The skills and capabilities that constitute business acumen and the competitive advantage it gives
Though I don’t follow football, I’ve been intrigued by the success Ryan Reynolds and Rob McElhenney have achieved at the football club Wrexham AFC. The club was promoted to League Two after a 15-year hiatus.
Success isn’t a fluke, and although I don’t know the ins and outs of the business strategy Wrexham is following, it’s clear that the celebrity owners have the drive and skills to do well. How else do you take a neglected team into premiership?
More than anything, it highlights something I have long believed; successful businesspeople are able to make the right decisions most of the time. They understand the market context, identify opportunity to diversify or expand, as well as manage associated risk. They have business acumen.
What is business acumen?
Business acumen is a critical skill for business leaders and managers today, but especially so if you want to accelerate growth, diversify or turnaround a business.
It includes a set of core skills such as operational knowledge, market analysis and financial literacy, combined with the ability to think strategically and lead change by using strong communication skills that engage teams.
People with strong business acumen can:
- identify opportunities to refine and develop the organisation’s internal systems and processes
- understand the market and identify opportunities to exploit and mitigate, or eliminate competitive threats
- utilise the company’s resources to capture any value it creates
- analyse complex data and apply critical thinking to solve business problems
- articulate ideas and plans in a clear and concise manner.
Interestingly, many leaders believe you either have it or you don’t. However, business acumen isn’t a superpower that you inherent or are necessarily born with. It is something you can learn through experience and coaching. Everyone will have a level of acumen, and in some respects that’s what makes teams work – using the strengths of others helps build successful outcomes.
Current climate is exposing gaps in acumen
I’m currently working with organisations that have identified big gaps in acumen to the extent it will hinder the delivery of their strategy if they don’t fix it.
Among the most common reasons for working on their team’s acumen is that they lack the capability to innovate. Without consistently strong levels of acumen, they can’t deliver their strategy whether that’s to create competitor advantage, improve financial performance or build a reputation for quality of service or product.
It’s become more acute as companies try to overcome the challenges related to inflated prices, skill shortages and higher energy and supply chain/distribution costs. Leaders are concerned that under pressure people will make poor decisions and take inappropriate risks – no one wants to be the next Volkswagen’s emissions scandal.
Classic brands like Chanel, relatively new brands like Apple and innovators like Starling all share leadership that boasts acumen. Their leaders understand their market, their customer and their brand value and are constantly innovating to stay relevant and ahead of competitors. Yet it’s not all about the big guys – every business can thrive if staff have the right business acumen, as Wrexham’s fortunes remind us.
For a more in-depth look at business acumen, read our article ‘Business acumen: What is it? Who needs it? How do you acquire it?’
My next post will look at examples of how business acumen has determined how successful a business has been.