Knowing Business Acumen
As today, in the crucial dynamic environment, our business keeps changing rapidly. So top-management of each organization is expecting more on their member to understand their business well. Consequently, “Business Acumen” has been identified as one of the critical competencies needed by leaders over the next decade as this is the consensus among “Human Development People” from most of leading organizations.
However, despite that fact that business acumen is an essential competency needed by managers and leaders, it is still ambiguous either what business acumen actually means or what ability should be clarified as an component of this competency. Regarding to Celemi’s White Paper, Business Acumen: An Experiential Approach which examined over thirty published definitions and/or explanations of business acumen, it leads us to the following conclusions about business acumen characteristics:
- It is essentially behavioral and experiential, and not merely a mastery of technical business knowledge, concepts, or practices.
- It requires the synthesis of technical knowledge, personal business experience, broad organizational exposure, global awareness, and analytical insight.
- High levels of business acumen result in improved financial performance, operating efficiency, human capital value, and market share growth.
- It leads to decisions that incorporate a balance between short-term objectives and long-term strategic goals.
- It enables organizational agility to quickly exploit opportunities and defend against threats.
The Benefits of Business Acumen
Despite the unclear definition on business acumen, and its confusion with business knowledge, there is general consensus about the benefits of possessing a high degree of business acumen among managers and leaders. They include:
- Improved decision making that balances long-term, short-term, and systemic consequences
- A breakdown of silo mentality as leaders see the implications of their decisions across all functional areas and customer segments
- Improved organizational agility to shift markets and processes quickly
- Building a high performance leadership team as a source of competitive advantage
- Strategic plans actually get executed – not simply developed and “shelved”
- An ability to improve the level of analytical insight leading to more profitable results
- Greater focus on predictive quantitative indicators
- A source of retaining and attracting talent
- Greater process alignment and systems thinking
- A leadership team that manages ambiguity well and challenges to take more informed risks
- Greater bench strength among emerging leaders.
The Business Acumen Challenge
In order to build business acumen within leaders, there are challenges with the need to raise the level of business acumen among managers and leaders as followings;
- Business acumen requires the past experience, technical business knowledge, broad organizational exposure and analytical thinking where our traditional training are limited to the technical components. In other words, having an MBA does not equate to having business acumen.
- Within complex organizations, there is a mindset that certain individual or functional departments do not wish to share information with others in the same organization. This is often referred to as “silo mentality” which is against to building broad business exposure within leaders in their formative development.
- It’s difficult to measure the degree to which someone possesses business acumen skills via conventional assessment tools.
- Because business acumen requires experience, the path up the competency curve can be slower than what is needed for emerging leaders rapidly assuming increased responsibility.
Many organizations still address business acumen via traditional business knowledge training, while this business knowledge actually is an essential ingredient of business acumen, but it does not build the higher refined skills that organizations need and rely on to grow, stay competitive, and build shareholder wealth. The chart below depicts the outcomes derived through business knowledge training versus the higher value outcomes associated with refined business acumen.
*Product, price, place and promotion.
The Business Acumen for Everyone
Enpeo Consulting is one of the leading consultancy service that strives to develop employee leadership and engagement. Business acumen in one of critical competency which we believe that people with keenness of business acumen will be able to make quick, good business decisions that drive superior performance contributing to their organization.
We facilitate business acumen workshops that help people to understand the big picture of business system and interdependent between functions in the business. In the workshop, participants learn how the business makes money, the structure, component and meaning of financial report, value driver in business and relationship between cashflow, profit, growth, employee, customer etc..
After the workshop, participants will be able to assess the financial health of the company, linkage to improvement and support company strategies to grow business profitably.
- Celemi’s White Paper, Business Acumen: An Experiential Approach