The Importance of Business Acumen
If you want to create a high performance culture, you’d better understand the importance of business acumen and the financials behind the business. It is not just the purview of finance to interpret the numbers that govern profit and loss; it behooves every employee to understand how and why the company makes money, spends money, and measures financial performance.
True business acumen is about more than understanding your P&L. True business acumen is being able to think and act like a business owner. You will know that you have true business acumen when you have an in-depth understanding of how your business works, how it makes money, and most importantly for leaders, how specific strategies and decisions impact business results.
A Lack of Business Acumen Exists
We believe that employees need to better understand the key factors that affect a company’s operations and financial strength to improve decision-making and strategy execution.
How can you expect to make informed decisions or pitch a new strategy or product if you are unable to articulate its potential revenue, costs, and return on investment?
Our leadership simulation assessment data tells us that leaders with high business acumen consistently show the importance of business acumen by:
Where to Start
To begin to intelligently discuss what impacts financial performance, think of your company’s financials simply as the way that you keep financial score. The math is not difficult. Begin by learning the terms; then you can graduate to interpreting and understanding the standard forms.
The Bottom Line
Whatever position you hold in your organization, the more you know about the finances, the more you can offer your team. With better context, better decisions can be made. If you want to improve decision-making and strategy execution, do not leave the numbers to the finance people.
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