I spent 20 years working in the fast-paced environment of foreign exchange dealing rooms. Imagine having to make split second decisions on multiple transactions in multi million dollar amounts and carrying substantial risk implications for your organisation.
This is the world of the FX trader when the market suddenly starts to run. You've got to know when to hold them, know when to fold them, know when to walk away, know when to run (thanks Kenny Rogers). At the root of the actions the trader takes is commercial acumen - the skills acquired to be able to act with resilience and a cool head.
My role was as a client dealer providing market support to clients, many of whom were not interested in the day to day noise of the market and split-second gyrations. They were more interested in the big picture, the long-term trends and the actions they needed to take for the success of their business. I needed to understand their business and how it would be impacted by changes in the exchange rate and when and how they might need to act, including the momentary opportunities when they presented.
At the root of the action’s client dealers needed is commercial acumen - the skills acquired to be able to understand and meet the needs of the client. Paradoxically, these contrasting roles needed different skills that could be described under the catch-all label - commercial acumen. In addition, we also needed to have strong awareness of how and when our two roles were dependent upon each other and any other part of the business.
We believe Commercial Acumen is an essential characteristic of anyone leading a business, leading a business function or aspiring to these roles at any time in the future. If you are in the business of "doing" business, you need commercial acumen.
So, what is commercial acumen? A general description would be that it is the exercising of good judgement on commercial opportunities, demonstrating business savvy, having an instinct for business and what constitutes a good deal. Some would say it is instinctive, intuitive or a gut feel (e.g.: the trader) whilst others would say it comes from careful and well considered analysis, planning and execution (e.g.: the client dealer).
As demonstrated above, there is often an internal and an external perspective. The internal perspective is having a thorough grasp of how the business operates. The individual is focussed on the vision or purpose of the business, the strategic direction it is taking, and the tactical approach of the various moving parts so that it achieves the goals as effectively as possible. They can demonstrate knowledge across the key business functions: production, sales and finance as well any legal and regulatory issues.
The external perspective would say an individual has a thorough grasp of how businesses operate so that they are capable of having a meaningful dialogue with any business owner, regardless of industry or size. They understand the need for a vision and purpose, easily learn the strategy and how the key functions of sales, production and finance are integrated along with a broad knowledge of legal and regulatory frameworks and how they impact.
There are clearly similarities, but the critical difference between the two perspectives will be the current and future aspirations of the individual. If they have a purely inward focus they may want a deeper understanding of the micro as well as macro issues of the business itself whereas an external perspective would be relevant for people who are or will be interacting with other businesses. They could be sales people, buyers, bankers, consultants or in any form of professional advice-giving position.
Leaders and Function leaders need to relate to both perspectives. The danger of having an internal perspective when your role is focussed on external parties is that you may tend to show your primary interest is your self-interest. In contrast the external perspective, when focussed on external parties, will tend to show as empathy, rapport building and trust by having your primary interest focussed on them.
So, how do you acquire Commercial Acumen? Despite what some people believe, it is not an ingrained and natural talent. Commercial Acumen is developed over time and we believe the 5E's of learning form the basis of its development. They are: Environment, Experience, Exposure, Education and Embedding.
Environment: Your learning environment could start in your childhood or youth through the influence of your home life, it may be an interest acquired at school, it could be your work environment or through being inspired by a high-profile Individual. If the business you are part of has a learning and development culture it will encourage you to focus on more than your immediate tasks and responsibilities. Business leaders encourage people who demonstrate a high aptitude and capability in commercial outcomes.
Experience: Most successful people in business will tell you about the importance of the time they spent gaining experience on the job, in the moment, and through successful and failed outcomes. The instincts or gut feelings they have today have come from having "been there, done that". Their experience enables them to make quick decisions to proceed or withdraw from a new business opportunity. Making time to learn on the job is probably the most effective investment an individual can make. But as they say, "time is money" and people are often in a hurry and looking to accelerate their progress.
Exposure: Exposure is an accelerator. Shadowing experienced and successful people to observe, question and listen provides a safe and engaging opportunity to learn in real time. Having a mentor, or a group of experienced and successful people as a mentor group provides an individual with amazing insights into their successes and failures as the individual gets to "walk a mile in my shoes". Learning what was disastrous for them and why enables an individual to learn without suffering the pain their mentor endured. Having a leader coach who provides support but challenges you to think through situations and own the outcomes that you formulate under their guidance empowers you to learn and grow.
Education: Education can be the greatest accelerator of learning. It needs to be done well, so it should engage, explore, explain, elaborate and evaluate during the education process. A simple form of education is to read books by experienced and successful people who have shared their life story in print. They may be dead or alive, yet you can still access their input. Lectures and tutorials have a place but do not replace time on the job. They prepare an individual and provide a baseline starting point.
Accelerated learning comes through experiential approaches including real-world business simulations such as the Streamwise Learning: Strategy & Commercial Acumen program. In these learning opportunities the participants are engaged by the simulation, can explore the new knowledge and skills in a safe environment, have the various learning elements explained succinctly, and the opportunity to seek a deeper understanding (elaboration). They have their performance evaluated to ensure it is on the right track and are provided with additional coaching support.
Embedding:The most crucial factor in any learning activity is what happens afterwards. When learned knowledge and skills are not implemented they are forgotten quickly. The forgetting curve is steeper than the learning curve, so embedding newly acquired knowledge and skills is essential. The tools for embedding are experience and exposure. The role of leaders here is to encourage their people to do what they learned back on the job, and to coach the individual to ensure a return on the learning investment. In all my years in business and in learning and development, the most common waste of time and resources has been as a result of the lack of embedding action.