What Business Acumen Can Do for You
By Kevin Cope, Founder, Acumen Learning
Years ago a colleague of mine was consulting with a group of senior NASA managers at Cape Canaveral. He tried to explain, in simple terms, an organizational change strategy. The managers seemed confused. In an effort to clarify, he said, “Please don’t make this more complicated than it is. It’s not rocket science.” To which they sincerely answered, “We wish it were. We’d understand it better!”
Many people, even those with jobs that others think of as incredibly complex, view their business much like rocket science: a lot of complexity, hard-to-understand data and formulas, communications in a language that barely resembles English. Yet most of them wish they could more clearly understand the business of their business and how to help their companies perform better. What they are wishing for is business acumen.
Business acumen is understanding how your company makes money and then making good decisions to improve the money-making process.
When you break down even the largest, most complex multinational company—such as Wal-Mart, Apple, Toyota, or Boeing—into its most fundamental elements, you’ll find the same drivers that power your business, or any business. What are those drivers?
How did we distill it down to these five? In my new book, “Seeing the Big Picture,” I explain how we used the core financial statements—the statement of cash flows (cash), the income statement (profit), and the balance sheet (assets)—as the foundation. These are the statements every company uses to judge its current strength and its future prospects. The fourth driver, growth, is reflected in all of these statements and for public companies is an important objective for shareholders. And the fifth driver is quite simple: Without good employees providing value to paying customers, the other four drivers cease to exist.
The 5 Key Drivers will help you understand and visualize how even the most complicated business can be analyzed and improved. Like the 26 characters of the English alphabet, the 5 Key Drivers combine in a multitude of ways to form the foundation of organization, products, market position, financing, human resources, and every other strategy or decision in a company. Leaders must set and achieve goals and obtain results in these five areas in order to achieve the most important objective for any company: long-term, sustainable profitability to support its mission.
You’ve probably heard of these essential elements, but you may not really understand their full importance and interdependence in creating success. While each driver is unique, it is also completely dependent on all of the other drivers. You cannot affect one without influencing the performance of another. Leaders have to take the connections between the drivers into account as they make their decisions, or they risk becoming overly focused on one driver and running an idea into the ground.
Acumen Learning, a business acumen training company I founded in 2002, has taught these 5 Drivers to more than 80,000 people in more than 30 countries, including 16 of the Fortune 50. The primary lesson we’ve learned as a company is that businesspeople want to become more effective and valuable, to secure their seat at the table and influence decisions, to have an impact on company performance. They want to use their full potential to help their business make money and sustain profitable growth.
They want these things for two reasons. First, we all instinctively seek out greater engagement—a way to feel that the work we do is worthwhile and makes a difference. Second, they understand something crucial. If you want to be in a better position—a job you like more with better pay, better long-term opportunities, and greater security, for example—you need to understand the key drivers of business and use that knowledge to make good things happen.
To do that, you need the ability to…
- See the “big picture” of your organization—how the key drivers of your business relate to each other, work together to produce profitable growth, and relate to the job you do each day.
- Understand important company communications and data, including financial statements.
- Use your knowledge to make good decisions.
- Understand how your actions and decisions affect key company measures and the objectives of your company’s leadership.
- Effectively communicate your ideas to other employees, managers, and executives.
For some of you, this list might resonate immediately. For others, it might raise an important question. Why should you care? Isn’t making these connections the responsibility of the executives, the senior leadership, or maybe your boss? Not if you want to be doing something different and better in your career three years from now.
Your ability to see the big picture and affect these business drivers through your decisions and actions can increase your own ability to contribute to the long-term profitability and growth of your company.
If, through your questions, ideas, comments, analysis, proposals, and performance, you exhibit business acumen, you will be seen as a more valuable contributor. You will demonstrate your worth to the company, and other people will notice.
And that, in a nutshell, is the path to success in almost any career.
Kevin Cope is a successful executive, keynote speaker, and author of “Seeing the Big Picture.” For more than 25 years, Cope has promoted the idea that the brightest minds in business understand the essence of how a company makes money and use this knowledge to drive their decisions. In 2002, Cope founded Acumen Learning, a business acumen training company. Cope’s specialty is teaching employees and leaders how to speak the language of business as fluently as they speak the language of their department or function. For more information, visit http://www.seeingthebigpicture.com.