What exactly is Business Acumen?

What is Business Acumen?

An Understanding of How Companies Make Money

One of the hottest areas in leadership development these days is the topic of “Business Acumen.” Unfortunately for talent development professionals and business leaders, there are many definitions for Business Acumen, ranging from the most basic – training someone on how to come to work on time – to the more complex training, helping an executive to become a leader of global businesses. To cut through the clutter and offer a simple, yet elegant understanding of what is Business Acumen in today’s volatile, uncertain, complex, and ambiguous world, we can define it as the following:

I understand how a company makes money
I understand how my company makes money
I understand how my customers make money

This approach to understanding Business Acumen enables business professionals to follow a logical progression that helps them make the right decisions to drive the best business results for their own companies and clients.

Understand how a company makes money

A business organization can be considered a complex system. That system is driven by a business strategy which is a value proposition offered to customers who will pay a fair price for the value they receive. The key elements of understanding how any company makes money include:

The company’s business strategy
The goals and objectives of the company
The financial metrics of the company
The size of the company’s potential market
The customer segments that make up a market
How the company markets itself to create awareness
How the company sells its products / services
How the company produces its products / services
How does the company get its products / services to its customers
How the company receives the cash for the value
How the company adjusts its strategy and moves forward

Understand how my company makes money

The next step in successfully understanding Business Acumen is recognizing how “my company” makes money. It is critical for every employee working within a business organization to build the business skills to better understand how the company they work for makes money. The topics are similar, but the subtleties are enormous. The key elements of understanding how my company makes money include:

My company’s business strategy
My company’s goals and objectives
My company’s financial metrics
The size of my company’s potential market
My company’s customer segments that make up our markets
How my company markets itself to create awareness
How my company sells its products / services
How my company produces its products / services
How does my company get its products / services to its customers
How my company receives the cash for the value
How my company adjusts its strategy and moves forward

Understanding all of these elements enables employees to lead effectively and make the best business decisions that support the strategy and achieve its goals and objectives.

Understanding how my customers make money

The final step in successfully learning about Business Acumen is understanding how “our customers” make money. Every employee working within a business organization needs to understand how customers make money so employees can align the value proposition of their company to the needs of their customer’s company. Again, the core elements of what needs to be understood here are similar, but are focused on fully understanding the dynamics of your customer’s business.

The key elements of understanding how my customer’s company makes money include:

My customer’s business strategy
My customer’s goals and objectives
What are my customer’s financial metrics
The size of my customer’s potential market
My customer’s customer segments that make up their markets
How my customer markets itself to create awareness
How my customer sells its products / services
How my customer produces its products / services
How does my customer get its products / services to its customers
How my customer receives the cash for the value
How my customer adjusts its strategy and moves forward

Understanding all of these elements enables employees to lead effectively and make the best decisions that support the ability to deliver the products /services your customers need to execute their strategy and achieve their goals and objectives.

why business acumen matters