What Is Business Acumen? - Definition & Examples

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  • 0:04 Business Acumen in Practice
  • 0:51 Defining Business Acumen
  • 3:10 Importance of Business Acumen
  • 4:19 Lesson Summary
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Lesson Transcript
Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

The term business acumen may be just two words, but it encompasses a lot! In this lesson, you'll learn more about business acumen, its elements, and why it's important for managers and employees alike.

Business Acumen in Practice

In the modern world of cell phones, mp3 players, and computers, few people in recent generations would match the skill, understanding, and savvy displayed by Apple's former leader, Steve Jobs. Years before consumers became obsessed with iPhones and iPads, the technology for these devices was already being utilized, just not very well.

Jobs was able to understand the planning and strategy behind creating a device that people would clamor over. He put together the operations necessary to build it and created a financial juggernaut that made Apple millions and cemented his legacy. Many would attribute Jobs' success to his business acumen. We're going to discuss what that means in this lesson.

Defining Business Acumen

Simply put, business acumen is understanding how a company makes money and achieves its goals and objectives. Business acumen, however, is not one skill but a set of skills that, working together, help to make a leader like Jobs and his business prosperous.

Individuals with business acumen have an understanding of the various parts of a business and how they are interconnected, giving them the ability to make smart decisions in any situation. If you feel like you weren't born with business acumen, don't worry! Most experts believe it's learned rather than innate. Leaders who develop sound business acumen are able to sort through the noise to focus on the key elements of importance to a business, find solutions for business problems, and lead his or her team to goal achievement.

There are four key elements central to business acumen. They are planning, operations, finance, and strategy.

Planning

Smart leaders are always analyzing and planning, typically several steps ahead of those who are less skilled in the art of business acumen. They engage in strategic thinking. That is, anticipating the needs of the company, its employees, and its customers further down the road and setting up plans that align those needs with the business' objectives.

Operations

Leaders with business acumen develop their knowledge of all areas of a business' operations. They can see all of the pieces of the business puzzle and how they fit together to create a cohesive unit. These types of people recognize that a decision in one department can impact the work of another department, and they take all aspects of operations into account to achieve success.

Finance

Understanding the financial piece of the business acumen puzzle is an important characteristic for a leader. He or she is able to look at the company's finances and make sound business decisions that will help, not harm, the company.

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