business acumen


Business Acumen is Simple

August 2, 2010

When you come right down to it, business is very simple. There are universal laws of business that apply whether you sell fruit from a stand or are running a Fortune 500 company. Successful business leaders know them. They have what I call business acumen - the ability to understand the building blocks of how a one-person operation or a very big business makes money…

I've been in the business world some forty years now, beginning when I was a child in my family's small business in India, then working as an engineer in Australia. I then moved to America and taught at both Harvard Business School and Northwestern University's Kellogg School, and have been advising CEOs and boards of directors at companies large and small around the world. The one thing I've noticed is that the best CEOs - the ones whose companies make money year after year - are like the best teacher you ever had. They are able to take the complexity and mystery out of business by focusing on the core fundamentals. And they make sure that everyone in the company, not just their executive colleagues, understands these fundamentals.

You could say they have their self-interest at heart, since the company and the CEO are more successful when everyone knows how the business works. But it's not just the CEO who benefits. People feel more connected to their work and have greater satisfaction from their job. And as the company has profitable growth - that is, both sales (the "top line") and profits (the "bottom line") increase year after year - there are greater opportunities for people to expand their careers and to make more money.

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