Business acumen: a CEDEP perspective

Why is business acumen an increasingly essential capability in our highly competitive global economy? And can business acumen be taught?

In this latest thought leadership article, Ravi Shankar, CEDEP Academics & Programme Director, and Christoph Herold, one of the CEDEP MBE LiVE Programme Director, discuss their modern-day interpretation of business acumen and why it’s an increasingly essential capability in our highly competitive global economy. We also examine how managers can best develop business acumen to gain a big-picture view of an organisation and strengthen business fundamentals to drive sustainable growth.

We are all familiar with the way modern organisations are typically structured into functions or domains such as finance and accounts, sales and marketing, research and development, human resources, and so on. These functions have evolved to enable organisations to remain efficient and gain a competitive advantage. However, managers within these silos typically operate uniquely within their functional teams and are limited to the challenges of one function alone. 

But for emerging leaders to step outside of their function and influence critical business decision-making, they need to develop the holistic skills and capabilities of sound business acumen.

The Cambridge Business English Dictionary succinctly defines business acumen as the skill in making correct decisions and judgments in business. Christoph Herold, CEDEP MBE LiVE Programme Director, explains how his interpretation of this definition relates to decision making within organisational structures.

“For me, business acumen is the combination of understanding the inner workings of a company and how the moving parts fit together. But we also need to understand the rationale and purpose behind all the moving parts. Only then can managers develop a keen eye for opportunities in terms of making decisions at different levels and understanding where their place is within an organisation,” he says.

Ravi Shankar, CEDEP Academics and Programmes Director, agrees that business acumen is not just about becoming an expert in one business function. “Instead, it’s about gaining a basic understanding of how each function operates, shifting your perspective and looking at the business holistically. It’s about looking at the organisation through different lenses. For example, appreciating business strategy and its connection with finance, and understanding the role of customers and markets and analysing operations. And, at the same time, addressing the impact of digital transformation and the need for sustainability,” he says.

“People who understand how different functions interconnect can execute business strategy more effectively. In short, they get more things done.” 

“Leaders with sound business acumen are excellent at their jobs, but they also know how to look left and right to assess the impact of their work on colleagues. They are empathetic and able to appreciate other points of view to their advantage. And above all, they are willing to make better decisions for the company than they are for themselves. 

“Not only that, but these leaders also know when to collect data and when to stop and make a decision. And they know when to solve a problem at a technical versus a social or political level. Leaders with good business acumen have a keen eye for where the problem or opportunity is, employ a big-picture view and are not afraid of making a decision.”

According to Shankar, customer values are also changing: “We now need to ask what is it customers value in the 21st century? Customers value an organisation with purpose beyond just selling, and this has become a critical factor in our new world of work. Everyone is questioning their purpose and the purpose of the entities they’re interacting with, whether customers or employers. So understanding the concept of value and purpose is critical. In short, good business acumen enables you to make high-quality decisions and create value within a purpose-driven world.”

According to Herold and Shankar, yes. they outline three steps to developing sound business acumen. 

“First, we can teach the basic elementary concepts of the different functions or domains. Then, we can look at the key core concepts applicable to each domain. For example, in the finance domain, we ask what is a balance sheet? How do you measure financial performance? In the operations domain, we ask why are flexibility, speed, quality and cost such important parameters? We then move on to develop an understanding of the broader context,” says Christoph.

  • Strategy

Understanding business strategy and developing strategic skills are essential for business acumen. First, you need to distinguish between static and dynamic concepts of markets and how to execute strategic decisions based on market conditions. Second, you need awareness of how and when you make a decision and combine this with a keen eye for where you can create value – and how to capture it as well.

  • Customers

You also need to understand different ways of segmenting customers, the concept of value proposition and customer experience design. You need to understand your customers’ needs, make strategic choices about who your customers are and what pains you want to resolve. 

  • Operations

Business strategy and marketing then links back to operations. How do we put this research into practice? How do we make the product we want to sell? You need to understand the concept of operations management and its connection with strategy execution.

  • Finance

And finally, you need to understand the fundamentals of financial performance and connect the impact of management decisions on the company’s financial health.  

Once you have covered the four pillars, sound business acumen also includes advanced interpersonal skills and an ability to self-reflect. For Herold, self-aware, humane leaders are the key to an equitable and sustainable world.

“You need to reflect on how you behave. How advanced are your interpersonal skills? How are you developing your communication, negotiation and leadership skills? The next layer is the question of internal marketing branding: who am I? A little bit of inner soul searching goes a long way,” says Herold.

“This all goes back to the concept of systems thinking in the sense that we all have a mind, body and soul, and we interact with companies as systems,” agrees Shankar. 

“You need to assess your capabilities constantly. What are my talents? What are my strengths and weaknesses? What are the things that give me energy and cost me energy? Good business acumen is about evaluating all the strategies you need to execute and deciding from a personal perspective which ones to take on and which ones will cause overwhelm. Assessing whether or not you are well-placed personally and politically from a power structure to even take them on in the first place is also part of good business acumen.” 

From a systems thinking perspective, society is a system too. We finally, therefore, need to consider how society comes into play when we define sound business acumen. 

“In itself, business acumen is not necessarily tied to a positive purpose. It is a skill that can be used to successfully run businesses, enhance the effectiveness of non-profit organisations but potentially also support activities that might be illegal, immoral or harmful to society as a whole. Having a societal view, therefore, is crucial. How is society affected by what you do, and how will it react? How will that reaction shape your decisions? Are you embracing sustainability innovation? These are all key considerations and the final layer of what we believe makes sound business acumen,” says Herold.

In the 21st century, business acumen has evolved from its traditional roots in financial proficiency to become a highly valued holistic talent capability. Leaders who possess sound business acumen understand how various organisational functions such as finance, operations and marketing must collaborate to execute business strategy successfully. They are skilled at adapting business decision making from a narrow functional view to a big-picture perspective. They can also deconstruct business as a dynamic, interconnected system operating in a complex, volatile strategic environment, even more so in our uncertain and volatile world. 

CEDEP’s MBE LiVE is an 8-week online program designed to develop business acumen with a big-picture understanding of an organisation and reinforce knowledge of key business fundamentals. With content inspired by MBAs, the programme enables participants to appreciate business strategy, its connection with finance, the role of markets and customers and an approach to analyse operations.

With a curriculum constantly refreshed to reflect emerging concerns, the MBE LiVE incorporates in-depth discussions on the impact of digital transformation and the need to take a sustainable view of business operations.

For more information about MBE LiVE and dates for 2024, please contact Nadine Theallier at and click here for all programme information: Online Mastering Business Excellence Programme (MBE) – CEDEP