Why Every Leader Needs to Develop Business Acumen

The following is taken from DDI's Better Leader Handbook?which you can get for free by participating in their Global Leadership Forecast Survey?which will take you just a few minutes to complete! It will also help me in doing research for my new book on leadership and vulnerability!

Wouldn’t we all like to be viewed as business experts? To have business acumen is to bring keen judgment to business-related decisions, but having that sort of expert ability is rarely innate. Rather, it’s usually the result of combining experiential wisdom with sound business knowledge and a rational decision-making process.

If you have business acumen, you can quickly and accurately size up opportunities or crises. You understand strategic direction, organizational functions, financial indicators, and current market conditions. You can cut through the “noise” of overwhelming—even conflicting—data to quickly decide what’s viable.

Questions to Ask Yourself

• How could I stay more up-to-date on current and future market trends and their impact on my business unit’s strategy?
• How well do I leverage my business expertise to mitigate risks and improve results for my department or team?
• Am I using the right data sources to evaluate business opportunities and make better decisions?
• Do I understand how work gets done across the organization, not just in my functional area?

Key Actions: Building Blocks for Success

Key Actions are behaviors that work together to help you demonstrate this competency effectively.

Analyze—Use economic, financial, market, and industry information to identify trends and evaluate specific business opportunities.

Integrate—Compare economic, financial, market, and industry data from multiple sources to identify critical issues and determine how they might affect your team and the broader organization.

Understand business functions—Learn about the nature and interdependencies of your organization’s functions (R&D, marketing, finance, operations, etc.) and processes.

Understand the industry—Learn more about the industry in which your organization operates (trends, customers, competition, market share, etc.).

Leverage your understanding—Use what you know about business functions, the industry, and your organization’s performance to limit risk and maximize results for your department or team and the organization.

When you’re demonstrating business acumen effectively, you’ll notice:

People see you as a business expert. They will ask you for advice. They see you as credible, and your unique experiences and insights can help them decide courses of action. People learn from your example and use your previous decisions and recommendations as a basis for their own decisions. Stakeholders across the organization trust that you understand and appreciate their varying agendas. You develop business plans collaboratively, so your plans meet your business partners’ needs.

Your solutions address key business demands and opportunities. You can quickly assess the financial health of a business unit or organization by knowing a few key indicators. Your recommendations and decisions support your organization’s business goals and strategic plans, save time or money, encourage creativity and innovation, and align with your systems, processes, and practices. You trust your instincts and perceptions and tap into your collective experiences to make recommendations quickly and confidently. You avoid making decisions based on hunches, intuition, or unsubstantiated data. You’re in touch with what your customers want. You continuously scan the environment to hear their voices.

Your “risky” proposals pay off. Others might see your business recommendations as risky, but you know they are rooted in sound analysis. You’re more willing than cautious colleagues to swiftly take advantage of key market opportunities. You determine risk based on diverse sectors and multiple perspectives rather than silos or single inputs (e.g., the economy, market share).

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