"Business acumen is the willingness and ability to take responsibility for your project's results and to know, at all times, how your project is helping the organization achieve at least one of its goals... Business acumen also includes an understanding of your organization's products and services. You do not need to be expert, but you should have a basic knowledge of what your organization does and the key drivers of how your organization delivers value. This basic understanding will help guide you in your projects. Project management should not operate as a separate silo that only gets involved with the technical aspects of projects, as is so often characteristic. We need to be aware of and knowledgeable about the business. This becomes critical in helping us determine how to deliver underlying value." A Sixth Sense for Project Management, Tres Roeder.
Business acumen is a large umbrella-term that means different things to different people. For many, the term is synonymous with experience. The people in your organization who have the most business acumen may have been working in their position or ones like it for a long time. They've used that time to gain exposure to many areas of the business, or to deeply understand their area of the business. They have a lot of context for understanding how to solve problems in an organization, and have the language to describe where they are, where they want to be, and what they need to get there. One of the main ways this knowledge is demonstrated is by their understanding of how to read corporate financial reports. This typically includes but is not limited to, the profit & loss statement, the statement of cash flows, and the balance sheet.
People with business acumen are skilled at making decisions that balance project scope against project constraints such as time, budget, and risk. While the executive sponsor of a project will be instrumental in making the big decisions, the project manager is responsible for day-to-day decisions, such as:
- If we are experiencing scope creep, where do I draw the line on how much additional work to take on? When do I raise the issue to the executive sponsor's attention?
- If I need to bring a problem to the executive sponsor's attention, what solutions can I suggest?
- Is my organization's strategic planning framework top-down, or bottom up?
- If my project is running behind schedule, do I ask my team to work extra hours to make up for lost time?
- Is my project aligned to financial metrics, such as net present value, return on assets, or return on invested capital? How do I achieve the goals for these metrics?
Just because people accrue business acumen over a number of years doesn't mean you need to resign yourself to passively waiting until you know more. Roeder Consulting recommends "experience accelerators" to quickly and effectively improve your business acumen today.
One-way learning is a good place to start. On your own time, at your own schedule, you can increase your business acumen with the following tools:
- Reading - One of the easiest ways to quickly gain familiarity with new terms and concepts on your own is to read. You can read articles from Business Week, The Financial Times, and other business-minded publications. You can read blogs or books from people who have experience working in similar or more advanced roles.
- Case studies - A good way to see how other organizations made strategic decisions, case studies are purchasable online from top MBA programs, like Northwestern, Harvard, and MIT.
- Investor calls - If your organization is publically held, you can listen to quarterly/annual investor phone calls. You'll hear your leadership team discuss changes in the industry and their strategies to get ahead of them. Many private companies also share basic financial information and strategic direction - you just need to determine where it is shared.
- Whitepapers / Podcasts - There are many free whitepapers and podcasts available online about interesting problems or new innovations in various industries.
- Online webinars and courses - you can self-train through watching webinars or taking courses focused on business acumen. Topics might include financial analysis, strategic planning, and business operations.
Scanning large quantities of information passively is a foundation to skill-building, but it won't stick without practice. Find ways to practically apply your knowledge so that you are continuously learning, demonstrating your growth, and testing what you know.
- Informal Conversations - A simple and effective way to practice is to have conversations with others who are interested in the same information. Having a face-to-face conversation requires you to actively test the ideas in your head, and provides a new perspective, can lead to collaborative idea-generation, and provides instant feedback on how you're digesting the information. Chances are, there are other people in your organization similarly interested in building and flexing their business acumen.
- Formal Mentor / Coach - Working with someone with deeper experience is an excellent way to develop business acumen. Mentors do not necessarily have to be internal to your organization. For example, after taking our A Sixth Sense for Project Management® Assessment, you can sign up for optional coaching sessions to discuss your results and pave a path to skill mastery.
- Take on a tough project - Dive into experiential learning by taking on a tough project. Oftentimes, we learn best when we have no other option. Just like a personal trainer might encourage you to do one more rep when you think you're at your limit, taking on stretch project assignments will give you a platform to grow. Don't be afraid to be a little bit uncomfortable - it can easily be indicative of your getting stronger (or smarter!).
STUDY A SIXTH SENSE FOR PROJECT MANAGEMENT®