Business acumen: an imperative for communication to serve as a strategic management function
By Lise Michaud
Business acumen is a critical capability for practitioners and essential for communication to serve in a strategic management role. IC Kollectif interviewed 33 in-house communication executives from 25 countries across all continents and representing 20 industries to find out if they considered business acumen as an important capability for their team, including for internal communication professionals, and why. The results of the qualitative research complement the findings outlined in my previous blog. The full results have been published in The Case for Business Acumen.
The need to understand the business
“Communication, just like finance or law, is a business function. The role of practitioners is to help the business do what it needs to do, which is typically to achieve reliable and sustainable net income,” commented Gary G. Hernandez, Head of HR Communications in a company based in the Middle East. He believes that practitioners who don’t have a deep understanding of how their business does this are out of the game. If they work in oil and gas, they need to understand the hydrocarbon value chain. If they work in investment banking, they need to understand the fundamentals of finance.” In the same vein, Shel Holtz, Director, Internal Communications at Webcor, a construction company in the US, added that practitioners must have “a thorough understanding not only of their business but of the industry in general and, even higher-level, the principles of business.
Why it matters
Interviewees raised strong arguments to explain why business acumen is a required capability for practitioners in their own communication team, even a baseline element for being a successful communication professional able to contribute to the performance of the organization.
Our findings show that business acumen is fundamental to:
· have a firm understanding of the business and how it works
· understand the business environment, the challenges and opportunities the company is facing
· understand what’s helping or hindering business performance
· address business issues
· apply the right strategies to drive the right outcomes
· speak the business’s language
· demonstrate business knowledge and the capability to communicate on the same strategic level
as senior management
· gain trust, show credibility and have influence
· provide strategic counsel
· get a seat at the table – and be able to stay at the table
Business acumen also prevents practitioners from constantly focusing on the challenge immediately before them and be able to connect what they are doing and saying with the larger context of their organization. According to Rick Phillips, retired in 2018 as CCO for Nationwide, it can add real value, even to the point of helping to shape some of the policy and decisions. For instance, it helps practitioners to:
· have a better comprehension of why the company might make certain decisions
· anticipate the impact and how specific news will affect future corporate goals
· foresee communication priorities and the impact of their work on employees and company
· ensure better alignment
· understand the metrics used to define financial success or the failure of business performance.
· be able to explain any text or table in a quarterly earnings release
· communicate quarterly and yearly performance internally
· ask better questions
· make better decisions
For Antonia Ashton, Vice-President Communications at SAP EMEA South, in South Africa, business acumen is up there with strategic and critical thinking skills and insight into emerging trends and issues and how they affect the organization on a strategic level.
Vija Valentukonyte-Urbanaviciene, Acting Head of Comms, CEO at Telia Lithuania, believes that leaders are looking not only for experts in their field, but also for business partners and problem solvers, proactive activists who will spot upcoming trends and opportunities, and help to develop the whole business, whether it’s increasing profits or excelling in customer service. In line with this, Torben Bo Bundgaard, Vice President, Organisational Communication at Novo Nordisk A/S, in Denmark stated, “A solid understanding of our business is a prerequisite for acting as a strategic advisor to our leaders, and we consider everyone to be in an advisory role, ensuring that communication links clearly to strategy.”
“Business acumen sets the organizational tone and helps create a compelling and consistent narrative to weave through the many messages and stories we tell every day,” said Kerrie McVicker, Internal Communications and Employee Insights Manager at Nestlé Oceania, in Australia. “It helps to transform complexity into clear communication that employees can easily understand. The more you understand, the better you can strategically advise and collaborate with the business.”
Mark Dollins insisted that financial literacy isn’t optional, and financial communications isn’t an external communication thing, contrary to what some internal communication professionals often say. He believes that practitioners must be fluent in conversing about the business with a CFO, CHRO or any other corporate officer. “Townhall content on business performance and quarterly emails shouldn’t be written by external communications folks. As internal communication pros, we should help take that story and frame it appropriately for internal stakeholders. We need to have strong connections in the Finance function and find safe havens to ask questions as we build our financial acumen.”
What is at risk by ignoring business acumen
According to Vija Valentukonyte-Urbanaviciene, communication professionals run two risks. First, they may end up working in their own “echo chambers,” doing a good job in their function but failing to prove their value and justify the cost, especially when the going gets tough. Second, even if the conversations do happen, it is critical that they reach the strategic level, and steer away from “vanity measures” such as “influencer X is good or bad since his post got Y likes and Z comments.
Communication techniques and tactics alone bring limited value to the business. Rick Philips believes that if practitioners fail to understand their entire business and how the pieces work together, leadership will call upon them only when they need something crafted, usually reactively. Communication executives we interviewed repeatedly mentioned that practitioners who can’t demonstrate business acumen won’t be taken seriously and will never truly be seen as strategic advisors. “They will continue pushing a boulder uphill,” argued Gary G. Hernandez.
“It’s ironic,” claimed Mark Dollins, the former Head of Executive & Global Employee Communications, at DuPont, “that the same communicators who complain they can’t influence leaders are often the same professionals who don’t understand what foreign exchange rates are or what margin expansion/contraction is. The President of North Star Communications Consulting, LLC added, “if we want to be more influential, we have to invest in business acumen as a core communications competency.”
How to build business acumen
Here’s an overview of suggestions mentioned during our interviews:
Get to know and understand the business of your business. Has indicated above, if you work in oil and gas, understand the hydrocarbon value chain. If you work in investment banking, understand the fundamentals of finance.
Have strong connections in the finance function and don’t be afraid to ask questions.
Get some experience in your business outside of communication.
Get a bachelor’s degree in Communication and an MBA, or a bachelor’s in business and a master’s in communication.
Learn to read and manage a P&L (profit and loss) statement.
Get close to the revenue generators.
Read industry trade publications.
Take management courses related to your industry, for instance, via LinkedIn Learning and others.
Read Mastering Business for Strategic Communicators: Insights and Advice from the C-suite of Leading Brands(Emerald Publishing, 2017), by Ron Culp and Matt Ragas. This book is a gold mine and also offers a glossary, a comprehensive list of resources on business acumen including journal articles, books, trade, and professional articles, white papers, reports, etc.
To learn more about our findings, download The Case for Business Acumen. This publication is part of our research brief series based on the findings of the global report The Next Level: The Business Value of Good Internal Communication. The report is supported by IABC, The Global Alliance for Public Relations and Communication Management and The Conference Board.