Why Does Business Acumen Matter?
Why Does Business Acumen Really Matter?
The current business climate has executives seeking more employees with a broader range of business expertise. The constant wave of disruption from startups and advances in technology is wreaking havoc with just about every industry. Corporate leaders report they need people – at all levels — adept at comprehending, valuing and contributing to strategic initiatives and systematic improvements.
Leaders want managers to focus on the big picture of the business, cultivate relationships across the culture, and contribute to the advancement of the firm’s goals. It’s not simply a matter of subject-area expertise, but an individual’s ability to understand various dimensions of a business that are in play as situations arise.
The concern is growing, as the Career Advisory Board announced last month nearly half of business leaders surveyed report a gap in business acumen with new talent. Another recent study from the Economist Intelligence Unit finds 65 percent of leaders believe insufficient business acumen limits a strategy’s potential.
Business acumen is not one thing. Rather, business acumen refers to the portfolio of attributes and skills that every business person needs to understand so they can effectively contribute to the goals of the company. It’s also important because it helps to guide the business employee in how they can purposefully chart their business careers.
So, what exactly is involved with mastering business acumen?
- Communicating clearly with all levels of people in every functional department and earning their respect.
- Collaborating creatively across departments to recognize and solve problems.
- Understanding the drivers for profitability and growth.
- A keen awareness of external threats and how to align internal processes to overcome them.
- Being a self-starter who takes initiative when appropriate.
- A willingness to shift strategy and goals to leverage market disruption.
And why exactly do these abilities matter?
When people are brought into a business role, either because they’re new to the company or because they shifted roles, it’s like they’re asked to jump on a moving train when they start. It’s clear that a sharp sense of business acumen allows them to adapt from day one. Veteran employees also need to sharpen their agility at pivoting from the work in front of them to other areas. Customer problems tend to trump the daily plan, but not everyone is adept at shifting their focus.
The business section is replete with articles about new competition emerging so quickly, incumbents are often caught off and their market share dissipates at an alarming rate. But when employees possess the above-listed skills and work across disciplines, businesses are better positioned to react to disruption, innovate, meet customer demands, avoid costly delays, and possibly, disrupt a market themselves.
As business consultant Ram Charan once explained, “Success depends on a leader’s ability to recognize such moments of disequilibrium in advance — and to have the courage and business acumen to chart a new course in the face of them.”
Business Acumen is missing link to long-term success
Ray Reilly, a professor of business administration at the Ross School of Business, University of Michigan, consults with corporations and has reported his surprise at how few executives know what business acumen is or why it’s important. He describes one with business acumen as someone who understands the key things they need to know to make a decision, to synthesize complex and apparently unconnected data, and react positively to events when they do not happen as expected.
An individual with a thorough grasp of business acumen, will establish the context for their work day, so others don’t set it for them. If business people have sufficient preparation when they encounter the unexpected, they’ll be able to set the stage to deal with these issues.
For strategies to stay on track, everyone attached to its execution should master these skills or risk allowing dysfunctional to rule. Now more than ever, millions of dollars are lost and businesses shutter when business acumen is not emphasized beyond the c-suite.
To encapsulate the various levels and the range of attributes and skills, the Business Acumen Institute created the Business Acumen Canvas. To download a copy, go here.