Executive level thinking In his 2012 book
Seeing the Big Picture, Business Acumen to Build Your Credibility, Career, and Company,
Kevin R. Cope states an individual who possesses business acumen views the business with an "executive mentality", with the ability to comprehend how the moving parts of a company work together to make to ensure success, and how financial metrics like
profit margin,
cash flow, and
stock price reflect how well each of those moving parts is doing its job. Cope proposes that an individual who has the following five abilities could be described as someone having a strong sense of business acumen: • Seeing the "big picture" of the organization—how the key drivers of the business relate to each other, work together to produce profitable growth, and relate to the job • Understand important company communications and data, including
financial statements • Use knowledge to make good decisions • Understand how actions and decisions impact key company measures and leadership objectives • Effectively communicate ideas to other employees, managers, executives,
and the public.
Distinguishing traits Raymond R. Reilly of the
Ross School of Business at the
University of Michigan and Gregory P. Reilly of the University of Connecticut document traits that individuals with business acumen possess: • An acute perception of the dimensions of business issues • Ability to make sense out of
complexity and an uncertain future • Cognizance of the implications of a choice for all the affected parties • Decisive • Flexibility for further change if warranted in the future Thus, developing stronger business acumen means a more thoughtful analysis, clearer logic underlying business decisions, closer attention to key dimensions of implementation and operation, and more disciplined performance management.
Business management and leadership Bob Selden observed a complementary relationship between business acumen and leadership. According to Selden, this relationship comprises 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. According to a study titled
Business acumen: a critical concern of modern leadership development:
Global trends accelerate the move away from traditional approaches, traditional leadership development approaches, which are said to rely on personality and competency assessments as the scientific core of their approach, are failing. The study's intended goal is reportedly to demonstrate the importance of business acumen in leadership development approaches. According to the study, business acumen is projected to have an increasing impact on leadership development and HR agendas. Research into this relationship resulted in the creation of the
Perth Leadership Outcome Model, which links financial outcomes to individual leadership traits. In a study that interviewed 55 global business leaders, business acumen was cited as the most critical competency area for global leaders. In their 2011 book,
The Leadership Pipeline,
Ram Charan, Stephen Drotter, and James Noel study the process and criteria for selecting a
group manager, and suggest that the process and criteria are similar for selecting a CEO. According to them an obvious criterion for selecting a leader is well-developed business acumen. Organizations with a strong base of business knowledge are more likely to develop leaders capable of motivating others and improving overall performance.. ==Development==