What is Commercial Acumen?

Many leaders have moved up through the ranks of a business, or by moving across companies, achieving success through their technical skill and ability to deliver results.

Yet unless they have worked with a role model in commercial acumen, or received support or training on the subject, leaders can find themselves lacking in this critical leadership component. Here we explore what it is, why it’s important and how to do it.

The word “acumen” means good decision-making based on insights, so commercial acumen is about doing this well in business. It means being aware of how the business makes money, the drivers of costs, sales and profit, customer needs, market trends and competitor activity.

Whilst some of this knowledge could be gained and simply held onto as a leader progresses, the best commercial thinkers are those who are constantly updating this insight and researching beyond the obvious to spot opportunities and threats.

It is not enough to say, “I know how we make money and I know what our customers need,” because the facts can change overnight. We need leaders who can say, “I know what problems are coming up for customers now, and how these will change their businesses in the coming months. I know how we can adapt what we do now, so that we can educate our customers on what they need and be ready to serve that need.”

Why is this important? We need only look at Blockbuster video or Kodak cameras, to see the catastrophic effects of not being prepared for a market disruptor. Netflix and Amazon Prime deleted the need for a physical place to hire films from. Digital cameras and of course smartphones severely reduced the need for camera film and printing services. And whilst those highly public demises may seem relatively few in number, there are thousands more everyday examples of companies missing out on opportunities, falling behind the competition or losing customers by not understanding their markets.

Any business could be great today, but tomorrow be disappointing customers or facing severe cost hikes or having to entirely pivot its product and service lines.

The more prepared business leaders are, through their market awareness, understanding of customer trends and forecasting of what could be needed next, the faster the business can pivot, take market share and be at the cutting edge.
How do you build commercial acumen

Unlike some leadership skills that can be built over time, embedded as habits and then take less effort, commercial acumen is something we need to constantly work on. To make good judgements, we need up-to-date insights, which means regular research.