Business acumen plays a role in so many rags-to-riches tales. Through shrewdness, vision, and business savvy, generations of railroad barons, pioneering oilmen, and bankers overcame daunting obstacles to create tremendous wealth and value. The celebrated entrepreneurs of the 21st century, the dot.com and social media tycoons have done the same thing—seemingly overnight. The entrepreneurial skills and business sense of leaders in high-growth start-ups often spell the difference between great success and dismal failure. In mature organizations, typical employees may not exhibit the same entrepreneurial qualities as the company’s founders, yet they still need strong business acumen to perpetuate growth and value-creation. Here’s the good news: business acumen is not something you need to inherit; business-acumen training can have an impact on employees at every level of an enterprise.
What is Business Acumen?
Business acumen is an almost intuitive and applicable understanding of how your company makes money. It includes a thorough understanding of what drives profitability and cash flow, a market focused approach to the business, and an overall big picture understanding of the
business and its interrelationships.
To consider these areas of business acumen more deeply, we’ve found that the skills and competencies that are most needed are the following:
1. Financial Acumen: It is important that leaders and employees have a comprehensive understanding of what drives profitability and cash flow. Practitioners need to understand a firm’s financial statements, key performance measures, and how their decisions will impact value creation.
2. Market Orientation: In addition to recognizing how their business operates internally, it is important that leaders have a deep understanding of the external environment or what we call market orientation. This includes the ability to analyze and synthesize market and competitive data. It involves having a deep understanding of the customer’s business objectives and purchasing criteria as well as an appreciation of the value of each customer to the company.
3. Strategic or “Helicopter” Perspective: In many organizations leaders grow up in specific functions or business units and are tasked to execute on tactical priorities. Business acumen requires an overall big picture understanding of the business. This encompasses having an understanding of critical interdependencies across functions and divisions, and grasping the short and long-term trade-offs of business decisions.
From our experience in working with companies over the last 25 years, it is mission critical that leaders and employees throughout an organization have the appropriate capabilities in each of these areas to ensure success. It should also be noted that business acumen is an extremely broad topic. Some of the other key developmental areas included under the business acumen umbrella are mergers & acquisitions, global mindset, innovation and more.
Stay tuned for part two to be released next week on Business Acumen: http://www.bts.com/business-acumen.aspx
Rommin Adl ---
Rommin Adl is the Executive Vice President of BTS USA & Managing Director of BTS Interactive and leader of Global Marketing. He has been with BTS for over 15 years in the roles of senior consultant, seminar leader, project leader and account executive. He has worked with a broad base of BTS clients including Aetna, AT&T, Chubb, Honeywell, Humana, Swisscom Mobile, Time Warner, Tyco International, and many others.
