This article is co-written by James O’Brien and Anders Liu-Lindberg
It’s a simple question that many executives ask themselves. “Why are we not making more money?”.
The strategy is right and the market conditions are good however there’s one thing that’s often forgotten. The strategy and how your company makes money is not understood by your employees. Knowing how your company makes money is also what we call Business Acumen – a term used by many but understood by few and actively developed by none. That’s why we have set out on a mission to not only explain to you what Business Acumen really is but also help you develop it and ultimately lead your company to making more money.
So, what is this Business Acumen?
If we go all basic we all know what a “business” is and “acumen” comes from the Latin word “acuere” and it means “to sharpen”. That means we can essentially translate Business Acumen to Business Sharp i.e. sharp about doing business. Obviously, that doesn’t provide a lot of guidance hence we need to go a few steps deeper into what Business Acumen is. To be sharp in doing business you need to be good at many things hence there’s bound to be several sub-components related to Business Acumen. James has previously laid these components out based on the research done to develop the Business Acumen Gauge in his 2015 article “Business Acumen – The Key To Business Success”.
The subcomponents are illustrated below:
On the one hand, this looks like everything that goes on in a company and you ask how can all this be attributed to one person i.e. someone with high Business Acumen but on the other hand you could also argue that if your employees and leaders in particular embody all these qualities your company is bound to succeed. So, if you want your employees to be sharp at doing business these are the capabilities you need to develop in them.
Business Acumen is underdeveloped in support functions
Now, hopefully your company is full of people with a lot of Business Acumen or if nothing else people that have well developed capabilities in at least some of the areas listed above. One thing that both James and I find though in extensive work and discussions with companies around the world is that Business Acumen is underdeveloped when it comes to support functions like Finance, HR and IT.
Anders finds that one of the reasons the concept of Business Partnering which has been widely implemented in both finance and HR functions is not really delivering on its promises is because the Business part is lacking. This can be directly attributed to a lack of Business Acumen. Like when the Maersk Line finance function asked our business stakeholders about how they would describe the finance business partners that supported them at the time a clear majority replied that they simply didn’t understand their business well enough. Anders has previously given some tips on how to develop a better business understanding in the article “How Can Finance People Learn About The Business” but if you truly want your employees to be Business Sharp then a much more structured development program is needed that focuses on developing each of the 11 capabilities. First things first though which is to understand what each of the 11 capabilities mean and how to develop them. We will explore this in a new series of articles over the coming weeks and months to once and for all clearly define what Business Acumen is and how we can all develop it to the benefit of your company’s bottom-line.
This is about the long-term success of your company
We want to take you with us on this journey and want to start by getting your definition of Business Acumen.
Have you done anything specific to develop it in your company over the years or you just think your employees will get it over time and become Business Sharp on their own? If that’s the case maybe it’s good to remember that almost any sharp object can easily become dull if it’s not being sharpen from time to time hence now might be a good time to think about how you can increase Business Acumen in your company.
If you’re a CFO, CIO or CHRO, then we want you to think about if your teams truly understand the Business part of what they support. If not, then this article series is definitely for you and your teams and if you want any immediate tips on how to increase Business Acumen then don’t hesitate to reach out to James and CFO Accelerator. Ultimately increasing Business Acumen will increase you’re your bottom-line so what are you waiting for?