{"id":57717,"date":"2020-09-17T09:13:18","date_gmt":"2020-09-17T13:13:18","guid":{"rendered":"https:\/\/trainingindustry.com\/?post_type=magazine&p=57717"},"modified":"2020-09-17T12:28:34","modified_gmt":"2020-09-17T16:28:34","slug":"how-to-leverage-business-acumen-to-create-a-future-ready-organization","status":"publish","type":"magazine","link":"https:\/\/trainingindustry.com\/magazine\/sep-oct-2020\/how-to-leverage-business-acumen-to-create-a-future-ready-organization\/","title":{"rendered":"How to Leverage Business Acumen to Create a Future-ready Organization"},"author":7,"featured_media":57824,"template":"","tags":[564,370,364],"class_list":["post-57717","magazine","type-magazine","status-publish","has-post-thumbnail","hentry","tag-business-acumen","tag-performance-improvement","tag-strategic-alignment","global_topic_tax-strategy-alignment-and-planning","magazine_issue_tax-sep-oct-2020","magazine_article_type_tax-feature"],"acf":{"sponsored":false,"gated":false,"gated_content_type":"","file_attachment":null,"gated_content":"","form_instruction_header":"To access the full article, please fill out the form below:","pardot_html_embed":"","author_override":true,"author_name":"Steven Haines","author_image":"","author_bio":"Steven Haines is the chief executive officer of <\/em>Business Acumen Institute<\/em><\/a> and author of \u201cThe Business Acumen Handbook.\u201d He\u2019s also written \u201cThe Product Manager\u2019s Survival Guide\u201d (2e) and \u201cThe Product Manager\u2019s Desk Reference\u201d (2e). <\/em>","excerpt":"The cultivation of business acumen contributes to the creation of future-ready companies \u2013 companies that can operate in an increasingly competitive market.","main_content":"Everyone\u2019s talking about the future of business, and conversations continually center around transformation and change. It may go without saying that talent management has never been more important. Leaders across business functions will benefit greatly from solid guidance on a popular term with many definitions: business acumen. The cultivation of business acumen contributes to the creation of future-ready companies \u2013 companies that can operate in an increasingly competitive market.\r\n\r\nWhat is Business Acumen?<\/strong>\r\n\r\nIf you ask 20 people to define business acumen, you\u2019ll likely get 20 different responses. It\u2019s a term most business professionals feel confident in their interpretations of. However, to minimize any further variability, let\u2019s start with a definition:\r\n\r\n\u201cBusiness acumen is a portfolio of skills, behaviors and capabilities needed to support an organization in the achievement of its financial and strategic goals.\u201d<\/em>\r\n\r\nConsider business acumen a skill set that is cultivated as in the trade-craft tradition. This is an important way to think about business acumen, because everyone comes into an organization with varied functional experiences and paradigms. Employees, regardless of function, need to understand the big picture of the business and how various dimensions of the business operate in collaboration with one another. They also must be able to consider a host of business dimensions as they collaborate. With this, I strongly advocate that leaders take a more active role in the cultivation of business acumen across the enterprise.","full_width":false,"content_band":[{"acf_fc_layout":"social_callout","blockquote":"The cultivation of business acumen contributes to the creation of future-ready companies."},{"acf_fc_layout":"content_area","wysiwyg":"Even in companies where functional leaders carry out routine development of employees, it\u2019s often not to improve business acumen. Leadership development programs add value by helping people across functions be better in leadership. However, based on research for my book, \u201cThe Business Acumen Handbook,\u201d these development efforts are not instilling the business of business in the minds of employees who have an opportunity to help the organization achieve its goals. That responsibility often falls on high-potential employees and those in leadership training. A more granular approach is needed. There\u2019s the \u201cwhat\u201d to develop, and then there\u2019s \u201chow\u201d to develop it. Let\u2019s talk about the \u201cwhat\u201d first, using a visual model called, \u201cThe Business Acumen Canvas.\u201d\r\n\r\nThe Business Acumen Canvas<\/strong>\r\n\r\nThe Business Acumen Canvas was created to highlight three dimensions of business acumen:\r\n
    \r\n \t
