Episode 75: The Importance of Business Acumen & Valuable Metrics

Audio:

Show Notes

Editor's Note: If you haven't already, leave the podcast a review either on Apple Podcasts or Spotify.

BIG NEWS: 

To Mike, business acumen is learning how to be a professional. Is being a professional equaled to business acumen, though? It isn’t equal, but it is a part of it. When you’re interviewing, the first impression soaks up a lot of oxygen in the room, and if you feel like you haven’t done well, there is an opportunity to stand out that many don’t take advantage of — the after impression. There are things you can do after that initial impression to really stand out and become noticed. 

The same thing goes for salespeople. If you’re on a sales call and afterwards follow up normally with what you covered and try to get the next meeting, you’re checking a box. If you do something or point out something for the prospect to understand, that’s when they want to pay attention to you. 

So, what is business acumen? 

Mike’s take is that it is the understanding of a situation and the opportunities and risks that come with actions that you can take. Business acumen comes with experience. 

Can business acumen be taught? Mike thinks yes while Doug says it can’t. Doug believes business acumen can be learned, but not taught. 

Business acumen is the ability to intuitively grasp the performance drivers for someone else’s business — and then clearly explain how your product or service will drive THEIR results. It’s an “ROI on the fly” conversation that’s an equal mixture of business understanding, asking the right questions and pouncing on an opportunity when it presents itself. When your salespeople have business acumen — greater growth and bigger margins are yours for the taking. When they don’t — competition, commoditization and falling margins are your future.

If you would like to learn more, take our online course: Business Acumen for Sales, Marketing & Demand Generation. 

Think of business acumen like the difference between knowledge and experience. Knowledge is when someone tells you something, for example, not to touch the oven burner. Experience is following through and doing it, for example, touching the oven burner and hurting yourself. 

In business and life whether you’re in sales, marketing, or just the revenue generation world, the most powerful trait you can possess to stand out is to be insatiably curious. 

We always discuss being curious and asking good questions, but we never talk about where good questions and curiosity come from. The core element of curiosity comes from empathy. If you aren’t empathetic, you can’t be curious. We have to approach things from a point to seek to understand. 

The other part to being curious is by how limited your knowledge base is. You can’t be curious about things you know nothing about. 

Business acumen is about having the foundational knowledge to help your prospects do something that they didn’t think was possible. When you have business acumen, you’re able to help impact your prospects/customer’s business, and to do that you have to be empathetic and see the world from their eyes.

Another question to ask yourself when it comes to business acumen is do you understand how business models work? A business is like the human body; everything is interconnected. Do you understand how they make revenue and how one department can affect another? If you don’t understand these things, you can’t ask impactful questions. 

How do you get business acumen? 

From Mike’s perspective, it comes down to experience and the mentors in your life. You don’t get it from just reading a book. You can get a deeper understanding of the principles, but until you experience it, you can’t have a true understanding.

From Doug’s perspective aspects can be taught, but everyone has to learn it. You aren’t born with business acumen. It all comes down to the range of your experience and exposure. Doug’s mentor was books, but he approached it in a different way. Rather than just reading books, he would challenge the author’s viewpoints and come up with questions based off of his reading. He also listened a lot.

QUESTION: 

Question of the episode: When does a metric go form being valuable to being vanity?

Mike starts off with when the executives become aware of the metric or when you try to game the system to bring the metric up in a positive light.

For Doug it comes down to Goodharts Law — the moment that you take a valuable metric and make it an objective, that’s when it becomes vanity. 

For salespeople, is the number of calls a vanity metric or not?

Mike says it is a vanity metric. From Doug’s perspective more often than not it is used as a vanity. For him he doesn’t care how many dials a salesperson makes, but cares how many dials they make. Confusing, right?

It comes down to this, if you’re making 50 dials a day, does that determine whether you’re going to be successful? No. If you aren’t hitting all your numbers and not doing well that’s an issue. If you are hitting your numbers and doing well, that’s great. What if a sales rep is hitting their numbers, but only has to work 20% of the time to do that? Is that okay? No because they’re costing the company a lot of money. At that point you would challenge them to do more. At that point sales calls are not a vanity metric because they’re showing you that your reps have time on their hands and there’s an action you can take from it. 

Think about it this way: How is it used? Is it actionable? Can you tie a question or hypothesis to the metric?

TAKEAWAYS:

Mike - Look at alternative views. Find things that go against what you initially thought because you’ll learn something new about yourself.

Doug - Go to someone in your business that does something that you don’t know much about and ask them to tell you a day in their life. Listen, and ask a whole bunch of questions. Seek to understand their world and then try connecting it to yours.