How to Improve Your Business Acumen
By Stephanie A. Parson
Business acumen is the ability to understand and act with the heart of your business in mind at all times. It is having the mindset that no matter your role in the business, you play a part in the organization, developing and delivering its products and services to the external customer. It’s understanding the direct relationship between your individual task and your team’s task in achieving bottom-line, strategically focused results. Business acumen means that you are constantly looking at how to make the products and services your organization provides better, faster, and with a higher quality and lower operational cost. It even means stretching yourself to understand how your competitors operate to achieve business success.
Dr. Reilly (2011) suggests that individuals with business acumen have an acute perception of the dimensions of business issues concerning their industry and those elements impacting their industry; they can make sense out of complexity and an uncertain future; are mindful of the implications of the decisions they make and the impact the decisions have on all those affective; are decisive; and are flexible when need be.
Those organizations with individuals with high business acumen find that:
- Their employees understand the connection between their individual activities and the success of the organization
- Teams understand the value of cooperation across the organization and thereby impacting innovation, creativity, speed to market and even employee retention
- Leaders better plan, organize, guide and motivate their employees to deliver
Three Fundamentals to Business Acumen
As with the fundamental theory of CGI-The New Face of Leadership , business acumen is a learned behavior which begins with understanding yourself, understanding your team and understanding your organization.
First: understanding yourself. You must determine your personal desire to become a key contributor and participator in your organization’s success. You must see the connection between business success and your personal success. You’ve got to understand how your thought process and your decision-making process align with the processes within your organization. Another area that you’ve got to discover early on is your loyalty to the company’s products and services. For example, do you know the “elevator speech” of your company’s sales team? Have you tracked your products/services from inception to the use by your customers? Have you tried to determine how your competitors deliver your portion of your company’s products/services? When possible do you recommend your company’s products and services to your friends? Do you use the products and services of your organization?
When I worked for the Seagram Company, one of the first tasks I was assigned was to understand the business from its inception – which meant I had to spend some time in the company museum. As a new executive to the company, I took my direct reports and their direct reports and together we learned about the company’s foundation. At the time the company also owned Tropicana and Universal Studies. The only orange juice I drank and recommended to all my friends was Tropicana … and to this day I believe it to be one of the better juices … years after I left the company … years after it was purchased by another company. In addition to this, my holiday gifts to my colleagues outside of the company included a case or two of their favorite Seagram product. I became loyal to the brand and wanted everyone to know about our products and services. Are you part of the company brand or just an employee?
Second: understand your team. My favorite question to my team is: “Are you a chicken or a pig when it comes to the company?” From a team perspective, your team should understand the customer value proposition – why do customers purchase your company’s product or services instead of your competitors? How can your team develop products, services and/or processes to maintain your current customer base and at the same time pull customers away from your competitor? Even if you’re responsible for a function which does not have any type of customer interface, you should have this discussion.
To enhance this discussion, pull individuals from teams outside of your group and brainstorm ideas surrounding this discussion. You will be surprised at the solutions an integrated team can develop. For example, when developing a new plane model, the Boeing company is known to pull in someone from every area who will “touch the plane” to enhance its overall design: engineers, designers, fuel truck drivers, pilots, maintenance, etc. Boeing understands that individuals are always thinking that their jobs would be so much easier “If Only ….” Or the customer’s experience would be so much greater “If Only ….” Or we could save a lot of time, energy, effort, money, “If Only ….”
Boeing also understands that the best way to get the “If Onlys” on the table is to provide a venue for the ideas to be introduced, discussed and even implemented.
As a team leader, you’ve got to ensure your team has the tools, procedures and ideas which give structure to organizational thinking and communication about business activities. Activities such as a standard process for providing input to the strategic planning process, cross-functional teams, decision-making processes and even awards and recognition programs for those groups who get it right are essential. You’ve got to provide a framework for a structure to support business acumen. Such a structure includes logical, consistent and complete approaches in the analysis, assessment and resolution of business issues.
“For employee management, business acumen requires mastering the tools which enable improved empowerment, communication, delegation, teamwork, conflict management, change management, time management, creativity,innovation, negotiation, partnering and other dimensions of the employee relationship” (Reilly & Reilly, 2009).
Third, from an overall organizational perspective, having Business Acumen also means understanding how to increase revenue through the introduction of new products and services, saving more money and/or increasing your customer base. All of which can be easy and at the same time almost impossible. We all know that revenues come from customers – however, it’s not just any kind of customer!
Choosing the Right Customer
According to Binod Maliel, PMP (2010), “the customer is king”, but “the RIGHT customer is king.” We know that 20% of the customers give 80% of the profits. So if we pick the right customers, our revenue will increase. For this, track the following for each customer:
- Percentage Revenue: What percentage of my total revenue is brought by this customer?
- Percentage Growth: What is the possibility of business growth from this customer?
- Percentage Contribution: What percentage of my total contribution (i.e. revenue – cost) is brought by this customer?”
Maliel (2010) goes on to suggest that there are three ways to market new business:
- Adjacency Marketing: This is also called “farming”. It is selling new business to the existing customers. As we know, selling to an existing customer is much easier than selling to a new customer. So, while delivering existing projects, look out for new ways you can add value to existing customers and so get more business.
- Replication Marketing: This is also called “hunting”. It is selling existing business to new customers. You already have businesses that you are offering to customers. Offer the same business opportunities to new customers. If you come across any potential customers (prospects) who could benefit from your business, suggest this opportunity to the right people in your organization and help to get this new business. Remember that:
- Your customers’ competitors are your prospects
- Your competitors’ customers are your prospects
- Marketing New Business to New Customers: This is the most difficult mountain to climb and is best not attempted since the returns are extremely low. For example, TCS with a $6 billion business does only 0.8% of its business from new-business-to-new customer.
- Making the decision that you are a pig and not a chicken – your success is dependent upon the company’s success and the company’s success is dependent upon your success.
- Identify your top 7 competitors – what are their capabilities and shortcomings and how do these compare with your company’s?
- Know the strengths, weaknesses, opportunities, threats and trends of your company and your top 7 competitors.
- Become loyal to your brand … this is not an option.
- Have “If Only …” discussions on every product and service you, your team and your company delivers.
- Define what success looks like and the processes and procedures your team requires to achieve them.
- Hire people with a strong business acumen or ability/desire to become stronger.
- Hang out with the sales and marketing teams at least once a quarter.
- Commit to action.
- Be resilient in building (integrating) a high level of business acumen into everything you do.
Stephanie A. Parson, Ph.D., is the president of Crowned Grace International.
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