PMI Global Insights

By Greg Githens, PMP

I was trained in the sciences and have always liked this quote from the British scientist Lord Kelvin -  

“When you can measure what you are speaking about, you know something about it. When you cannot, your knowledge is of a meager and unsatisfactory kind.”

In this article, I apply the spirit of Kelvin’s quotation to the concept of business acumen. Because many people use it as a gauzy and subjective buzzword, we will all benefit from a better understanding.

We begin with understanding acumen as a general topic. Then, we will examine the specific topic of business acumen.

A person with acumen is sharp minded. The word’s direct Latin ancestor is the verb acuere, which means “to sharpen,” and a related Latin noun is acus for “needle.” Sharp needles are very useful tools for tailors and physicians, and the analogy extends to strategic thinking. A person with acumen is sharp and able to penetrate a complicated system.

Many people incorrectly associate the word acumen with the word accumulate or Cumulous (clouds), which draws from the Latin, to pile up.

The lesson here is, remember that acumen is like acupuncture. It is an ability to penetrate a topic to deliver benefits.

The bLAID framework for evaluating acumen. The bLAID framework unpacks business acumen into four elements.

business Literacy – Just as a literate person can distinguish fiction from non-fiction, a business-literate person knows the principles of accounting, finance, operations, human resources, and the like. Business literacy resembles book-learned knowledge. Business literacy is a baseline of understanding. It is not the same thing as acumen.

Since the topic is business acumen, I made the “b” lowercase, which allows us to distinguish other kinds of acumen; for example, project literacy, financial literacy, or technology literacy.

Analysis – A necessary step in showing acumen is to probe the situation. (As mentioned above, the “acu-“ part of the word acumen relates to penetrating.) A skilled analyst can probe quickly and intuitively. A less-skilled person may require more time to identify the crux of the business issue. Regardless, acumen is fundamentally a concept of achieving a better understanding of the situation and not accepting mediocre and conventional explanations.

Analysis naturally leads to insight.

Insight – Everyone has had an insight: a sudden realization of a better explanation of a situation or a resolution to a challenging issue. The activities of analysis and reframing naturally tend to generate insights.

The insight sparks some initial design ideas. As you further refined those ideas you improve the quality of your solution.

Design – Design is an iterative activity that starts with the insight, generates options, and refines the solution space.

Evaluating a group of executives. I was once invited to help a not-for-profit community organization with its strategy. An important element of this example is that this organization was floundering. If the Board could not provide leadership and value to the community, the organization would cease operations.

I met with the members of the Board. As a discussion starter (and as an assessment of their business acumen), I needed an icebreaker exercise. I asked each member to answer this question.

A philanthropist is willing to grant your organization a significant amount of money. How (and why) would you invest that money to best benefit your organization?

Each person wrote a few sentences, which we returned at a later meeting. I contend that the answers reflect the business acumen of the person. The bLAID framework provided some guidance on what to look for.

The best answer was this: ask for a grant of $100,000 and use it to hire a full-time administrator for the organization. It was a good answer because it addressed a large specific challenge for the organization: the current ad hoc, part-time, volunteer structure was not efficient or impactful.

The other answers were narrow-framed, and uninspired. The ideas would only result in incremental improvement of the status quo.

Subjective measures are common (and acceptable). While objective, quantitative measurements are desirable, the fact is that we can and do accept subjective measurements.

One example is in the judging of gymnasts. Most of us have seen the Olympics and watched the feats of gymnasts. At the end of each routine, we see judges posting their individual ratings up to the perfection of a 10.

Another is the judging of dog shows, where there are awards for best of breed and best of show.

We accept as valid the winners of gymnastic competitions and dog shows. The reason is that, firstly, there is an understanding of what makes for good quality. Gymnastic routines require certain kinds of movements and challenges. Judges grade the dogs on their conformity to breed standards.

Business acumen scoring models. I evaluate business acumen though assessing five qualities.

First, I do a general assessment of competence, which I define as “the ability to understand a situation and act reasonably.” In the above example of the not-for profit, the best answer also reflected an understanding of the reality of the situation: this organization was struggling and not getting sufficient attention from its Board.

Second, is an assessment of the proposed design. Is it plausible?

Third, is the scalability of the design and the positive impact on stakeholders. This was a strong factor in finding the best solution in the above example of the not-for-profit organization.

Ingenuity is the fourth criterion of the model. Insight reveals itself in ingenuity of solutions.

Lastly, I look to see if the proposal creates options for future action. This was also a benefit of the best solution in the above example.

Want to learn more? Join me on 7 October in Session #428 at PMI’s October Virtual Experience Series Event to learn more about measuring business acumen. Further the dialogue by taking part in the discussion threads with me and the rest of the PM community.