Business Acumen and Career Success

This is another chapter that will appear in my new book which will be out soon.  It’s called My Corporate Climb and is a companion piece to my membership site of the same name..  I’d really appreciate your feedback on it…

I seem to hear it a couple of times a week.  One of my coaching clients comes to me and says, “I didn’t get the promotion I wanted.  When I asked why, I was told that I’m not strategic enough.”  “You’re not strategic enough” can be a catch all term used to explain away why another candidate was chosen over you.  Often it has no real meaning.  On the other hand, not being strategic, not demonstrating that you see and understand the big picture can really harm your corporate climb.  As you climb the corporate ladder, you must become more strategic.  You’ll need to develop your business acumen.

Think of business acumen in two ways.  First, you have to have a basic understanding of how your company makes money.  This means that you have to have a working knowledge of finance, marketing, sales and operations.  Second, you have to be able to use this knowledge to make sound decisions that contribute to your company’s profitability.  In other words, you need to see the big picture in your company, and how what you do every day contributes to it.

Even if you are in a highly specialized field, like IT or HR you have to understand how business works.  You need to not only have high technical acumen – the knowledge of your field, but you need to know and understand how your company competes and wins in the market place.  While you might be a technical specialist, you have to be a business generalist.

Business acumen allows you to understand your company’s overall strategy and how it competes in the marketplace.  It helps you speak the language of business, which will allow you to engage senior leaders in your company in conversations that demonstrate your awareness of the issues with which they grapple every day.  Your business acumen will help you demonstrate that you are a business generalist, not a technical specialist – an important key to climbing the corporate ladder.

If you google “business acumen” you will find five drivers essential to all businesses: Cash, Profits, Assets, Growth and Customers.

Cash is an item on your company’s balance sheet that reports the value of your company’s assets that are cash or can be converted into cash immediately.  Cash is a company’s most liquid asset.

Profits, sometimes called Margin, are the money that is left over after you have paid your expenses.   Two types of profit or margin, gross and net are often calculated.  Gross profits or margin is your sales minus the cost of goods sold – how much it cost you to develop, make, market, sell, and deliver your products.  Net profits are gross profits minus expenses and taxes.

Assets are things like company property, equipment and cash.  People are not found as an asset on a company’s balance sheet, but they play a crucial role in how well your company uses its assets.  Velocity is a term often applied to assets.  The better a company’s ability to use its assets to make money, the higher the velocity.  The big question here is, “How fast does a company use its assets to increase its profits?”

Growth is typically measured in three ways: Sales, Net Profits, and Earnings per Share.  If you work for a publicly traded company, your CEO is probably most concerned with earnings per share, because that determines the market value of your stock.

Customers are the end user of your company’s products and services.  Strong companies are good at not only exceeding customer expectations, but in anticipating their needs.

These business drivers are interdependent.  Taking action on one of them will have an impact on at least one the others.  For example, if you choose to conserve cash by not investing in new technologies you might hinder growth because your current technologies are not adequate to increase your market share.

On the other hand, discounting your products may lead to higher sales and improved market share, but have a negative impact on your gross margin.

I downloaded a presentation by Kevin Cope, CEO of Acumen Learning called “What Your CEO Wants You To Know.”  He suggests that one way to test your business acumen is to see if you can answer 11 questions that you can find in your company’s annual report.

For the most recent fiscal year end:

  1. How much cash was on hand?
  2. How much cash was generated from operating activities?
  3. What was total net income?
  4. What was the net profit margin?
  5. What were total sales?
  6. What was the inventory turnover rate?
  7. What was the return on assets?
  8. How much did sales grow over the previous year?
  9. How much did net income grow over the previous year?
  10. How much did Earnings per Share grow over the previous year?
  11. How do all of the above compare to your competition?

I know that this can sound pretty overwhelming.  But the answers to all of these questions can be found in your company’s annual report.  If you don’t know how to read your annual report, I suggest you make friends with one of the Finance people in your company.  Take him or her to lunch and ask him or her to give you a little tutorial on reading an annual report.  Trust me, the cost of this lunch will be one of the best investments you’ve made in your corporate climb.

It’s important for you to understand how your company makes money by integrating the five drivers.  As I’ve mentioned above, the drivers are interdependent.  When you do something that makes an impact on one, you affect the others.  Great companies are good at integrating all five of the drivers.

But remember, your department or function is likely to emphasize only one or two of the drivers.  If you want to become known as someone who understands the big picture, figure out what drivers other departments and function focus on.  Recognize what is important to them when you are in conversation with them.

Besides understanding the five business drivers and your company’s balance sheet, there are some simple, common sense steps you can take to develop your business acumen…

  • Schedule a meeting with your manager.  Tell him or her you would like to develop a better understanding of your company and how it makes money.  Have a discussion about your department – and you – can make a more significant and positive impact on the business as a whole.
  • Figure out the key metrics on which the senior leaders in your company are focused.  Make sure you know how your role and what you do every day contributes to these metrics.
  • Begin to think in terms of how you can impact your company’s key metrics.  Suggest some projects that you can undertake that will improve your company’s performance in one or more of the key metrics.
  • Constantly ask yourself, “How can I make a positive impact on the driver or drivers associated with my work?  How can I demonstrate measureable results?”
  • Start with small, simple steps.  As your business acumen begins to develop you’ll find that you’ll be better able to both understand and make a positive contribution to the big picture – and move your corporate climb along.

The career success coach point her is simple common sense.  Business acumen is a key component of life and career success.  You demonstrate your business acumen and ability to be strategic by doing the following things.  Show that you understand how the various parts of your company work together to provide value.  Make decisions based on data, not just your gut.  Choose the course of action that will have the best results for the entire company, not just department.  Take calculated risks.  Don’t choose the first and most obvious answer; look for unique and creative solutions to problems and issues.  Collaborate with colleagues in departments outside of your own.  Always keep the finances in mind when you are making decisions.  Be persistent and agile.  Get the projects done, no matter what unexpected obstacles pop up along, the way.

That’s my career advice on developing your business acumen.  What do you think?  Please take a minute to share your thoughts with us in a comment.  As always, thanks for reading my daily thoughts on life and career success.  I value you and I apprecaite you.


PS: If you haven’t already done so, please download a free copy of my popular career advice book Success Tweets and its companion piece Success Tweets Explained.  The first gives you 140 bits of career success advice tweet style — in 140 characters or less.  The second is a whopping 390 + pages of career advice explaining each of the common sense tweets in Success Tweets in detail.  Go to to claim your free copy.  You’ll also start receiving my daily life and career success quotes.

PPS: I opened a membership site on September 1.  It’s called My Corporate Climb and is devoted to helping people create career success inside large corporations.  You can find out about the membership site by going to http://www.mycorporateclimb.

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  1. Bud, I found this one of the best articles I’ve read on your site. What I liked about it is that it gave very specific questions we can ask ourselves (and a course of action to pursue if we don’t know the answers to those questions).

  2. Lynne:
    Thank you for your kind words.
    I’m glad you liked the article.
    I was trying to be provocative with the questions.
    All the best,

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