Business acumen is a critical leadership skills gap that many leaders are finding difficult to develop.
We’re seeing businesses scale up faster than ever before in history. It took a little over 200 years for the first billion bicycles to be sold in the world. It took about 120 years for the first billion cars to be sold. It took McDonald’s 23 years to sell the first billion hamburgers. It took Facebook 8½ years to get the first billion users. It took Uber 5½ years to sell the first billion rides. And Uber has a competitor in China, called Didi Chuxing, that took just 11 months to sell their first billion rides — just in China! No industry is safe today. As the market becomes more and more competitive, leaders need to know how to create value and improve business profitability. This is why it is crucially important to hone and improve your business acumen as a leader. You can do this by focusing on three specific areas of your business that work directly toward creating value and improving profitability.
1. Anticipate Future Trends
Thomas Frey, our newest Bullet Proof® Manager leadership development faculty member, likes to say that “the future creates the present”. Indeed, as a leader, you need to anticipate the future to adapt your present. You need to be aware of trends and understand new technology to be able to leverage them to create strategic advantage. These trends could include competitive trends, financial, technological, environmental, regulatory, economic, and more. The decisions you make today will have an impact on tomorrow’s results. Make sure that you are staying up-to-date and well informed on how current and future trends can affect your business to ensure those impacts and results are positive.
2. Identify People Who Impact Key Business Drivers
Great leaders know how to involve everyone in the company’s success. Key business drivers are both internal and external factors that impact your business, and each key business driver has several employees who contribute to that driver every day. Lay the groundwork by identifying your key business drivers and the people on your team who contribute to them.
Once you have completed this exercise, you and your team will have a better understanding of how each person affects key business drivers, what you need to focus on, and how to communicate it with your team to increase buy-in and performance.
3. Define Performance Measurement
How do you know if your business is a success? By understanding financial performance measurement tools. And we know that money is one of the most important success indicators for companies. Financial indicators is the most commonly discussed business acumen topic. As a leader, you need to be able to identify how you are earning and spending money, and understand that everybody has a direct or indirect impact on performance. Defining how each one influences the results will enable you to focus on the right strategy and drive the business to success.