While it is an extremely vital skill for employees to have. It may be difficult to teach, measure, and sustain in the workplace, as both internal and external factors can have a direct impact on what commercial acumen skills mean to a certain firm. We’ve put together this helpful reference to help you understand commercial acumen, as well as how it can be exhibited and strengthened through interactive workplace training.
What is Commercial Acumen?
Commercial acumen is defined as a comprehension of how a business runs as well as the factors that influence the company’s performance. Essentially, it is an understanding of how the business is run. The precise definition and importance of commercial acumen will differ from one company to the next. A bank, for example, will normally seek financial acumen in the form of statements, core expenses, and profit margins, but a service-led business will be more concerned with value creation, innovation, and consumer experience.
While this may appear to be a lot of knowledge to absorb, you may exhibit commercial acumen by looking beyond your immediate function and beginning to comprehend how the organisation works as a whole, in accordance with certain principles, aims, and goals.
Why is Commercial Acumen so Important?
Commerciality has recently become a buzzword, with an increased emphasis on this notion in the business sector. Recruiters want to employ it, managers want to promote it, and L&D professionals are being asked to develop it.
It’s easy to understand the benefits of having commercially aware staff. Consider the impact on your organisation if everyone fully understood how their duties and decisions affected other departments, the customer, and the bottom line, both now and in the future. Consider how it would improve your business’s internal communications and financial health. That is why it is not only necessary for managers to be commercially sound; everyone in your organisation should collaborate and approach their duties in a consistent, commercially sound manner.
How Does Commercial Acumen Appear?
So, how does commercial thinking manifest itself in practise? It’s not only a question of intelligence. It’s all well and good to suggest that commercial acumen entails knowing more than simply your particular business function.
Challenges Facing Employee Commercial Acumen Development
In theory, we all agree that it would be wonderful to boost our employees’ commercial acumen. In practise, though, there are a few possible roadblocks to encouraging this type of thinking. The first difficulty is that success might be defined extremely differently depending on the organisation. Some organisations, for example, desire to gain a particular amount of market share, while others want to be recognised for providing exceptional customer service. Still, others devote all of their resources to leading the way with revolutionary new technology. What does success look like for your business? What are your company’s unique selling points? Is your business’s strategy communicated to all employees?
As a result, when it comes to commercial acumen, general online advice or off-the-shelf courses rarely translate into useful advice for your personnel. Employees must be aware of which of these factors their company prioritises and what, in the context of their organisation, a commercially sound decision might look like. The second difficulty is one of business culture, which can make it difficult for employees to comprehend how their function fits into the larger vision.
This is especially true with large, multinational corporations. Understanding the broader business implications of any choice is an important aspect of commercial acumen. This knowledge may be more difficult to achieve if there is a lack of communication between departments or a lack of transparency about what is going on elsewhere in the business. Your staff may already be very commercially savvy, but without the opportunity to learn about the rest of the business or understand your client, this commercial acumen skill set may not serve your organization.
How do you Exhibit Commercial Acumen?
It’s one thing to have commercial acumen, but you also need to be able to demonstrate it to hiring managers. And that begins with a thorough understanding of the organisation for which you are applying.
The Internet is a valuable tool for learning about the organization’s structure, what it does, who its customers are, and the industry or sector in which it operates. It can also assist you in researching larger concerns that may affect the organisation and its market on a local, national, or even worldwide basis.
A company’s website is only one point of contact. Make a habit of checking news websites to identify any concerns or obstacles that the organisation is facing. At the very least, investigate who the company’s consumers are, as well as any challenges it may face, such as technical improvements, evolving client preferences, environmental and sustainability issues, or any economic aspects that may affect the organisation and its market.
This research will be useful in your interviews with hiring managers, allowing you to stand out from the crowd by providing comments specific to the firm rather than generic responses.
Because commercial acumen is generally gained through experience, when you meet with a recruiting manager, mention your involvement in several projects. This can demonstrate your awareness of the business world while also allowing the hiring manager to see that you learn something new with each on-the-job interaction.
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Prepare to present specific examples of times when you have demonstrated your commercial acumen in a practical environment. This might be an idea you recommended. You can back it up with definite outcomes such as a 10% return on investment or a 5% cost reduction.
Although it will differ from business to business, there are a number of aspects that employers and executives will look for when attempting to drive commerciality in their business, including:
- Specific KPIs and objectives
- The influence of particular products and services
- Strategy for the organisation
- Management of risks
- What effect does behaviour have on profitable growth?
- Analyze your competitors.
