As I was doing some customized design on the business acumen product that we call Mini-MBA, the Wikipedia definition of Business Acumen was brought to my attention. Wikipedia defines business acumen as:
Business Acumen Definition:
“Business acumen is keenness and quickness in understanding and dealing with a business situation in a manner that is likely to lead to a good outcome. The term ‘business acumen’ can be broken down literally as a composite of its two component words: Business literacy is defined in SHRM’s Business Literacy Glossary as ‘the knowledge and understanding of the financial, accounting, marketing and operational functions of an organization.’ The Oxford English Dictionary defines acumen as ‘the ability to make good judgments and quick decisions’. Given these textbook definitions, a strictly literal definition would be ‘keenness and quickness in understanding and dealing with a business situation.’
Additionally, business acumen has emerged as a vehicle for improving financial performance and leadership development. Consequently, several different types of strategies have developed around improving business acumen.”
I was delighted by a few of the things I read in the definition. The first idea was the use of the words “keenness” and “quickness.” In today’s increasingly competitive global economy, organizations need leaders who can act keenly and quickly in response to changes in their environment in order to stay on top.
Secondly, the definition indicates that business acumen has emerged as a vehicle for improving not only financial performance but, more importantly, leadership development. In observing leaders from all levels and types of organizations over the past 15 years, I have noticed that leaders who understand of the fundamentals of business are better equipped to tackle all types of leadership challenges that they face.
Developing Business Acumen
I recognize that good leadership contains many facets including being a good communicator, knowing how to build strong teams, facilitator, coach, delegator, planner, and so on. But I’ve always been impressed with leaders who have developed their business acumen, who can speak to and relate to how businesses function at the core. This leadership mechanism seems to be the lever that makes the best leaders successful when used along in concert with the other fundamental qualities of leadership. As organizations seek to develop their leadership bench strength, I believe it will be increasingly important for business acumen to be at the core of any organization’s leadership-development process.