Business acumen describes an ability to understand and deal with business risks and opportunities in a manner that is likely to facilitate a good outcome. At the same time that is the ability to have an holistic understanding of business scenarios which combine both data analysis and heuristics. Thus, knowing when to use data, and when instead to trust intuition.
Understanding business acumen
Management firm Elgood describes business acumen as “the ability to take a ‘big picture’ view of a situation, to weigh it up quickly, make a logical, sound decision confidently, and influence others to agree with you in order to have a positive impact towards achieving the objectives of the organization.”
Business acumen is a competency not reserved for those occupying management positions. Indeed, the skill can be applied to everyday scenarios such as improving work efficiency or solving complex problems.
Business acumen skills
Though not an exhaustive list, we have compiled some of the most important skills below:
- Understanding of the consequences – with opportunity costs attached to every decision, the individual must consider multiple potential outcomes and choose a path with the most benefit and least downside.
- Problem-solving ability – a crucial skill for when business plans or operations are subject to unforeseen circumstances. Those with high business acumen can make the necessary adjustments and adapt quickly.
- Focus – organizational success is dependent on leaders focusing on high-impact objectives and avoiding distractions. This skill increases productivity since employees do not waste their time on non-productive activities.
- Recognizing stakeholder needs – balancing the needs of various stakeholders can be difficult. The organization must consider the impact of its actions and decisions on each stakeholder group.
- Financial literacy – or the ability to understand how an organization uses its available resources to achieve the desired outcome. In a commercial context, this is measured by profit and loss and also includes eliminating waste and improving process efficiency. For non-profits, success may be defined by benefits to society or the carrying out of company mission and vision.
- Talent acquisition – organizations with strong business acumen recognize the high financial cost of employee turnover and improper recruiting. These organizations tend to make better hiring decisions. Many also discover that a culture of strong business acumen is a place high-quality employees want to work.
- Culture – related to talent acquisition is a workplace culture of ownership, accountability, and entrepreneurial thinking. Here, employees make explicit links between their business decisions and the impact of those decisions on organizational success. Individuals then begin to develop the skills associated with business acumen, including accountability, collaboration, responsibility, integrity, and entrepreneurship.
- Business acumen describes an ability to understand and deal with business risks and opportunities in a manner that is likely to facilitate a good outcome.
- Business acumen is not reserved for upper management. Indeed, organizational success is driven by employees collectively exhibiting the skills associated with business acumen.
- Business acumen skills include understanding the consequences, problem-solving ability, focus, recognizing stakeholder needs, financial literacy, talent acquisition, and company culture.
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