How to Improve the Business Acumen of Leaders for Better Strategy Execution

Improve the Business Acumen of Leaders: Essential Skills Every Leader Must Master
We know from leadership simulation assessment data that technical skills and functional expertise are no longer enough for leaders to thrive — they are merely tickets to play the game. Business acumen — the ability to understand key business drivers, anticipate shifts, and make informed decisions that align with strategy — has emerged as a key to leadership development. When leaders lack business acumen, their people and businesses suffer due to weak strategic thinking and decision making.

The good news is that the core leadership skills of business acumen, strategic thinking, and decision making can be assessed, learned, coached, and reinforced.

Why Business Acumen Matters
Business acumen provides the context for effectively leading change, making strategic decisions, and executing strategies.

• The American Management Association found that 65% of senior executives viewed financial acumen as “very” or “extremely” important for leadership success.
• Research from the Harvard Business Review emphasizes that leaders with strong business acumen are more likely to make decisions that drive long-term performance rather than short-term wins.
• A study by the Corporate Executive Board found that companies with leaders who demonstrate strong commercial insight achieve revenue growth rates 12% higher than their peers.

When leaders do not have a solid grasp of what makes your internal and external business dynamics, it puts even well-crafted strategies at risk. Why?  Because things change, and leaders must make high stakes decisions to move plans forward in a way that makes sense to their various stakeholder groups.

Leaders who fail to anticipate trends or struggle to grasp how their decisions impact the big picture risk making choices in silos — often undermining enterprise-wide strategic priorities and their credibility as leaders.

Practical Ways to Improve the Business Acumen of Leaders

1. Expose Leaders to Cross-Functional Perspectives
   Effective leaders understand how different functions interconnect to deliver enterprise-wide value. Shared goals across functions, rotational programs, stretch assignments, temporary cross-departmental projects, and action learning leadership development initiatives help leaders gain firsthand exposure to the priorities, pressures, and nuances of other teams.A broader lens enables leaders to see beyond their silo, appreciate the need for collaboration, and identify how trade-offs in one area ripple across the business.
2. Build Financial and Commercial Literacy
   McKinsey research underscores that leaders who are financially literate are significantly more effective at identifying growth opportunities and avoiding costly missteps. High performing leaders can read financial statements, interpret performance metrics, and connect operational decisions to financial outcomes.Done right, customized training workshops and financial business simulations are powerful ways to teach the financial basics required to make sound decisions.
3. Simulate Real-World Business Challenges
   We know from training measurement research that business acumen is best learned by doing. Experiential decision making training, scenario planning, and strategy retreat workshops can accelerate the development of business acumen.Business strategy simulations are another proven approach to providing a safe space for leaders to learn the cause-and-effect dynamics of business decisions because they must make difficult trade-offs, balance competing priorities, and defend high stakes decisions.
4. Encourage Strategic Curiosity and Market Awareness
   We know from project postmortem data that leaders with strong business acumen continuously scan the external environment for important signals of change. Effective leaders remain attuned to shifting market dynamics and can translate key insights into effective actions.Encourage leaders to stay ahead of the game.
5. Connect Individual Roles to Enterprise Value
   We know from people manager assessment data that team effectiveness grows when leaders can link their daily decisions to enterprise-wide outcomes. Too often, leaders, especially new managers, see their role in isolation.Help leaders to understand how their decisions influence different parts of the business to create a clear line of sight between individual actions and strategic priorities.
6. Ensure Cultural Reinforcement
   Like any important business initiative, developing business acumen is not a one-off training event; it requires a sustained effort that embeds behaviors into business practices, succession planning, performance management, and leadership development. Leaders should be expected to articulate the “why” behind their decisions and regularly reflect on outcomes.Structured coaching and continuous feedback loops should reinforce the cultural expectation to “know the business.”

The Bottom Line
Technical expertise and functional competence is not enough to create high performance.  Invest in exposing leaders to cross-functional perspectives and building financial literacy.  Then you and your organization can elevate leadership effectiveness and strategy execution.

To learn more about how to improve the business acumen of leaders, download The Top Skills for High Performing Leaders