The success of any enterprise is based on two things: Its products and services, and its talent pool. Most firms have a grasp on the cycles of innovation and effective management of products and portfolios. However, from the point of view of business talent, there are some gaps.

Based on research conducted by the Business Acumen Institute, leaders believe the most visible gap is related to the skills and capabilities that comprise ‘business acumen.’

Most business leaders admit that they want more of their people to grasp every aspect of what it takes to help the company to succeed. They also say that it’s hard to convey the multi-faceted nature of business acumen, and express frustration in trying to simply explain a complex way of thinking. They ask: Wouldn’t it take years of training? How could we afford the time?

The Business Acumen Canvas is a tool that you can use to visualize the many dimensions of business acumen, and to more effectively target the areas that must be cultivated.

The Business acumen Canvas is a tool that can help executives expedite the learning required to keep a company running smoothly and profitably. Senior leaders and middle-level managers alike need to understand the multi-faceted approach to the improvement of business acumen; that each dimension is related to the other, and that this “layering” (see the model) is an effective way to target individual and organizational development activities.

The canvas’s three layers cover different critical areas, including:

1. External factors that enable people to work from the “outside in” through a comprehensive understanding of customers, segments, and competitors.
2. The mindset that is needed to allow business people to see the interconnected nature of “all things business,” to connect the dots, and contribute to optimal business decisions.
3. The combined capability to link mindset to business model, teams to processes, and goals to financial and other business outcomes.

In Part 1 of this series, we’re going to tackle the first layer – all the external factors waiting outside your doors that have to be appreciated so that the firm’s direction can be understood. We’ll address how leadership can cultivate a rich understanding of these factors business-wide and how individual team members should process this information, apply it to their work day and advance in their careers.

For simplicity, we’ll examine a few of these:

1. Markets served
2. How the company makes money
3. Channel performance
4. Technology

 

1: Markets Served

This first step is often where entrepreneurs fail. It’s either taken half-way, rushed or not done at all. Businesspeople need to understand each of the following components and how they relate to their specific goals.

Market segments are defined as the businesses or consumers your company targets. An analysis of these segments involves several factors, such as demographic details: Who exactly is your customer? What do they want and need without even knowing it? We help you clarify this information and take a deeper look into sub-segments that identify decision-makers and what influences their choices.

Value propositions are the benefits your customers perceive from using your product or your service: cost savings, time savings, revenue generation or a positive impact to daily life.

Competitive advantage is what sets you apart from other companies offering similar goods & services: What does your business do better or differently than its competition and why does that matter? Employees benefit when they understand how your company creates and sustains competitive advantage in chosen markets.

Global presence and industry trends are growing in importance weekly as digital and other disruption increases in velocity and frequency. Failing to respond is putting legacy brands in peril. Every business is tasked with forecasting the next big trend as consumer-driven demands change constantly. We help leaders understand several models related to positioning their brands correctly including PRESTO, which creates a framework for research and trend discovery.

 2: How the Company Makes Money (the revenue model)

Every employee must understand how the company makes money. This is vital because it provides a context around decision making: will what we want to do have a positive impact on revenue, and profit? It’s also important for employees to see the connection between the customer value proposition, prices paid, value received, and revenue earned.

3: Channel Performance

Regardless of your business model (B2B, B2C), customers have choices about how they research and purchase your products and services. There’s a lot that goes into the decisions made by a company to go-to-market, and employees must grasp the complexities of buyer and user choices. Whether your products are sold directly or indirectly, via the Web, or otherwise, it’s important for everyone to understand that the path to the market is paved through a concise understanding the segments served, the customers in those segments, and the products with the most compelling value propositions.

4: Technology

Technology and its constantly evolving impact on business is the stuff of entire departments for larger corporations. They employ teams of business systems analysts to determine what tech will improve their operations and what will simply waste everyone’s time.

What’s most important to businesses large and small is a desire to maintain awareness of technological advances that will improve not only their distribution efficiency but just about every touchpoint with staff, consumers and vendors. The price tag of these upgrades is often staggering, so again, the key is knowing what changes are truly necessary and hopefully, profitable.

Making the Connection: For Leaders and Everyone Else

The most well-meaning and hard-working leaders do not always have the before-mentioned forethought, or needless to say, the time — to nail down all of these external factors prior to a product launch. Or perhaps they do but markets change, disruption hits or they scale so quickly, they’re struggling with keeping pace. A comprehensive business acumen refresher is helpful to staying on track and hitting targets.

As stated, businesses that neglect to demand every level of staff fully comprehended these issues miss out. They miss out on the ideas and innovation every team member is capable of producing once they understand the essential elements of business acumen, including these external factors.

Leaders also need their people to help them detect and decipher market shifts and stay on the cutting edge of budgeting theory and supply-chain efficiencies. Training from the Business Acumen Institute aims to help all of your teams understand each dimension of business acumen and apply this new knowledge to improving your culture, processes, projects and products. With everyone grasping these external factors, your organization is ready to master layer two: Creating a mindset of success. More on that in the next article of this series.