The Business Acumen Imperative

Five Critical Steps to Developing World-Class Business Acumen throughout an Organization

From the C-Suite to the front lines, do today’s organizations have the business acumen they need to successfully execute strategy and drive long-term success?

"While most business and financial acumen programs focus on acquiring intellectual knowledge, BTS focuses on learning with immediate application – the difference between reading about driving a car, and actually driving a car in heavy traffic. In addition to the expertise gained, there is a terrific opportunity for people to learn from each other and form lasting professional relationships. The BTS leadership is adaptive, articulate, and can bring a great deal of experience to the classroom. Our experience has been very positive."

Gregory L. Waters, President & CEO, Integrated Device Technology
Written by

Rommin Adl

Executive Vice President
Table of Contents

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From Rags to Riches: Business Acumen and the World on Wheels

In 1908, Henry Ford introduced one of the most innovative and influential products in history—the Model T. Simple to drive, easy to repair, and priced well below anything on the market, the Model T was an instant sensation, transforming the automobile from an extreme luxury exclusive to the elite to a possibility for the middle class. However, a series of surprising decisions in the years immediately afterwards transformed the initial success into an enduring legacy. Like many rags-to-riches tales, business acumen played a key role.

In 1914, Ford decided to offer employees double the average wage, and at the same time, year over year, he continued to drop the price of the Model T, until in 1916 the automobile was less than half of its original price1. By 1920, sales had skyrocketed, driving production to one million cars per year. At the same time, employee retention increased, with the higher wage helping to attract retain top talent. In 20 years, the percentage of car ownership among American families rose from zero to 80 percent, and for a brief moment, half of the cars on the road were Model T’s2.

Ford’s tremendous success was driven by long-term strategic thinking, a deep understanding of the market and customer, and an ability to balance financial levers to drive value in the business—attributes central to rags-to-riches tales across time, from the railroad barons to the social media tycoons. Often the difference between success and failure in high-growth start-ups, business acumen is just as critical to perpetuate growth in mature organizations. The good news: business acumen is a skill that can be learned, practiced and mastered at every level of an enterprise.

What is Business Acumen?

Synonymous with business skills, business acumen is an intuitive and applicable understanding of how a company makes money. It encompasses a thorough understanding of the drivers of profitability and cash flow, a market-focused approach and a big-picture understanding of the business and its interrelationships. The skills and competencies most critical include:

  • Financial Acumen: An understanding of the drivers of growth, profitability and cash flow as well as a firm’s financial statements and key performance measures
  • Strategic Perspective: An overall big picture understanding of the business, the critical interdependencies and the short- and long-term trade-offs of decisions
  • Market Orientation: An ability to analyze and synthesize market and competitive data as well as a deep understanding of the customer’s business and objectives

However, the essential business acumen skills for a front-line manager are not the same for a mid-level manager or senior leader. Instead, the capabilities tend to be stratified across an organization’s hierarchy—while financial acumen and literacy are critical for effectiveness at the front line, strategic thinking and a global mindset becomes increasingly important at more senior levels. To ensure success, it is mission critical that leaders throughout an organization have the appropriate capabilities in each area.

Why Is Business Acumen Important?

Business acumen has long been a source of consternation for large corporations. Most corporations recognize business acumen as a necessity, but struggle to define and embed it across their organization. The end result leads to a business acumen skills gap and it is impacting the bottom line.

Lack of BA Pie ChartA survey of more than 300 senior executives conducted by The Economist Intelligence Unit and sponsored by BTS explored the relationship between strategy execution and business acumen. The data reveals that leaders overwhelmingly agree that business acumen is a core component enabling an organization to achieve strategic priorities.

Companies with strong business acumen and decision- making capabilities are more likely to be market leaders in terms of revenue growth, profitability and market share. Yet, two-thirds of surveyed leaders admit that insufficient business acumen is currently constraining their organization’s ability to effectively turn strategy to reality. Even worse, at both the manager and senior manager level, the business skills identified as most important by respondents were also the capabilities most in need of development.

Reacting to the capability gap, Jeff McCreary, former Chief Sales and Marketing Officer at Texas Instruments, commented, "Solid business skills are the foundational strength of virtually any enterprise. To build a high-performing culture and a team committed to rapid execution, you have to develop business acumen. Otherwise, you won’t be as successful as you can and should be."

How Do You Develop Business Acumen Capability?

Five Critical Components

How do you design and deliver a business acumen program that engages leaders, closes individual-specific and organization-wide skills gaps, and drives results?