  1. External orientation<\/li>\r\n \t
  2. Mindset<\/li>\r\n \t
  3. Capability<\/li>\r\n<\/ol>\r\nExternal Orientation.<\/em><\/strong> External orientation is where we start. The firm\u2019s very existence is established on a thorough understanding of targeted customers and their needs. This also includes an understanding of the firm\u2019s competitive capability and how it\u2019s positioned to achieve success. With this, every decision considers the impact on customers and the firms market posture. Executives are urged to mute functional agendas in business decisions, so that actions contribute to the strategic goals of the company. When employees comprehend the business\u2019s orientation, they\u2019re building a foundation for business acumen.\u00a0<\/em>\r\n\r\nMindset<\/em><\/strong>. Mindset consists of the mental models and operational paradigms of employees. Most executives want their emerging leaders and managers to think strategically. However, a solid context is needed. Strategic thinking enables employees to knit together various dimensions of the business. This means that they can identify and solve problems or determine how to finetune a process to achieve greater efficiency. With the right mindset, employees achieve self-empowerment as they build capital and develop the ability to navigate the business culture to get things done.\u00a0\u00a0<\/em>\r\n\r\nCapability<\/em><\/strong>.<\/em> This area of the model addresses day-to-day business operations. There are eight key capabilities that must be developed in order to attain an optimal level of business acumen. These include:\r\n
      \r\n \t
    1. Utilizing teams and influencing people<\/em><\/strong>. <\/strong>The business of business is also the business of people. People represent the glue holding together the execution and management of tasks within the context of the entire business acumen canvas.<\/li>\r\n \t
    2. Using processes to get work done.<\/em><\/strong> Interconnected workflows are the heart of the workplace. Mastery of workflows is the key to clarity around roles, efficiency and outcomes. It\u2019s also the key to understanding customers. When employees understand the world of customers, they can contribute to the delivery of compelling value propositions.<\/em><\/li>\r\n \t
    3. Managing projects targeted at goal attainment.<\/em><\/strong> Every person should understand project management and time, cost, and scope in the achievement explicit goals. It\u2019s related to the first two items and represents how work gets done.<\/li>\r\n \t
    4. Understanding the products sold by the firm<\/em><\/strong>.<\/em> Products are the lifeblood of business. Key employees should understand the products sold, the needs of the customer, the competitors in the market, the market share obtained and the revenue attained.<\/li>\r\n \t
    5. Understanding finance and financial analysis<\/em><\/strong>.<\/em> Every business decision made has financial consequences. Therefore, an understanding of accounting, finance, budgeting and variance analysis is vital. As a word of caution, many put too much emphasis on this area in the cultivation of business acumen. It is certainly a vital dimension but not to the exclusion of the other areas.<\/li>\r\n \t
    6. Formulating goals and strategies.<\/em><\/strong> Every leader and manager should be thinking about what\u2019s next. To do so, they must have the data to evaluate the past and present, including customers served, industry trends and financial contributions. They must synthesize data, uncover patterns and contribute to the decisions that impact the future vision, goals and strategies of the firm.<\/li>\r\n \t
    7. Analyzing data to solve problems and make decisions<\/em><\/strong>.<\/em> Each aspect of the business contains a treasure trove of data and insights. Decisions might have to be made on a moment\u2019s notice or require deeper analysis. The ability to break down a situation, assess anomalies, and come to a conclusion impacts business and team functions. This capability provides a strong adhesive for the items in this list.<\/li>\r\n \t
