The importance of commercial acumen | by Maarten van der Walt

Maarten DV Walt 2 Bizarre as it may seem, given that the concept of trade has been around since humans started living in communities, the art of barter is a neglected and much-needed skill in today’s commercial world.

I have seen the scenario play out so many times. Large corporates end up sitting around a negotiation table, completely unprepared for the experienced salesperson who shows up with a briefcase full of negotiation skills and the intention to gain the maximum benefit for their own organisation.

The art of barter requires a fine balance, whereby you must maintain a relationship, seek the best commercial benefit for your organisation and have both parties walk away feeling a sense of accomplishment.

Another skill that is lacking, or whose value is poorly understood is commercial acumen. This hard-to-pin-down ‘soft skill’ is the ability to adapt to a constantly changing market, while identifying the metrics that measure your organisations commercial performance.

So many organisations use the wrong yard stick. Often, the basis for your resource-spending decision is measured in the financial statements. The problem with using financial statements to guide these decisions is that the financials are simply the sum-total of both good and bad decisions, rather than a deep understanding of the myriad of decisions that were made in order to arrive at a single cost or benefit result.
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Take, for example, your cost of sales as a line item on your profit and loss statement. Hidden in there lies: purchase price of goods; logistics, outsourcing and consignment stock decisions; as well as numerous other supply chain decisions that ultimately led to this single line item.

The same problem occurs when production efficiencies are neglected. Time and material is spent pushing production quantities, while profit and growth opportunities are neglected.

Identifying the correct yard sticks to measure business performance within your organisation is a great example of commercial acumen.

A final skill that is perhaps in short supply at the moment, is the ability to understand the “why” that is behind what we do. Fostering a common goal, purpose and culture within an organisation must be created in order for everyone to understand how their work contributes towards achieving these goals. The yard sticks must be understood, and the organisation’s goals must be clearly communicated.

This is neatly summed up the following anecdote. In 1962, President John F Kennedy visited the NASA space centre. While he was there, he noticed a janitor carrying a broom. He interrupted his tour, walked over to the man and introduced himself, “Hi, I’m Jack Kennedy. What are you doing?” he asked.

The man responded; “Well Mr. President, I’m helping to put a man on the moon.”

Maarten van der Walt is a Principal Associate at Bespoke CfSD Group, founder of DUNGBTLE and the author of Turning Loss into Profit - www.bespoke.co.za

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Posted on September 19, 2019

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