about customer service. When you have studied those, pick more until you have the business knowledge you need. Attend an advanced business program or get an MBA at a local college or university.
- Knowledge About Your Business – Have a meeting with a person who knows about business and is in charge of the strategic planning process in your company. Have him explain the strategic plan for the organization and the capabilities the organization needs to win.
- Try Some Broader Tasks – Volunteer for tasks that include people outside your area of expertise. Work on some projects that cross-functional or business unit boundaries to learn more about the business.
- Get Close To Customers – Customer service is the best place to learn about the business. Arrange a meeting with an equivalent in customer service. Have him explain the functions to you. If possible listen in to customer service calls or even better handle some yourself.
- Learn To Think Like An Expert – Take problems to experts or consultants and ask them what clues they look for. Take a note of what they consider significant and insignificant. Put up data into categories so you can remember it. Devise key areas or questions you can consider each time a business issue comes up. Wasting your time learning facts won’t be much use unless you have imaginary buckets to put them in. Then present your thinking to experts or write a strategic business plan for your unit and invite their review. There is no need to limit your choices to just your organization; any calculating business person should have some interesting insights.
- Strategic Perspective – In many organizations leaders grow up in specific functions or business units and are tasked to execute on calculated priorities. Business acumen requires a good understanding of the business. This includes having an understanding of critical interrelationships across functions and divisions and grasping the short and long-term compromise of business decisions.
- Market Orientation - Apart from recognizing how their business functions internally, it is important that leaders have a thorough understanding of the external environment or what we call market orientation. This includes the ability to diagnose and evaluate market and competitive data. It involves having a deep understanding of the customer’s business objectives and purchasing norms as well as an appreciation of the value of each customer to the company.
- Financial Acumen – It is important that leaders and employees have a comprehensive understanding of what drives profitability and cash flow. Professionals need to understand a company’s financial statements, key performance measures, and how their decisions will influence value creation.
Every business needs leaders at all levels who are able to combine different things together and make decisions for the benefit of the whole organization. These people are often seen as having strong business acumen.
The business skills and sense of leaders in fast-growing start-ups often define the difference between great success and horrible failure. In mature organizations, typical employees may not exhibit the same leadership qualities as the company’s founders, yet they still need strong business acumen to maintain growth and value creation. It is not something you need to inherit; developing business-acumen training can have an impact on employees at every level of an enterprise.
Contact us if you are interested in a business strategy training program that is tailored to the needs of your organization or team.