Business acumen is a buzz word you hear all the time.
“He has great business acumen.”
“Build me a team full of people with business acumen!”
“That young employee needs to learn some business acumen.”
So what is business acumen and why do you need it?
The word acumen is defined as the ability to make good judgements and quick decisions. Business acumen can be taken a step further and be defined as keenness and quickness in understanding and dealing with a business situation in a manner that is likely to lead to a good outcome.
Some people mistake business acumen for business sense or business savvy, yet it goes beyond sense and savvy.
Business sense is usually used to describe someone who has an innate ability to understand the workings of business, while business acumen is not always innate and can be learned.
Someone with business savvy may be very successful, but usually in a shrewd and perceptive way, while someone with business acumen has the ability to work with others and lead a team in a productive manner to successfully accomplish a task or make a decision.
Have you ever thrown your hands in the air (or banged your head on your desk) and said, “This issue/problem is so convoluted and there are so many parts it is too confusing! I can’t figure it out”?
If that is you, well…
…you may want to work on your business acumen.
Dr. Raymond R. Reilly and Dr. Gregory P. Reilly studied business acumen and document five traits that individuals with business acumen possess. Let’s break them down for you.
Leaders with business acumen have an acute perception of the dimensions of business issues. They understand the ins and outs – the nitty gritty. Yet, they also understand the bigger picture of the issue at hand. They pay closer attention to the key dimensions of implementation and operation than those without business acumen.
Those with business acumen can make sense out of complexity and an uncertain future. They can take the moving pieces to the puzzle and put it all together to come up with a solution. They have a clearer logic and the skills necessary to make sense of the madness. Through thorough analysis they can make logical recommendations for an uncertain future.
A person with business acumen is equipped with the skills to make decisions, and to be confident in their decisions. They are decisive. They are leaders with the ability to lead a team through a decision-making process.
I remember one experience I had serving on a committee to solve a compensation issue. The team leader was someone who lacked any decision making skills. Serving on this committee was pure torture. Maybe some of you can relate to what I endured!
Meetings would drag on and on as the problems were discussed over and over again and round and round the team members went. Then, when a decision could not be reached, a second meeting was scheduled where the same thing happened; on and on, over and over, round and round.
At BizBasics Online, we call this churning. Imagine the “olden days” when the cream from the milk would be poured into the tall vat or pot and for hours the cream would be stirred by hand, eventually turning it into butter. Round and round, up and down, over and over again, until, eventually, you get soft, room temperature butter formed in the vat.
Eventually, our team came to a decision. But it was a “mushy” decision. The team could not agree on a course of action nor could they be confident in the decision they made.
The team lacked a leader with business acumen to make a decision.
A good team leader with business acumen would have kept us on course and taken the committee through the decision making process and analysis of the intangibles on that decision.
Once a decision has been made and you are on the path of the chosen course of action, those with business acumen are flexible if further change is warranted in the future.
Consider this: A horse wears a set of blinders on the side of its eyes so that it can’t see any distractions that may arise. This forces him to focus on the path ahead.
Someone with business acumen can “take off the blinders” to see the other paths if a “distraction” should warrant a move. While they are looking at and focusing on the current path, they are not opposed to making changes to move to a different side of the path or take an entirely different path.
This also is a pride issue. A person with business acumen is not too proud to accept changes to their course of action when a change is presented or necessary. They are not offended or upset when changes need to be made, because they have the foresight to see how changes can impact the firm for the greater good.
Those with great business acumen are mindful of the implications of a choice for all the affected parties. They understand that the decision does not just affect them or their team. It has a greater reach to other departments in the company and even to outside entities, like the community or the environment. They understand how the “ripple effect” will impact those around them and are mindful of the implications of their choice.
People with business acumen are effective leaders. They use their skills to further the goals of the organization. They are the people who make a positive impact on the organization and business leaders recognize the value of those who have business acumen.
In the study Leadership Without Boarders by Ed Cohen, “business acumen was cited as the most critical competency area for global leaders” and an organization is more likely to achieve its potential when lead by individuals with high business acumen.
Thus, those with business acumen are highly desirable and businesses want to “stack their deck” with those who have the ability to lead the company with the “ability to inspire and excite the organization to achieve its potential”.
We can come to the conclusion that individuals with business acumen will be more likely to advance in their careers and industry while those who lack business acumen will not have as many opportunities.
Remember, business acumen can be learned. So if you are interested in advancing in your industry, company, or career, it is worthwhile to develop business acumen traits and learn business acumen skills.