The building blocks of commercial acumen, and why it’s so important.

Commercial acumen is traditionally gained over years of working across the breadth and depth of an organisation, being exposed to a variety of different clients, and pulling that all together to give yourself a big picture view of your business, the market it operates in, and how all the different departments work together.

No small order, and, as we’ve discovered over the years, actually quite difficult to attain. Even for experienced senior leaders, the pattern we’ve seen is that high performers are identified early in their careers, promoted through but not across the ranks, eventually arriving at the ‘Head of’ their organisation with a siloed view of the business. Learning and development teams are often aware of the gaps in knowledge, all over the business and there’s no shortage of training programs to upskill your teams, however unless you’re sending everyone on an MBA, the focus of these courses is often very narrow.

So, what exactly is Commercial Acumen?

The foundational block is financial acumen, which we define as the ability to read the Profit & Loss, Balance Sheet and Cash Flow Statements. These are all required to understand the overall health of a business, with leaders needing to have a good handle on cost centre reports and budgets too.

The next layer is business acumen, which is understanding the different functional departments, roles, the language they use and why they exist. That’s the internal factors, however it all sits within the context of the market you operate in, so we can add a number of external factors into the mix. That includes competitors, customers and shifting consumer sentiment, along with supply chain and risk management considerations, and external regulations that can affect your industry too.

Finally, on top of all that is commercial acumen, which brings it all together to deliver a broader perspective of what’s going on, and how to leverage all the different parts of the business to get the best result. The human aspect of business comes into play here, as often, people don’t react entirely rationally, or the way you expect them to because they may have different information or goals than you realise. Even if a decision is ostensibly the right one to make, the way you implement it can make all the difference to outcomes realised.

Another factor that makes a difference is the ability to make nuanced decisions under pressure with incomplete information, a tight schedule, complexity and conflict. Emotional fortitude helps in these situations, as does a solid grounding in business ethics. Commercial acumen is all of this, combining to a greater understanding of the ‘bigger picture’ in terms of strategy, operations, people, the external context and how financials are all connected. It’s having the ability to challenge conventional thinking, and be flexible with business models and frameworks.

Why is Commercial Acumen important?

One could easily suggest the strategic direction and higher-level decisions rest with the executive team of an organisation, and under those circumstances, commercial acumen is really only important for senior leaders. However more and more businesses are adopting agile working methods, pushing decision-making to the edge which means commercial acumen is now relevant to every business professional, not just for those at the top. The more people with commercial acumen in your business, the better. In our experience, those who really benefit from this kind of knowledge are leaderships teams, including up and coming leaders, along with sales professionals, and anyone working in professional services such as lawyers, consultants and accountants.

Why is Commercial Acumen important for leaders?

Because knowing how to fine tune an organisation to get the most out of every single department is one of the keys to sustainable high performance, which is essential to continued success in today’s business environment. Performing for a short period of time just doesn’t cut it anymore, while doing it consistently, in a range of different environments and conditions takes an acute awareness of your surroundings, combined with the ability to inspire people to be their absolute best. That’s why commercial acumen is important for leaderships cohorts, and up and coming leaders too, helping to embed your knowledge, widen your perspective, collaborate more effectively, and make better decisions.

Why is Commercial Acumen important for sales professionals?

Like it or not, the B2B sales environment has changed, with buying groups increasingly afraid to make the wrong decision. To avert this, they go one of two ways.

Increase the size of the buying group
The fear of making the wrong decision is offset by spreading the responsibility, so more stakeholders are brought to the table, from a host of different departments. This means you’ve got more people to win over, from a variety of different perspectives, making the process more complicated and extending the sales cycle too.

Decide to just focus on cost
The buying group ends up being so divided on the right course of action they decide to take the path of least resistance, which means staying with the incumbent or going for the cheapest alternative. Neither of which is a great outcome for you.

Having commercial acumen allows you to overcome both of these situations, by turning you into a trusted advisor as opposed to a salesperson. With expanded perspective and knowledge you can truly add value to a prospect’s business, elevate the conversation and turn their fear, into an opportunity for growth. Plus, a greater insight into how companies make decisions, and what all the different departments are actually measured on, is invaluable knowledge when manoeuvring your prospects over the line for a sale.

Why is Commercial Acumen important for professional services?

Lawyers, consultants and accountants operate in a slightly different business environment from many of the organisations they advise, and so, building commercial acumen will give you a more thorough understanding of your customers operations, leading to you becoming a better adviser. Even if your clients are internal, and you’re part of a large organisation, you’ll know your team is lacking in commercial acumen if it’s sometimes known as “the department for the prevention of sales”. Not a good sign.

You do, of course, have to balance the desire to ‘get things done’ with the relevant regulations, however understanding the broader context of what people are trying to achieve, and thinking creatively about how to meet those goals, with an acceptable level of risk, is exactly the place you want to get to.

“Understanding the numbers is essential, but it’s more than that. It’s the dynamics between and within organisations. L&D has to recognise that individuals don’t operate in a vacuum. Context matters. Strategy, operations, people, the external context and financials are all connected. We must understand how it all works.” Kate Kesby

At Wyda, we run a series of training programmes, and a highly advanced business simulation, that delivers commercial acumen to all professionals at all levels. Activating their existing knowledge, filling in the gaps, putting it all into perspective and giving them a big picture view of the business they operate in, sell to, or serve as advisors.