I was recently talking to a senior leader who argued that business acumen is something that cannot be taught or learned; it’s an innate ability that some of us are born with.
Let me set the scene, he’s had a successful career, respected for his commercial ability in organisational transformations & pursuing strategic goals in large technology businesses. This undoubtedly comes hand-in-hand with the privilege he has experienced throughout his life as a white, male leader.
There is a gender and race gap around business acumen.
Business acumen is having the ability to make judgements and decisions to drive business results.
This involves understanding the financial levers of cashflow, working capital, investment funding, growth, profit and returns as well as the impact of capability, compliance and community on the customer. Incorporating both financial knowledge and strategic capability to understand the impact of decisions and activity on the results of the business.
For small companies and start-ups this is likely to be driven by one or two individuals. For example, making a decision to invest in a targeted advertising campaign to drive brand awareness leading to an increase in sales for the purpose of bringing in more cash to re-invest in product development for future sales growth.
For large organisations, business acumen is required by all senior leaders, functional, project and team leaders. For example, having strategic goals for each function to reduce their fixed costs by 5% year on year for the next 3 years by implementing AI thereby reducing the running costs of the business in a busy marketplace to improve profitability.
The Missing 33%
In “No Ceiling, No Walls: What women haven’t been told about leadership from career-start to the corporate boardroom,’ author Susan Colantuono shares her extensive research into the reasons why there aren’t more senior women leaders. It is because they haven’t been told about the importance of business skills for their success.
Focus is generally placed on professional competence and people skills as being most important for leadership positions.
However, the complete equation is:
For decades, significant leadership development focus has been placed on developing professional competence and people skills because, historically, this is what our leaders fell short on. Business acumen was generally being developed in upper and middle-class homes, prep schools, senior schools and leisure activity opportunities for those people born to be our future leaders.
Meritocracy has given most of us the belief that we can become who we want to become; that we have equal opportunities to realise our potential.
Back to the senior leader I was referencing, his privileges have given him access to education, mentorship, networks and resources to develop the language, knowledge and skills to demonstrate his ability to understand and influence the financial drivers for business success. He has been rewarded and recognised throughout his career for this (perhaps, not so) innate ability.
To have a chance of levelling the playing field for anyone (regardless of their gender, race, sexuality, faith and any other exclusionary factor) to reach senior leadership positions, it’s critical to break through the old-school code and learn business acumen.
Ways to develop your business acumen
Here are 7 ways to develop your business acumen required to lead business well:
1. educate yourself on financial terminology and what they mean related to your sector and/or size of business.
2. immerse yourself in business news & insights from traditional media through to social media.
3. seek out an experienced mentor – getting their insights into different business models they’ve experienced.
4. notice and start using the language used by expert operators in your field.
5. find opportunities to teach & educate others.
6. reflect on the commercial drivers you are able to influence in your role – find ways you can demonstrate your contribution to the business (such as reducing cost or increasing turnover).
7. track key data that can demonstrate your contribution & effectiveness.
With a growth mindset, we can all develop the skills we need to achieve our goals, smashing through any barriers in our way to achieve extraordinary outcomes.
Investing time and energy in developing and shaping your own business acumen will pay rewards for you.
It’s never too early or too late to learn.
Leading Business is a key component of the Nudge leadership model that underpins all our Nudge Forward leadership development programmes, along with Leading Self and Leading Others.
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