Defining Business Acumen

 In today’s complex global business environment, organizations can survive or fail, and individuals'defining-business-acumen2 careers can stall or excel, based on the level and proficiency of business acumen skills within their company. Just ask any c-suite executive if having a strong business skill set has been critical for their own success and we guarantee they will say yes! With this being such an important competency, defining Business Acumen and getting everyone on the same page about what it means is critical.  

Advantexe is a training and consulting firm that specializes in the design, development, and delivery of simulation-centric talent development engagements that focus on Business Acumen development. Based on our work with cross-functional teams, new hires, emerging leaders, and some of the top business leaders around the world, here is how we are defining business acumen. 

Defining Business Acumen

Business Acumen is a deep and applicable understanding of the system of how a business achieves its goals and objectives. It includes a thorough understanding of the levers that create and position a value proposition to customers and it drives profitability, cash flow, and shareholder value. Specifically, the definition is an understanding and awareness of how to think about and successfully make the right business decisions. The term business acumen should be broken down into two primary areas:

  1. Industry-specific knowledge and skills
  2. Strategic thinking tools and skills.

Industry knowledge skills include:

  • Understanding and impacting the Profit & Loss Statement, the Balance Sheet, and the Cash Flow Statement,
  • Comprehending the industry ecosystem and local market (customers),
  •  Analyzing and using data.

Strategic thinking skills include:  

  • Using sound business judgment, having a general manager mindset (assessing a market and setting direction)
  • Being able to predict contingent outcomes from both customer and competitive perspectives

Taking an even deeper dive into the definition, let’s focus on three primary characteristics that comprise the series of Business Acumen competencies in today’s business leaders:

  1. A General Manager's Mindset
  2. Financial Acumen
  3. Ability to Lead and Support Strategic Execution

Business Acumen Competency Model


A General Manager's Mindset

  • Understands the complete business ecosystem including developing and executing strategy, the integration of internal operations to deliver the value proposition, the supply chain, market trends, customer needs and segments, and competitive analysis.
  • Knowledgeable of current and possible future trends, policies, practices, innovations, and information affecting his / her business and organization.
  • Understands the global marketplace and can function globally and locally at the same time.
  • Is able to think strategically and tactically with a focus on business results.

Financial Acumen

  • Understand company and client financial metrics and performance and the impact business decisions have on the P&L, Balance Sheet, and Cash Flow statements.
  • Understands and communicates the drivers of shareholder value and the key decisions that drive it in the short and long term.
  • Is aware of how strategies and tactics work in the marketplace and in regard to your company's business.

Ability to Lead Strategic Execution

  • Is able to develop and execute a competitive analysis and lead the changes that create differentiation and growth.
  • Is able to execute strategies through people by providing leadership, feedback, coaching, utilizing influence, managing conflict, and developing talent for long-term success.

The Last Word: Overusing Business Acumen

As with most competency models and discussions, sometimes they can be overused to the detriment of the individual and organization. With any acumen development process, an individual or leader may overdevelop, or depend too heavily upon industry and business knowledge skills at the expense of personal, interpersonal, managerial, and leadership skills. 

Related blog posts that you may be interested in:

 New Call-to-action

Robert Brodo

About The Author

Robert Brodo is co-founder of Advantexe. He has more than 20 years of training and business simulation experience.