Business Acumen 101
Every business needs smarter business people.
Business Acumen for your team:
I'm not saying that your team isn't smart - because they are! They are brilliant in their roles. Your HR team knows human resources inside and out, and your marketing team can sling campaigns and generate leads with the best of them, but you need these people to not just be brilliant in their functions but to also really understand your organization as a whole.
Business Acumen for individuals:
Corporations need individuals who see the broader perspective of the business, but can also relate to their employees on the day-to-day logistics. I mean, what organization wouldn't benefit from having more of these employees around?
Business Acumen 5 Driver Model:
Business acumen goes far beyond finance and definitions. It is thinking about business through the lens of 5 fundamental categories. Cash, Profit, Assets, Growth, and People. Business acumen is zooming in on your company with these specific metrics in mind and asking these questions:
- Are you focusing on these 5 things?
- How well is your company doing in each category?
- What areas need improvement?
How were your answers? If the answer was not good, be careful - these five drivers can make or break your organization. Let's look at each driver a little deeper:
Cash
How much cash do you have? How much cash are you generating?
Profit
Are you profitable? Do you know the difference between your organization's sales and costs?
Assets
Are your assets helping you operate more efficiently and effectively?
Growth
Are you growing and expanding?
People
Do you value your people above all else? By people, we're referring to not just your employees, but also your market, customers, and shareholders.
FORD: A Business Acumen Example:
In the 1920's Henry Ford's Model T's were made primarily out of wood. Looking at his business, Ford decided to purchase a sawmill so that he could source his own wood and wasn't at the mercy of his suppliers. However, he was then plagued by another problem - what to do with all the leftover sawdust? Henry Ford was an environmentalist and lived by the saying "Reuse. Reduce. Recycle." So, the leftover sawdust going to waste around his plant was driving him insane. Instead, in a great example of asset utilization, he turned the sawdust into a Kingsford charcoal briquette - a popular item still used today.
Business Acumen is critical for success:
We love to hear success stories of companies making their assets work for them. This is exactly why assets is one of the 5 drivers, however, all 5 categories are critical to the success of a business. These are also metrics that leaders are using to evaluate their own company, determine the financial strength of a company, and determine smart investments. Be an individual who can deepen, broaden, and challenge the views within your company. You’ll be a smarter business person because of it.
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