What Is Business Acumen?
6 Simple Ways to Develop Business Insight and Become a Better Leader
Aug 1, 2009
Business acumen can be described as an understanding of how a business works and what it takes to make it profitable. It is about comprehending topics such as: amortization, assets, balance sheets, book value, cash flow, fixed assets, liquidity, margin and return on assets, to name just a few.
The best leaders know that having a strong understanding of their business is critical to making money consistently, and knowing which opportunities to grab and which to ignore. They realize that they need to have not only good business understanding in general, but also specific knowledge about the type of business and industry they are in. When these two conditions are not met, leaders typically fail to recognize the challenges the business is facing, the concerns of their people, and the impact of their decisions on the bottom-line.
Ways to Develop Business Acumen
- Reading business publications and watching specific business channels can provide current information about business trends, markets, or economic factors affecting various businesses and industries. Some of these include: The Wall Street Journal, Business Week, the Harvard Business Review, and CNN.
- Joining professional networking organizations and associations dedicated to sharing business information with their members can offer networking events, conferences, and seminars.
- Attending evening or weekend courses focusing on business topics can build one’s knowledge on matters such as understanding financial statements and P&L (Profit & Loss), cash generation, or revenue growth.
- Finding a mentor with a strong business understanding is a great way to learn how businesses operate. The mentor can be a co-worker, a former boss, or someone who is a member of the same professional association.
- Participating in task forces or committees responsible for developing the business can offer opportunities to work on challenging and exciting initiatives, such as improving quality, generating higher revenues, reducing costs, or process re-engineering.
- Last but not least, finding an accountability partner can be extremely beneficial. He or she will not only provide support, but will also help track progress and keep the individual focused on their learning goals.
Although business acumen can certainly be developed by doing some or all of the things above, one of the best ways to learn is through hands-on experience with various business scenarios and challenges.
Opportunities to Develop Business Acumen
The following are just a few examples of scenarios that can help develop one's business understanding through the challenges they provide and the dialogues they encourage:
- Starting a new business
- Expanding an existing business (for example, launching a new product or entering a new geography)
- Acquiring a business
- Product redesign initiatives
- Quality improvement initiatives
- Company-wide or cross-functional reorganization projects
As Ram Charan so aptly put it in his book, What the CEO Wants You to Know, "Expand on your business acumen by practicing it in more complex situations. Don’t be afraid to make mistakes and learn from them.”
 |
