What is Business Acumen?

An Understanding How Companies Make Money

One of the hottest areas in leadership development these days is the topic of “Business Acumen.”  graph-pie.pngUnfortunately for talent development professionals and business leaders, there are many definitions for Business Acumen, ranging from the most basic - training someone 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 pie-chart-numbers.gifstrategy 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 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" makesbag-dollars.png money.  It is critical for every employee working within a business organization to 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 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 achieves its goals and objectives.

Understanding how my customers make money

The final step in successfully learning about Business Acumen is understanding how "our customers" growth-chart.pngmake 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 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 enable employees to lead effectively and make the best decisions that supports the ability to deliver the products /services your customers need to execute their strategy and achieves their goals and objectives.

Additional Reading

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