Business acumen

Business acumen

Business acumen is a concept pertaining to a person's knowledge and ability to make profitable business decisions. Originating within corporate learning and development circles, Charan, Ram. [ "Sharpening Your Business Acumen"] , [ "strategy+business"] , Spring 2006. ] the term has seen a sharp rise in usage since the beginning of 2007. [ [ "Google Trends tracks "business acumen"] ] Despite a lack of consensus on an exact definition, business acumen is often closely linked with the fields of behavioral finance and financial literacy.

Additionally, business acumen has emerged as a vehicle for improving financial performance and leadership development.Summerfield, Brian. [ "A Crisis in Leadership"] , "Chief Learning Officer Magazine", April 2008.] Consequently, several different types of strategies have developed around improving business acumen.

Competing Definitions of Business Acumen

The term "business acumen" can be broken down literally as a composite of its two component words: the Oxford English Dictionary defines acumen as "the ability to make good judgments and quick decisions". [Oxford English Dictionary [ 's definition of "acumen" ] ] Given the standard definitions of business and what is "good" for business, a strictly literal definition would be "the ability to make profitable and quick business decisions."

In the industry, the term has come to evoke numerous interpretations, including, but not limited to, more detailed versions of the literal meaning. It is clear that the term lacks a unanimous definition, even within the business community, as evidenced by a study conducted by the Institute for Corporate Productivity. The study left business acumen undefined and invited respondents to offer their explanations of what the term meant. [Gilmore, Agatha. [ "New Study Finds Lack of Business Acumen in Leaders"] , [ "Talent Management"] , March 2008. ]

As a solid meaning has not yet emerged, many business leaders and academics have created their own working definitions. A few examples are:

*Ram Charan, business consultant and speaker, is one of the outspoken voices attempting to define business acumen. He describes it as the art of “linking an insightful assessment of the external business landscape with the keen awareness of how money can be made — and then executing the strategy to deliver the desired results.”

*Michael Tindall, Product Manager at ExcellerateHRO, and Roselyn Feinsod, Human Resources Consulting Principal at Towers Perrin, provide a perspective based solely from a Human Resources point of view. They link business acumen to "business intelligence" through the ability to interpret data. [Tindall, Michael and Feinsod, Roselyn. [ "Business intelligence- transforming data into business acumen"] , "HR Management".] They have defined business intelligence as "useful information on which HR professionals can base strategic decisions, and derived from the examination of integrated data from vertical HR functions."

*Bob Selden, faculty member of Mobilizing People, a leadership development program based in Switzerland, observes a complementary relationship between business acumen and leadership. [Selden, Bob. [ "Is Business Acumen a Substitute for Leadership?"] , 26 February 2008.] Selden states the importance of nurturing both the development of strategic skills and that of good leadership and management skills in order for business leaders to achieve effectiveness.

*Dr. E. Ted Prince, CEO and founder of the [ Perth Leadership Institute] , has also identified a relationship between business acumen and leadership. Prince believes that "business acumen is defined by two dimensions: the inclination to use resources and the propensity to add value to products and services.” Research into this relationship resulted in the creation of the Perth Leadership Outcome Model, which links financial outcomes to individual personality traits.

Business Acumen Development

Programs designed to improve an individual or group's business acumen have been a primary factor in fueling the growth of business acumen as a significant topic in the corporate world. In general, there are three different types of business acumen development programs available:

Business Literacy Courses

Many universities and companies offer continuing education programs for executives and senior leaders and function as corporate learning entities. Prominent schools, such as those at the University of Michigan Ross School of Business and the University of Pennsylvania Wharton School of Business, have programs which have been classified and presented as business acumen development courses. In these programs, participants are generally involved in seminars, workshops, and highly condensed classes which cover a variety of topics on both the theory and practice of business. Subjects range from introductory financial training to industry- and- position-specific learning. Overall, these courses tend to stress the importance of business knowledge imparted from experienced leaders and managers in a classroom setting.

Business Simulations

A business simulation is another corporate development tool used to increase business acumen. Several companies, such as [ BTS] and Paradigm Learning, offer business simulations as a way to educate mid-level managers and non-financial leaders within their organization on cash flow and financial-decision-making processes. Their forms can vary from computer simulations to boardgame-style simulations.

Although these simulations provide participants with a more interactive learning experience, it is debatable as to whether these simulations reproduce the real-world sensation of actual business scenarios. Thus they may or may not act as accurate predictors of participants' reactions in actual situations.

Psychological Assessments

The advent of personal assessments for business acumen is based in the emerging theories of behavioral finance and attempts to correlate innate personality traits with positive financial outcomes. [Perth Leadership Instute White Paper: [ "Business Acumen and Leadership Development for CEOs and Senior Executives"] ] This method approaches business acumen not as entirely based in either knowledge or experience, but on the combination of these and other factors which comprise an individual's financial personality or "signature". The results from this research have been limited, but noteworthy. [Prince, E. Ted. "Research note: how the financial styles of managers impact financial and valuation metrics." [ "Review of Accounting and Finance"] 7.2 (2008):193-205 ]


The perception of business acumen as a valuable and necessary quality for high-level corporate leaders has occurred within a short period of time. However, given the overall ambiguity of the concept combined with its increased use, some have classified business acumen as simply a buzzword.


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Look at other dictionaries:

  • acumen — UK US /ˈækjʊmən/ noun [U] ► skill in making correct decisions and judgments in business or in a particular area of business: »He is an astute man with sound business acumen. »commercial/financial/legal acumen …   Financial and business terms

  • Business simulation — is simulation used for business training or analysis. It can be scenario based or numeric based. Most business simulations are used for business acumen training and development. Learning objectives include: strategic thinking, financial analysis …   Wikipedia

  • acumen — noun ADJECTIVE ▪ considerable, great ▪ business, commercial (BrE), financial, legal, political, technical VERB + ACUMEN …   Collocations dictionary

  • acumen — a|cu|men [ ə kjumən, ækjəmən ] noun uncount the ability to make good quick decisions and judgments: business/financial/political acumen: We are looking for someone with both business acumen and technical expertise …   Usage of the words and phrases in modern English

  • acumen — noun (U) the ability to think quickly and make good judgements: business/political/financial etc acumen: The firm s success is due to the director s ingenuity and business acumen …   Longman dictionary of contemporary English

  • acumen — UK [ˈækjʊmən] / US [əˈkjumən] / US [ˈækjəmən] noun [uncountable] the ability to make good quick decisions and judgments business/financial/political acumen: We are looking for someone with both business acumen and technical expertise …   English dictionary

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  • acumen — a•cu•men [[t]əˈkyu mən, ˈæk yə [/t]] n. keen insight; shrewdness: business acumen[/ex] • Etymology: 1525–35; < L acūmen sharpness =acū , s. of acuere to sharpen (see acute) + men n. suffix a•cu′mi•nous, adj …   From formal English to slang

  • acumen — noun noted for her business acumen Syn: astuteness, shrewdness, acuity, sharpness, sharp wittedness, cleverness, smartness, brains; judgment, understanding, awareness, sense, common sense, canniness, discernment, wisdom, wit, sagacity …   Thesaurus of popular words

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