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To run a truly effective, dynamic, and successful organization, leaders must possess a deep understanding of the business world. This skill, known as business acumen, is not something we are born with, but rather something that is cultivated over time. Many senior leaders mistakenly believe that business acumen simply means being financially savvy, but that is only one aspect of it.

There are five essential components that make up a solid foundation of business acumen: Intelligence, Strategy, Communication, Innovation, and Accountability. As you evaluate these qualities, take the time to assess both yourself and the other leaders on your team. Identify the strengths and weaknesses within your organization, and create an action plan to bridge those gaps and elevate your organizational success to new heights.

#1 – INTELLIGENCE: Leaders with business acumen have the ability to create, read, and analyze financial reports and budgets. However, they also excel at explaining this sometimes complex information to others. This is a trait that is highly admired by senior leaders when they think of someone with strong business acumen. Furthermore, these leaders have an insatiable hunger for knowledge and are constantly seeking opportunities to expand their understanding and intellect. They don’t just read business books, magazines, and white papers for the sake of it, but rather to gain practical skills and techniques that can be applied to their own work and industry.

#2 – STRATEGY: Leaders with business acumen understand the key priorities and business objectives of their organization. They proactively develop a written action plan to guide their team towards achieving those objectives. Rather than waiting for a strategic plan to be handed down from corporate, these leaders start focusing on how their team can contribute and make an impact as soon as they become aware of the business objectives. It’s not enough to just have business intelligence; leaders must also be able to translate that knowledge into actionable behaviors that engage the entire workforce and drive positive results.

#3 – COMMUNICATION: Leaders with business acumen are exceptional communicators, both verbally and in writing. They recognize that clear and simple communication is the key to achieving business priorities and executing the strategic plan. If you observe a leader with strong communication skills, you will notice that they have the ability to communicate effectively with individuals at all levels of the organization. They can convey their message with finesse to executives, while also simplifying it for line staff to understand and relate to their day-to-day tasks.

#4 – INNOVATION & RESOURCEFULNESS: Leaders with business acumen possess the unique ability to do more with less. They are not hindered by a lack of resources, but instead are creative enough to find new ways to accomplish tasks effectively and efficiently. While it would be ideal to have all the necessary tools, they don’t allow the absence of resources to create negativity or conflict within the team. Their greatest satisfaction comes from overcoming obstacles and challenges to deliver a product or service that exceeds expectations. These leaders are not wasteful; instead, they are innovative and resourceful.

#5 – ACCOUNTABILITY: Leaders with business acumen recognize the importance of holding employees accountable for driving organizational success. Without accountability, all the other components of business acumen (intelligence, strategy, communication, and innovation) lose their value. To establish accountability, leaders must set clear expectations, communicate them to gain employee buy-in, integrate them into the work environment, evaluate performance against those expectations, and reward and recognize those who consistently meet and surpass them.

Just like a waterfall, business acumen starts at the top and flows down throughout the entire workforce. If senior leadership lacks these essential components, organizational effectiveness and success cannot be sustained. Now that you have a clearer understanding of business acumen, your next step is to work towards closing any professional gaps you may have. Remember, developing strong business acumen is not limited to analyzing financial reports; it encompasses a range of skills and abilities.

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Ihab Salloum