Organisational business acumen is maintaining a focus on business opportunity, by building the capability and motivation of staff, to meet client's needs and maximise investor return - and gain competitive advantage for your business.
Business acumen can be defined as an individual's capability to create value while managing the associated risks.
- Lack of business acumen
For example, the existence of 'silos' in a business. That is, when the strength of one part of the business undermines the strength of the whole business. The result is inefficient 'flow' which reduces value because, despite all the performance measures being used, it is no one's responsibility to make it efficient.
- Presence of business acumen
Take working capital as an example of business acumen. If we measure the number of days between receipt of an order and payment of the account, we have a benchmark. Because internally generated finance is the cheapest form of finance, why not speed the flow of working capital and reduce the benchmark number of days?
The assumption of business acumen
Business acumen is seldom taught outside business courses. Often new professionals are so focussed on their professional discipline that they forget why it is that their employer employs them.
Many staff are taught how to do their job without an understanding of the 'bigger picture' or an appreciation of how their part makes the sum of all the parts greater. Then, of course, there is that anthem of those who take a narrow view of their part within a total process and regularly chant "It is not my job!".
Business acumen and human nature
Motivated staff like to be busy, but it is better that what keeps them busy adds value to the business. When staff can meet their own needs by demonstrating business acumen and adding value, it is a powerful driver of success. When the individual needs of staff override the business interests, the reverse is true.
Business acumen is an important capability for career development. Employers are increasingly interested in understanding an individual's achievements in a role, than the specifics of the role itself. Staff who can demonstrate their business acumen are more successful in developing their career.
Business acumen at work
The use of true business acumen looks like this:
- The removal of a mental constraint that sabotaged the ability of a business to grow
- The reduction in financing costs by the improvement of working capital
- The understanding of the shortfall between estimated and actual cost and how to put those dollars back on the bottom line
- The HR Department that recognised that the organisation was being choked by the unproductive and inefficient paper flow generated at the expense of their own value-adding work
- The clearer definition of target client profile, which focussed the sales effort in winning clients for whom the value proposition was highest and increased the volume of highly profitable products
- The re-engineering of transport to increase flow and reduce cost
Think about how the specific and measurable benefits of projects like these can add value in your business.
Developing business acumen
It is a good time to invest in the business acumen capability of your staff and their motivation to demonstrate it. What better way to invest in future growth?
Many organisations have made a commitment to staff during tough times and this can be much more than just the ongoing availability of their job.
The best way to develop business acumen is through an in-house program, using examples directly applicable to opportunities that add value within your business.
Ensure that your program:
- Challenges thinking and stimulates innovative ideas for specific and measurable benefit
- Builds the capability and motivation of staff to break down what might be seen as a complex issue, into a logical flow of measurements to define benchmarks for improvement
- Provides a range of tools, techniques and support for participants to utilise which add value to the business
- Introduces a Business Case Framework to ensure rigour in proposing projects that add value to the business
- Proposes an effective model for managing change and stakeholder management
- Builds a culture of continuous improvement and change readiness to add value and increase return on investment
- Delivers ongoing return on investment years after its conduct
Your business acumen test
- We are a measurement managed organisation and utilise performance measures to guide our efforts
- Change in our organisation delivers sustainable, specific and measurable benefits
- Our staff understand and utilise their ongoing opportunity to present a persuasive Business Case for value creation
- Our staff have the capability and motivation to produce a Business Case for value creation that is specific, measurable and achievable
- Our organisation has a Business Case Framework that regularly drives value-adding items on the Senior Management Team's meeting agenda
- Our staff always ask potential employees to demonstrate their business acumen through their achievements and how their achievements could be applied in our organisation
- Net profit per employee is increasing at a greater rate than the net cost per employee, and has been as a 12 month trend
If you cannot answer True to the majority of these questions, then it is time to invest in the capability and motivation of your staff to demonstrate business acumen on an ongoing basis. You owe it to them and your business.