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Business Acumen

Definition
Business Acumen is the ability to perform with insight, acuteness, and intelligence in the areas of commerce and/or industry. Make decisions and act in situations in which there is not enough information to be certain of outcome or implications of the decision.
Behaviors
An employee demonstrating this competency:
  • Directs resources towards profit and revenue growth opportunities
  • Demonstrates high regard for company profitability / financial strength
  • Actively seeks accountability and measures performance
  • Exceeds targets and commitments set
  • Understands the industry and marketplace and consistently is able to identify positioning for the company that enables it to exploit profitable opportunities
  • Holds staff accountable and measures performance
  • Understands linkage from spending to shareholder return
  • Meets or exceeds targets set
  • Engages in cross-functional dialogue and decision-making
  • Identify and exploits business opportunities for revenue and margin contribution
Importance of this Competency
They say that knowledge is power, and business is no exception. With the “break-neck” pace of business in the 21st Century, employees at all levels must be continuously increasing their knowledge to assure the survivability of their organizations. As the accessibility, proliferation, and sheer volume of information grows, so does the need for people who can acquire, synthesize, and put the information to work effectively and efficiently within the organization.

Leaders need business acumen and decisiveness. They must be able to make high stakes decisions, such as whether to accept a multi-million dollar deal, restructure the organization, cancel a venture that is not going well, or eliminate a large number of jobs. Decisiveness does not mean making decisions impulsively or intuitively; it does mean willingness to step up to a decision when a decision is needed. By acquiring the habit of decisiveness, it spares from getting worn out from carrying around a load of unresolved projects.
General Considerations in Developing this Competency
One of the best ways to learn this competency is to be thrust into a situation where time-critical decisions and business acumen are required, and you must make the best decisions you can, under pressure. It may also help to work closely with a leader who demonstrates decisiveness, to see first hand how this person makes decisions.

Another approach is to reflect on your own behavior. Think of situations in which you needed to make a decision. What did you do? Did you act decisively? Would you handle this situation the same way today? What would you do differently?
Practicing this Competency
  • Volunteer for assignments in which you will be responsible for making decisions.
  • Practice using a simple analytical process in making decisions: Answer these questions:
    1. What are the criteria that should be considered in making this decision?
    2. What are the alternatives?
    3. For each alternative:
      • What are the positive results if things go well?
      • Can you quantify the benefits of a positive outcome?
      • What are the possible risks? What could go wrong?
      • Can you quantify the costs of a negative outcome?
      • What is the probability of a positive outcome?
Look for opportunities to take charge of a group to overcome an impasse, ensure that the group faces an issue, or change the direction in which the group is moving.
Obtaining Feedback
Discussion with peers is the best way to attain feedback. By entering into business discussions you will be able to gauge your progress and determine which areas you must focus more heavily on, as well as determine the areas at which you are very adept.

Ask someone to observe you over a one-month period and give you feedback regarding decisiveness and business acumen. Ask this person to point out when you are demonstrating decisiveness effectively, when you are making decisions too hastily, and when you need to be more decisive.

Look at the results of past situations when you had to make decisions: how you handled the process, did you use a systematic approach and the outcomes.
Learning from Experts
If you have the opportunity to work closely with a decisive leader, observe this person’s decision-making behavior. How does this person make decisions?

Interview a leader who is strong in business acumen and decisiveness. Ask the person to talk about several situations in which s/he had to make a decision. Ask the person to walk you through each situation. Find out what the person did, said, and thought, in the process of making each decision. Reflect on what you have heard. What behaviors could you benefit from adopting?

Ask business professionals and educators how they keep up on their business knowledge. Find out their preferred media sources, and how often they refer to them. Also, it might be beneficial to inquire about their business background and what they consider to be their greatest teacher.
Coaching Suggestions for Managers
If you are coaching someone who is trying to develop the compentency, you can:
  • Give the person ongoing, constructive feedback about behavior in decision-making situations.
  • Empower this person to make decisions in his/her area of work.
  • Provide assignments that involve decision-making.
  • Be supportive when a decision does not work out. Decisive people do not always make decisions that work out as planned. Rather than criticize the employee, debrief the situation with the employee to help identify what can be learned from it.
  • Provide resources such as business newspapers, magazines, and trade journals to your employees.
  • Invite the exploration and study of the Internet, and its various business reference sites.
  • Encourage attendance at formal schools, universities, and workshops.
  • Help increase business sense.
Sample Development Goals
By December 1, I will interview Mary Byrne to learn how she makes decisions.

