- Defining commercial acumen
- Why is commercial acumen important?
- What does commercial thinking look like?
- The challenges of fostering commercial acumen in your team
- Training someone to have commercial acumen
What is the definition of commercial acumen?
Often referred to as ‘business acumen’ or ‘business savvy’, someone with high commercial acumen takes into account a number of different considerations when evaluating business decisions and has a greater understanding than most as to how their decisions and actions impact the wider organisation.
Commercial acumen is often mistaken for financial acumen. However, commercial acumen in fact covers more breadth and requires an understanding of multiple business factors, including finance but not limited to finance. Learn more about the difference between commercial and financial acumen here.
For any organisation to be successful, there are 7 critical factors that it must excel in. Every one of these needs to be working well for the organisation and it must be recognised how each of these will impact on each other, i.e. these 7 success factors are all inter-related – examples include marketing, strategy and processes. Someone with commercial acumen understands the implications of their roles and their decision-making on all these functions.
As an example, imagine an organisation that has a number of inefficient processes which are causing delays in meeting customer demand for a product. One way of improving this situation is with the implementation of new technology.
Considerations that must be taken into account should include factors such as:
- whether demand for this product line is growing or shrinking, perhaps influenced by wider economic issues;
- understanding what competitors are doing and the impact that this could have on their own business;
- what the strategy of their organisation is and how this project fits into it;
- the amount of money required for investment;
- the other possibilities of how the money could be spent and the implications of those options compared to this idea;
- the impact on the people within the business, such as training on the new technology or whether people will need to be re-deployed elsewhere within the organisation;
- whether the technology improvements create bottlenecks further down the line; and
- the impacts on the customer and how the improvements could be incorporated into marketing campaigns.
These are just some examples of commercial thinking for this scenario. There are many more factors that someone with great commercial acumen would take into account.
Commercial acumen requires an in-depth understanding of both the short and long-term effects of their decisions, not only on all of these success principles, but ultimately on the customers. All too often, only short term impacts are considered and the customer implications aren’t always thoroughly explored, resulting in the inability to fully achieve the desired results from decisions.
Why is commercial acumen so important?
Commerciality has become something of a buzzword recently, and we’ve seen an increased emphasis on this concept in the business world. Recruiters want to hire it, managers want to promote it, and learning and development professionals are being asked to develop it.
It’s easy to see the advantages of having a commercially aware workforce – consider the impact it would have on your organisation if everybody fully understood how their roles and decisions impacted other departments, the customer and the bottom line, both now and in the future. Think of how it would improve the internal communications and the financial wellbeing of your business. That’s why it’s not just essential for managers to possess commercial ability – everyone in your organisation should be working together and approaching their roles in a consistent, commercially sound manner.
What does commercial thinking look like?
So, what does commercial thinking look like in practice? It’s not simply a matter of intelligence. It’s all very well to say that commercial acumen means an understanding of more than just your own business function… but how exactly should somebody think in order to make a commercially sound decision? Complete Financial Training have devised a model for facilitating commercial thinking, which covers the critical points that should be considered in every commercial decision, and how to apply this to your own role. These points include how to fully understand and manage the risks involved with a decision, and how to evaluate the impact of this decision on your organisation’s standing in the wider market.
The challenge of developing commercial acumen among employees
In theory, we all know it would be ideal to improve the commercial acumen of our employees. In practice however, there are a couple of potential barriers to fostering this kind of thinking. The first challenge is that ‘success’ can be defined very differently depending on the organisation that you are in. For example, some organisations want to achieve a certain amount of market share, others wish to be recognised for outstanding customer service, others pour all of their resources into leading the way with innovative new tech. What does success look like to your business? What are your organisation’s key selling points? Is your business strategy shared with all employees?
That’s why, when it comes to commercial acumen, generic online guidance or off-the-shelf courses rarely translate into practical guidance for your teams. Employees need to know which of these factors are prioritised by the business they’re in and understand what a commercially sound decision might look like in the context of their organisation. Complete Financial Training offers bespoke commercial awareness training for teams, with practical examples from your organisation.
The second challenge is one of company culture, which can sometimes make it more difficult for employees to understand how their role contributes to the bigger picture. This is particularly true in large, multinational organisations. A large part of commercial acumen is understanding the wider business consequences of any decision made. This understanding could be more difficult to achieve if there isn’t strong communication between departments or little transparency as to what’s happening elsewhere in the business. Your employees may even already be very commercially savvy, but without the opportunity to learn about the rest of the business, or understand your customer, your organisation may not benefit from this skillset.
Can you train someone to have commercial acumen?
Commercial acumen is essentially a business skill. As with other business skills, this is something that can be improved upon and trained. However, it can be difficult for an individual to take the training on board without practical examples, or real experience that they can reflect on. That’s why we wouldn’t advise an off-the-shelf class for employees – Complete Financial Training offers bespoke courses supplemented with real practical examples from your organisation, to show employees exactly what commercial acumen looks like and how they can strive for it in their roles.