To help improve your own commercial acumen, you should actively examine your business and assess how it achieves commercial success, as well as stay up to date on any recent market developments, including competitors.
How to Sharpen Your Commercial Acumen
If you are just starting out in your profession or believe your commercial acumen is lacking the good news is that there are actions you can do to improve your business understanding.
First and foremost, keep up with the financial press and current events. It’s a low-cost approach to becoming acquainted with the larger business community. Also one can gain an awareness of the current economic climate and how it affects various enterprises.
Consider what you have gained from your past work experience. It’s easy to get caught up in the day-to-day minutiae of a job. However, true commercial acumen entails being able to recognize how modest steps done by one department can have a larger impact on the firm as a whole.
Connecting with a mentor might also be beneficial. Many professional groups will connect you with a mentor. This can be a wonderful way to tap into the commercial acumen skills and experience of a more seasoned expert in your industry.
Commercial acumen is a skill that will never be wasted. By devoting time to improving your commercial acumen, you will have a higher chance of landing the job you desire and achieving long-term success in your chosen field.
Commercial Acumen vs. Financial Acumen
While both financial acumen and commercial acumen are related to the overall goals of the business, there is a substantial distinction between the two that employees should be aware of: Making judgments based on financial statements and the monetary impact on the organisation requires financial acumen.
Commercial acumen is closely related to an understanding of how a business operates and how decisions affect the organisation as a whole. As previously said, financial acumen is more closely tied to business sectors such as profit margins, revenue management, core expenses, and pricing, which are often associated with banks and financial services.
Training in Commercial Acumen
To assist you in determining your organization’s and staff’s degree of commercial acumen, I have given a list of questions that we utilize when working with clients to build a baseline understanding of where we need to start in the development of a bespoke commercial acumen training programme:
- What does value for money mean for your organization when it comes to project procurement and delivery?
- What are the primary motivators for your projects, business models, and organization?
- Who are your top ten most profitable clients, and why are they so successful?
- What are the most important commercial factors and indicators influencing your sector and markets?
- If you work for a private company, what are your average profit margins on projects or services?
- What is a suitable public Return on Investment (ROI)/Benefit Cost Ratio (BCR) for this project or service?
- What are the most and least profitable major industries in which we work? Why?
- How much do your bid costs cost as a proportion of your net fee revenue? Where do we get our repeat business and referrals?
- What percentage of your revenue is made up of your top 20 clients? How would you go about increasing this?
- What is your bid success rate in terms of count and dollar amount?
- What is the government’s whole-of-life cost approach to achieving value-for-money outcomes?
- How do our supply chain partners perceive us from a government standpoint? Are we regarded as a mature and astute client?
- What is the ratio of passive to generated revenue production in your services, geographies, and business units?
- What are the top three expenses for the project or organization budget for which you are responsible?
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- How well do you understand the business models and commercial practices of your competitors?
- What are the most important lag and lead indications for predicting profitability in the short, medium, and long term?
- What are the many business strategies you employ to demonstrate flexibility to your clients?
- How are your suppliers and important subcontractors compensated? How can we reduce the cost of doing business with us?
- Do you understand the major proposal qualifiers and assumptions that can be used to de-risk key projects?
- What is your profit aim in comparison to your revenue target?
- What are the three most important factors that could lead to increased profitability in your business or project?
- Do you use a balanced scorecard to track your key performance indicators?
- How do you hold your top employees commercially accountable? Are their commercial duties and obligations clear to them?
- How do you train new employees on your commercial procedures and critical metrics?
By asking these questions, we can rapidly determine where an organization and its individuals are in terms of commercial acumen. If you read this list and are unable to answer some of the questions, you have just identified some areas to focus on in your quest to improve your commercial acumen skills.
Commercial Acumen FAQs
What are commercial acumen skills?
Marketing and sales are used to differentiate a product or service and identify the target market. Entrepreneurial skills that inspire innovation and creativity. Team activities for idea generation Leadership skills that foster a commercial perspective.
How do you demonstrate commercial acumen on a resume?
Working part-time, interning, or participating in extracurricular activities are all excellent ways to obtain a deeper grasp of the business you want to work in. Actively monitoring and reading social media feeds, workplace emails, and journals, on the other hand, will keep you in the loop.
What is the difference between commercial and business acumen?
It all boils down to emphasis, in terms of both breadth and time. In terms of scope, commercial acumen is concerned with marketing current items and services. Business acumen takes this into account, but it also asks, “What more products and services may we offer that our clients might want/need?”