At the next meeting of the Production Team, I will intervene quickly if the group starts to go off track. Afterwards, I will ask two team members for feedback on my behavior.

On March 1 I will review the proposals from different vendors and make a decision on that day.

Within one week I will confront Deborah about her performance problem and begin implementing the disciplinary process.

I will read the business section of my local newspaper everyday.

I will subscribe to some business magazine, and read at least some of the article therein.
Resources

Books

Dealers, Healers, Brutes and Saviors; Eight Winning Styles for Solving Giant Business Crises, by Gerald C. Meyer & Susan Meyers. New York, NY: John Wiley & Sons, 2000.

E-Profit: High-Payoff Strategies for Capturing the E-Commerce Edge, by Peter S. Cohan. New York, NY: AMACOM, 2000.

Executive’s Guide to E-Business: From Tactics to Strategy, by Martin Deise, Conrad Nowikow, Patrick King, & Amy Wright. New York, NY: John Wiley & Sons, 2000.

Financial Intelligence: A Manger’s Guide to Knowing What the Numbers Really Mean, by Karen Berman & Joe Knight. United States: Harvard Business Review Press, 2006.

Interpreting and Analyzing Financial Statements, by Karen Schoenebeck & Mark Holtzman. Upper Saddle River, NJ: Prentice Hall, 2012.

Profitable Growth is Everyone’s Business: 10 Tools You Can Use Monday Morning, by Ram Charan. New York, NY: Crown Business, 2004.

Simplicity: The New Competitive Advantage in a World of More, Better, Faster, by Bill Jensen. New York, NY: Perseus Press, 2001.

Smart Choices : A Practical Guide to Making Better Decisions, by John S. Hammond, Ralph L. Keeney, & Howard Raiffa. Boston, MA: Harvard Business School Press, 2002.

The 2,000 Percent Solution: Free Your Organization form ‘Stalled’ Thinking to Achieve Exponential Success, by Donald Michell, Carol Coles, & Robert Metz. New York, NY: AMACON, 2003.

The Business of E-Commerce: From Corporate Strategy to Technology (Breakthroughs in Application Development), by Paul Richard May. New York, NY: Cambridge University Press, 2000.

The McGraw-Hill 36-Hour Course: Finance for Non-Financial Managers, by H. George Shoffner, Susan Shelly & Robert Cooke. New York, NY: McGraw-Hill, 2011.

 

SELF STUDY COURSES

Finance and Accounting for Nonfinancial Managers. American Management Association. Tel. 800 250-5308. http://www.amaselfstudy.org/course.cfm?isbn=9780761214892

How to Read and Interpret Financial Statements. American Management Association. Tel. 800 250-5308. http://www.amaselfstudy.org/course.cfm?isbn=9780761213963

 


EXTERNAL COURSES

Business Challenge. Online, Multiplayer Simulation. Enspire Learning. Tel 888 534-3484. http://www.enspire.com/products-and-programs/simulations-and-courseware/business-challenge

Corporate Social Responsibility: Strategies to Create Business and Social Value. Four days. Harvard Business School Executive Education. Tel. 800 427-5577. www.exed.hbs.edu/programs/csr

Finance and Accounting for the Nonfinancial Leader. MRA-The Management Association, Inc. Tel. 800 679-7001. http://www.mratraining.com/CourseDetail.asp?id=1940  

Fundamentals of Finance for Non-Financial Managers. Three days. American Management Association. Tel. 877 566-9441.  http://www.amanet.org/training/seminars/Fundamentals-of-Finance-and-Accounting-for-Nonfinancial-Managers.aspx


EXTERNAL RESOURCES

See Appendix

Consult local community college and adult education offerings for general business courses.


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