The Search for Business Acumen
Business acumen is the understanding of key business drivers for performance and use of sound business practices. In order to remain viable, businesses must grow, make a profit and stay ahead of the competition. No matter what role a leader plays in an organization, therefore, he or she must be able to navigate the competitive business landscape effectively, a skill often referred to as “business acumen”. There are lots of ways to differentiate yourself and your company from competitors, and business acumen is surely one of the most important. Business acumen is a general understanding of business principles. It is the ability to make thoughtful business decisions. Mostly, it relates to the ability to make decisions that lead to profit.
The search for business acumen will help keep other traits and skills in perspective. For instance, great communication skills help leaders motivate people, implement a strategy, and win over customers, investors, and the public. But business acumen defines the substance of the message being communicated and is gained by knowledge. The old saying that knowledge is power is so true in today’s business world. Business acumen can be gained by reading and studying but also by doing.
Leaders must make crucial decisions that directly affect the overall financial performance of the organization. They are challenged with ever increasing responsibility and accountability for financial, strategic and operational decisions. They must possess the confidence and business acumen to make decisions that build shareholder value and support the organization’s overall strategy.
The term “business acumen” can be broken down literally as a composite of its two component words: the Oxford English Dictionary defines acumen as “the ability to make good judgments and quick decisions”. Given the standard definitions of business and what is “good” for business, a strictly literal definition would be “the ability to make profitable and quick business decisions.”
It is all about confidence and is not about arrogance or false pride. With knowledge and experience and seeing positive results gained by your actions comes confidence. Knowing what works and what doesn’t is the essence of business acumen. Some of this can be learned by reading what others have to say and seeing what others have experienced and applying it to your own situation.
How to truly acquire an instinctive business behavior…
- Clearly understand why your customers choose to do business with you
- Ensure your pricing is consistent with your business strategy and customer expectations
- Limit risk exposures and achieve optimum returns with appropriate financial structuring
- Evaluate your organization in light of your industry and competitors
- Recognize the interrelated chain of events between decisions and organizational results
- Understand how your company makes a profit so based on strategy and have a collaborative, organizational focus
Business acumen is the collection of knowledge, skills, and experiences that transforms us into indispensable strategic partners in our organization. Professionals are expected to communicate in the language of business. Decision-makers expect to see results from investments made in all parts of the business no matter where you sit. An individual’s advancement in a competitive environment without good business acumen is rare because, as individuals advance, their performance requirements change from an emphasis on knowledge, education and experience and how well they do their job to how well they:
- Know how things get done.
- Understand where to go to get help to get things done.
- Demonstrate personal creditability.
- Perform effective follow-up.
- Hold subordinates accountable for their own performance.
- Provide recognition or other necessary performance feedback.
Business acumen will continue to become more important, particularly as businesses continue to be affected by social trends such as preferences and requirements of the available workforce. As such, companies will need to place greater emphasis on business acumen if they want to remain competitive. Business acumen means never having to say you didn’t try. The most savvy business people have tried and failed a thousand times all in an effort to see what works and what doesn’t. Learn from those who have gone before you. Transfer their knowledge into your situation and the business world will be yours.
Jamie Wood, Avatel EVP
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