To run an effective, dynamic, and successful organization, leaders must possess strong business acumen. Unfortunately, we are not born with this vital leadership skill, it is cultivated over time. When asked to define business acumen, the response from senior leadership is basic and direct. Most believe that business acumen means having financial knowledge; but that my friend is just one element of business acumen.
There are five essential components that make up a strong business vision: intelligence, strategy, communication, innovation, and accountability. As you review the qualities of each, assess yourself and other leaders on your team to see where strengths and weaknesses exist within your organization. Then start with an action plan to close the identified gaps and drive organizational success to the next level.
#1 – SMART: Yes, leaders who possess this component of business acumen are adept at creating, reading, and analyzing financial reports and budgets. However, they are also comfortable when it comes to explaining this sometimes complex information to others. This is a quality that most senior leaders admire and think of when they envision someone with great business acumen. Along with financial intelligence, leaders who possess this component of business acumen have an immense hunger to learn more and increase their knowledge and intellect. They not only read business books, magazines, and white papers to gain knowledge, but also to gain skills and techniques that can be applied in their line of business and daily work.
#2 – STRATEGY: Leaders who possess this component of business acumen know the key priorities (business goals) of the organization and have proactively formulated a written action plan to get the team there. They don’t wait for the strategic plan to come from the corporation, as soon as they learn the key business objectives, they start to focus on how their team will contribute to and impact it. Again, having business intelligence is not enough, leaders must also be able to turn all of that wealth insight into actionable behaviors that will engage the entire workforce or team and drive positive results.
#3 – COMMUNICATION: Leaders who possess this component of business acumen are excellent communicators, both verbally and in writing. They know that simple and clear communication is the key to achieving key business priorities and strategy. If you ever look at leaders with great communication skills, you’ll notice that they communicate clearly up and down the organizational ladder. They can make a point delicately at the executive level and easily simplify the message to relate to the daily activities of line staff.
#4 – INNOVATION AND RESOURCES: Leaders who possess this component of business acumen have the great ability to work with little and produce a lot. They are not constrained by a lack of resources, but they are innovative enough to create new ways to get work done effectively and efficiently. While having all the tools at your disposal to get the job done right would be great, they don’t let the lack of them create dissension or negativity on the team. Their greatest joy comes from being able to overcome barriers and obstacles to create a product or service that is exceptionally better than they expected. Leaders with strong business acumen are not wasteful, but innovative and resourceful.
#5 – RESPONSIBILITY: Leaders who possess this final component of business acumen understand the importance of employee responsibility in optimizing productivity and achieving success. Without accountability, none of the other components that make up strong business acumen—intelligence, strategy, communication, and innovation—will have any value. To hold employees accountable for driving the organization’s key priorities, the leader must set the standard or expectation, communicate it to gain employee buy-in, integrate it into all aspects of the work environment, evaluate employee performance in relationship with him and then reward. and recognize those who consistently meet and exceed the expectation or standard.
Like a waterfall, business acumen starts at the top and trickles down through the entire workforce. If senior leadership does not possess these essential components, the effectiveness and success of the organization are not sustainable. Now that you’ve been equipped with some level of clarity regarding business acumen, the next step is to work on closing your career gaps. Simply put, developing strong business acumen doesn’t start or stop with the ability to analyze financial reports; Developing a strong business acumen is multidimensional.