With 25 years of experience in working with world-class organizations facing this challenge, we’ve distilled five critical components of business acumen initiatives that have proven universally effective:

1. Involve the Leaders: To ensure success at the end, strong support from the leaders of the learners is critical at the start.

Research reveals that when learning interventions fail to produce the expected impact, the program design itself is often not the major cause. Instead, more than 80 percent of programs fail because of inadequacies in program preparation and follow-up3.

To enable a culture of learning across the organization, engage the employees’ managers to communicate the business acumen initiative and tie the learning to individual development, business unit/functional objectives and company-wide goals. This helps provide the learner with context, coaching and support at the start, and leader involvement drives intentionality, accountability, and action back on the job at the end.

Tools can facilitate employee and manager conversations and drive clarity and alignment around core questions:

  • What in particular will be useful for the participant to learn, given their current role and future ambitions?
  • How will they implement the learnings into their daily work?
  • What results may those actions have on job performance?
  • How will those actions and key learnings drive the organization’s business goals?

Online portals and apps can provide easy access to program materials and help to enable ongoing employee/manager engagement.

2. Level Set Capability: To maximize the program experience and drive engagement, ensure that all employees have foundational business acumen capabilities.

Engaging all functions, business acumen initiatives typically involve a diverse group of employees exposed to different degrees of business acumen on a day-to-day basis. Building basic knowledge around finance and level-setting capability is important to ensure that all employees are able to contribute and, ultimately, get the most out of the program experience.

Online, self-paced courses can build foundational skills quickly and efficiently. By incorporating videos, case study scenarios, engaging topics, and gamification elements, programs like BTS’s Why Finance Matters and Know the Business or Harvard’s ManageMentor have proven highly effective.

3. Create Immersive, Discovery-Based Customized Experiences: In designing the program experience, highly immersive and customized experiences drive impact.

Learning business acumen is like studying a new language or riding a bike: unless you actually do it, it is difficult to master and embed into your daily rhythm. Reading, lecture, case study and other traditional methods have proven less than effective—creating awareness, but failing to motivate confidence and action.

Customized to the company’s business, experiential learning maximizes engagement and provides opportunities for practice in a risk-free environment. Like a pilot in a flight simulator, participating leaders practice applying concepts within the context of the business and experience the impact of decisions on the bottom-line firsthand. Following the competitive, simulated engagement, leaders are able to readily apply new skills and behaviors. Realistic and interactive, customized business simulations lead to both behavior change and action on the job.

However, in considering business simulation-based programs, generic, off-the-shelf experiences can prove cost-effective, but also increase the risk of exposing learners to the wrong assumptions and trade-offs. Ultimately, these engagements do not prove as impactful since application to the job can be unclear.

4. Make It Actionable and Manage Accountability: A core capability, business acumen can readily translate into action on the job.

To translate the learning into results, conclude the program by challenging participating employees to commit to one to two actions back on the job. Engage managers in the process after the program to ensure application and address any barriers to execution.

On-the-job tools and apps can capture the key program insights, provide ongoing support over time, and create a community for employees to continue the dialogue.

5. Measure Behavior Change and Results: To demonstrate impact to stakeholders and sustain business support, the measurement of behavior change and results is key.

A business acumen program can prove highly engaging for employees, effectively involve managers, and accelerate capability development; yet, to be a success, it must lead to meaningful behavior change and business impact. A results focus and measurement effort is critical to capturing the return on the investment and sustaining ongoing support from the organization.

After implementing the previous four steps, results shouldn’t be difficult to prove, illustrated in revenue growth, employee engagement, customer satisfaction and, ultimately, share price appreciations. At a leading telecommunications company:

  • 89 percent of participating managers committed to implementing an action plan following a business acumen program
  • 90 managers made commitments totaling more than $190 million in bottom-line improvements
  • Six months after the program, participants reported almost $7 million in profit improvement, $3.4 million attributed specifically to the program
  • The return on investment was over 1000 percent

Considering the impact on the organization, business acumen development becomes a mission-critical investment.

Better Results, Faster

Arming employees with a sharp sense of business acumen not only accelerates individual growth, but strengthens alignment around the company strategy and drives successful implementation. Yet, too often business acumen development initiatives fall short of the expected results.

To maximize impact, companies must recognize that development is not a one-time event, and adopt a robust strategic approach, beginning with these five steps, to assure results.

1 "The Model T Put the World on Wheels", Company Heritage, Ford:

2 Blank, Steve, "Apple’s Marketing Playbook Was Written in the 1920’s", The Atlantic, 26 Oct. 2011.

3 Brinkerhoff, Robert O. and Anne M. Apking, High Impact Learning: Strategies for Leveraging Business Results from Training.

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