In 2020, the travel and tourism industry was one of the worst-hit by the COVID-19 pandemic. According to a report by the United Nations World Tourism Organization (UNWTO), travel dropped by 72% in 2020. Not only did this affect the livelihood of one in every 11 employed individuals but many organizations like Airbnb incurred significant losses.
Even though Airbnb’s bookings dropped by 70%, their leadership managed to improve business slowly and steadily—their gross bookings actually increased by 1% in a year!
Airbnb’s CEO Brian Chesky wrote several letters to employees, guests and hosts expressing his thoughts, worries and vision. It was Chesky’s business acumen that turned things around, motivating those around him to keep going during the hardest times.
Organizations can benefit from leaders that display high business acumen skills. But what exactly is business acumen? Discover the meaning of business acumen, business acumen skills and how you can encourage your employees on their journey to developing business acumen.
What Is Business Acumen?
The meaning of business acumen or ‘business sense’ is the ability to make quick, effective decisions for the sake of resolving a crisis or navigating challenges. Leaders who have a strong business acumen are able to diffuse a situation with tact, precision and insight. They’re more likely to achieve improved results and desired outcomes.
In organizations, senior executives, managers and leaders are responsible for strategic management and next steps to sustain competition and account for market fluctuations. It’s critical to have a leadership that has a keen sense for change. Not only should they be able to adapt to change themselves but also understand employee needs in the same context.
Important Business Acumen Skills
Leaders may exhibit different examples of business acumen depending on their industry, job role and even responsibilities. However, there are certain skills that are common across the board.
Here are a few examples of business acumen skills:
Leaders must exhibit a growth mindset or a vision for the future to develop their business acumen. The dynamic world waits for no one. What you need is a team that’s always ready for the next challenge. Even if there are unexpected setbacks, leaders must have the ability to think about how they can turn them into opportunities for the future.
Understanding the needs of multiple stakeholders—instead of just one or two—makes leaders more inclusive, insightful and goal-oriented. If leaders bring their biases or prejudice to the decision-making table, they’ll come up with ideas that aren’t in everyone’s best interests. It’s important to develop critical thinking if you want your organization’s leadership to make informed decisions.
Organizations face problems—big and small—almost on a daily basis. It may be something as small as forgetting to send an email and as big as costing the organization crores in losses. Business leaders must have the right mindset to solve complex problems in creative ways. From implementing new strategies to recycling old ones, creative problem-solving is a critical business acumen skill.
Ideas And Innovation
Business acumen is primarily concerned with using what you already know to come up with better ideas and drive innovation. Leaders should understand how they can get everyone on the same page, consider multiple perspectives and engage the entire team to develop new ideas. Driving innovation is possible with collaboration, and leaders should have the insight to involve everyone in the process.
Decision-making isn’t always effective, especially if people are pressed for time or under pressure. Smart decision-making means leaders use what they have to make decisions that benefit the organization. They have to deep dive into their knowledge bank and extract what they believe is helpful.
Business acumen also incorporates effective communication skills because how else will leaders inform key stakeholders of their plans? They have to share important insights, updates and dates with managers, teams and external stakeholders. Organizations must encourage their leaders to develop business acumen if they want to drive excellence in the workplace. High-performing leaders have a significant impact on the overall functioning of the organization. So, this is all the more reason for you to invest your resources to build your A-Team.
Characteristics Of Business Acumen Skills
Business acumen skills help leaders overcome challenges on a daily basis. They help leaders communicate with impact, create strategies for the future and influence clients to expand the business.
Here are some aspects of business acumen skills that every leader should possess:
Business acumen is more than just knowledge or experience. It’s about knowing how to deal with unexpected situations, navigate conflicts and achieve results in the most efficient way.
It’s good sense in addition to a set of essential skills like problem-solving, decision-making and understanding others.
Leaders who have excellent negotiation skills, who are able to arrive at win-win outcomes, show exceptional business acumen.
Strong business acumen will help leaders understand the needs of different stakeholders—clients, customers and investors.
Leaders with business acumen think about the big picture while being aware of each milestone on the way.
Your employees may already display a certain skill set that reflects their business acumen. But you must help them refine these very skills and leverage them to achieve organizational goals.
How To Develop Business Acumen
Developing business acumen takes practice and patience. Most of all, leaders can sharpen their business acumen with focused efforts on learning and development, training and experience.
Here are some ways to develop business acumen:
Employee Training And Development
Employee training and development is one of the most effective ways to improve employee skills and acumen. Organizations can help leaders develop their acumen with proper training that focuses on improvement areas. Training can include practice exercises, activities and conferences to introduce employees to experts. On-the-job training and off-the-job are two types of training and development practices for your employees. People can learn from their mistakes and work on their weaknesses.
Learning is a key aspect of employee development. Seeking knowledge and education helps people become more equipped at their job. They may even find improvement areas they’d previously overlooked. When employees seek knowledge, they’re motivated to grow and apply what they’ve learned. Online courses or programs for business acumen can help employees find greater significance in their roles. With learned principles, they’ll be quick to pick up on cues (on the job) that’ll help them make better decisions.
Simulations And Practice
Another way to help leaders develop business acumen is by practicing simulations. They can be given situations that require them to make decisions or apply their knowledge. It’s an effective way to nudge them in the right direction. They can identify gaps in their knowledge or areas where they’re lacking to improve performance.
Encouraging Leaders To Listen
If leaders can learn to listen to clients or customers, they’re more likely to make better decisions. Listening will help them learn directly from the source. They’ll be able to understand customer needs, motivations and what drives them. Not only will this lead to improved decision-making but effective problem-solving. Whether it’s learning on the job or online, having the provision for it is the key. Organizations must support individual learning efforts to drive collective goals and success.
Understanding The Organization
Often, leaders work with multiple blind spots because they don’t have all the relevant information about their organizations. Before you even begin a training and development process, it’s important to submit financials, policies and other information about your organization to your leadership. Not only will this help them familiarize themselves with critical subject matter but also base their decisions on fact, rather than speculation. Studying what the organization believes in, its missions and goals helps in strategizing robustly.
Employee learning and training are the most effective ways to develop business acumen. Once they’ve learned how to apply their knowledge, they’re better equipped to implement strategies. All they need is the right guidance, feedback and platform to approach learning positively.
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