Business acumen is an almost intuitive and applicable understanding of how your company makes money. It includes a thorough understanding of what drives profitability and cash flow, a market focused approach to the business, and an overall big picture understanding of the business and its interrelationships.
To consider these areas of business acumen more deeply, we've found that the skills and competencies that are most needed are the following:
Financial Acumen: It is important that leaders and employees have a comprehensive understanding of what drives profitability and cash flow. Practitioners need to understand a firm's financial statements, key performance measures, and how their decisions will impact value creation.
Market Orientation: In addition to recognizing how their business operates internally, it is important that leaders have a deep understanding of the external environment or what we call market orientation. This includes the ability to analyze and synthesize market and competitive data. It involves having a deep understanding of the customer's business objectives and purchasing criteria as well as an appreciation of the value of each customer to the company.
Strategic or "Helicopter" Perspective: In many organizations leaders grow up in specific functions or business units and are tasked to execute on tactical priorities. Business acumen requires an overall big picture understanding of the business. This encompasses having an understanding of critical interdependencies across functions and divisions, and grasping the short and long-term trade-offs of business decisions.