    8. Assessing business performance.<\/em><\/strong> Perhaps the single most important characteristic is a person\u2019s ability to see how things are going and recognize when they\u2019re going off the rails.<\/li>\r\n<\/ol>\r\nEach of these items cannot be seen just from one viewpoint or business perspective. The skilled business person, regardless of the function they serve, should be able to build an integrated mental model, so that the right practices are implemented at the right times.\r\n\r\nHow to Cultivate Business Acumen<\/strong>\r\n\r\nMost people who work in complex companies are overwhelmed. Employees are trying to execute a number of tasks and processes correctly and urgently. Some things happen so fast that it\u2019s hard to structure work. For executives and talent managers, harnessing and optimizing the capabilities of employees can be a daunting task.\r\n\r\nWith an effective organizational strategy, companies can build business acumen in employees. It\u2019s not the kind of thing you orchestrate overnight, but it is feasible with a simple process.\r\n
        \r\n \t
      1. Assess business acumen. <\/strong>Evaluate the skills and capabilities of your targeted population. Each area of the Business Acumen Canvas can be put under a microscope. Examine each area as a \u201ccluster\u201d of work, and assess what people know versus what people do. Exposing employees to a simple self-assessment<\/a> can speed things along. After taking this assessment, they can share their results with managers to finetune goals and plans.<\/li>\r\n \t
      2. Assess gaps. <\/strong>Identifying key gaps is an important part of any strategy. After examining data in each area, highlight major areas requiring attention. In strategic planning, an examination of strengths and weaknesses often leads to ideas about what\u2019s possible and provides input on next steps.<\/li>\r\n \t
      3. Future state.<\/strong> Determine what\u2019s most important, so you can envision your organization\u2019s future. This requires collaborative leadership. Your job is to identify developmental areas that will help the company gain a larger share of the market, innovate new products or deliver better customer experience. Then, there\u2019s greater meaning to the goals you derive, including an ability to improve return on investment and foster greater customer satisfaction.<\/li>\r\n \t
      4. Action steps.<\/strong> Your action steps represent the outcome of the gap analysis, vetted against future business goals. These could include upskilling, experiential work projects for employees and coaching.<\/li>\r\n \t
      5. Evaluate results. <\/strong>All strategies require evaluation. Your future state and action steps should be harmonized, requiring you to reassess business acumen gaps and goals to help your company on its organizational journey.<\/li>\r\n<\/ol>\r\nSummary<\/strong>\r\n\r\nThis article shared a solid framework to enable you to understand the foundations of business acumen. Business acumen is multi-dimensional and dynamic, and it must be knitted into the fabric of the organization. While there isn\u2019t a codified body of knowledge for business acumen, it is my aim to provide a foundation, so that you\u2019re able to contribute to organizational success.\r\n\r\nWhen speaking about fabric of an organization, I think of the work of Charlie Munger, vice chairman at Berkshire Hathaway. There\u2019s a quote from Munger I\u2019ve summarized to reinforce my message to you:\r\n\r\n\u201c\u2026You can\u2019t really know anything if you just remember isolated facts and try and bang \u2019em back. If the facts don\u2019t hang together on a latticework\u2026 you don\u2019t have them in a usable form\u2026 You\u2019ve got to have models in your head\u2026 And the models have to come from multiple disciplines, because all the wisdom of the world is not to be found in one little academic department\u2026\u201d\u00a0<\/em>\r\n\r\nOrganizational and business intelligence isn\u2019t achieved overnight. The accumulated knowledge, experience and abilities to correlate actions to outcomes form the foundation of business acumen."},{"acf_fc_layout":"content_area","wysiwyg":"[hubspot type=\"form\" portal=\"47185625\" id=\"c843f807-4376-4b21-81d7-1a222b62f5be\" version=\"v4\"]"}],"tice_sponsors":"","custom_dfp_keywords":"","featured_article":true,"feature_type":"portrait","theme":"light","remove_gradient":false,"title_in_image":true,"featured_text_image":57823,"magazine_link":"https:\/\/www.nxtbook.com\/nxtbooks\/trainingindustry\/tiq_20200910\/index.php#\/p\/38"},"yoast_head":"\nHow to Leverage Business Acumen to Create a Future-ready Organization<\/title>\n<meta name=\"description\" content=\"The cultivation of business acumen contributes to the creation of future-ready companies \u2013 companies that can operate in an increasingly competitive market.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link 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