Career Skills: Commercial Awareness
Improve your Career Skills: Commercial Awareness.
Have they got commercial experience? This is a question we are often asked by our clients. So, what is it to ‘be commercial’ and why is it so important? We thought we’d try to demonstrate what it is and give some pointers on how to improve your ‘commercial acumen’.
We explored this area and gathered some key explanations and how to gain Commercial awareness.
What is Commercial Awareness?
The Cambridge Business English Dictionary defines Commercial Awareness as,
“knowledge of how businesses make money, what customers want, and what problems there are in particular areas of business: To become what an employer wants, the three most valuable attributes are a can-do attitude, technical skills, and commercial awareness.’
In other words, Commercial Awareness is an understanding of what a company needs to do to be profitable, be successful, and serve its customers well. With it, you know its core values, key competitors, stakeholders and current business challenges. You also know the organisation’s strengths and weaknesses. The skill is then being able to use all of that information to make sensible decisions.
Benefits and Uses
Many companies see commercial awareness as a key requirement when recruiting. If candidates can show commercial awareness, it demonstrates an understanding of how the organisation operates and makes a profit; as well as how the industry as a whole works.
If someone has this skill already, the hope is they can make an impact quickly on business performance.
If you’re not looking to change jobs right now, Commercial awareness can also improve your performance in your current role. Understanding the industry that you work in and how your role contributes to your company being competitive, means you will make better decisions, get good prices from suppliers, strengthen your reputation and boost your career prospects. It’s a win win.
The Interview example
Rob is a successful Marketing Manager and has applied for a new job as Head of Marketing. He knows he’s up against a few other candidates, but he’s done his homework; done as much interview prep as he can and is as ready as he can be for his second interview for the role.
During the interview, he demonstrates an in-depth understanding of how the organisation works, what their priorities are and outlines how he would run the Marketing department to boost their presence in the competitive landscape.
Rob talks through his experience of working with external partners, such as media agencies and different suppliers – having negotiated lower fees by over 15 percent, looking to save money where ever possible; but making sure it’s in the right places. He highlights how he successful managed different marketing agencies, monitoring performance, making sure they delivered and pointed out opportunities etc.. that may have been overlooked. He also demonstrated knowledge of arising technologies that the company could be exploiting in their marketing strategy – some of which were news to his interviewers.
He also highlights several important trends he’s noticed in competitors’ marketing activities, some using different methods and platforms, he talks through a marketing plan showing how the company can refresh their acquisition marketing tactics. He demonstrates potential ROI scenarios based on industry statistics and of course past experience.
By backing up his plan with industry stats and company figures, he has demonstrated a solid grasp of ROI and that he’s thought about cost savings, and thinking about the bottom line.
He gets the job, because he has demonstrated commercial awareness. He has saved money where he could, in the right places. He knew what was happening with competitors and the wider industry and used this information to build a more profitable and successful marketing strategy.
Wherever you are in your career, starting out or well on your way :0) …Commercial awareness, or business acumen can make an enormous difference in your future prospects. It will give your opinions weight and help you grow into a colleague that is respected and can make well-informed decisions.
No matter what role or industry you work in, commercial awareness is extremely useful and will help you rise through the ranks of any company.
Time to get your Commercial head on
It takes work to build commercial awareness and is really learning the key things to understand. It’s a mixture of fact finding, reviewing processes, internal and external factors – applying logical thinking and trying to think outside of the box.
You can’t develop deep understanding overnight; and it should form part of your ongoing professional development. Ultimately, the key goals are to learn more about your organisation, your market, and your industry. It’s time to do a company review, considering all of the internal and external factors.
Here’s a good way to approach it.
INTERNAL REVIEW
1. Understand the company
The foundation of commercial awareness lies in developing a deep understanding of your company, including how it works, how it makes money, and what it cares about most. Many tools and resources are available to help you uncover this information.
2. Get a copy of the annual report.
Find out what the leaders say is important about the business and how it works? Look at the financial results – is the business profitable, where does it make and spend its money? This highlights the main areas of attention. Read the organisation’s mission and vision statements. What are their core values, key result areas, ad expressed goals?
How does the company make these goals happen? Consider what can be done better, this then leads to looking at quality management and opportunities for improvement. This opens up a whole world of management philosophy – which is not something to be tackled lightly. Pick out what you ca – the useful nuggets of information for the purpose of your task.
3. Understand Customers and Competitors
To understand your organisation, you need to know about its customers and competitors. Make a list of your competitors. What are their strengths and weaknesses? Do a comparison on how are they performing with your company?
Perform a USP Analysis and a SWOT Analysis. How does your organisation compare to its competitors? What are its biggest strengths and weaknesses? Are competitors taking advantage of any of these weaknesses? And have you identified a strength that your company isn’t taking advantage of, that they can use to differentiate themselves in the market?
Now look at your company’s target market. Who are these people? What do they care about? How does your company segment the market, or create entirely new market?
What does all of this information tell you about the way you should work?
EXTERNAL REVIEW
1. PESTLE
Perform a PESTLE Analysis to learn about the political, economic, socio-cultural, technological, legal and environmental factors that affect the company and its long-term strategy.
Then look at the USPs or core competencies that the organisation claims. What’s missing, what can be added?
Last, look carefully at your role. How do – or should – you add value to your organisation? And what do you do that contributes to its goals, and makes life better for your customers? (If you’re not sure, conduct a Value-Chain Analysis to determine which activities create the most value for your customers.)
2. Understand Resources and Suppliers
Every company depends on resources and suppliers to operate effectively and it’s important to use resources effectively and negotiate the best prices for goods and services.
First, conduct a VRIO Analysis (management tool) to understand the relative importance of your company’s current resources. This will help you decide the most useful, and if any factors are helping or holding back performance.
Next, review the cost of these resources. Are all of them necessary? Are you getting the best prices, and negotiating at every step?
You need to calculate if your suppliers are giving you the service and support you need? Review SLAs. Analyse each and make sure that they’re giving you the right service levels – there are supplier performance tools to do this.
3. Stay Up-to-Date on Industry Developments
Keeping up-to-date with what’s happening in your industry is part of developing commercial awareness.
Subscribe to industry journals, magazines, blogs, financial reports and websites. Choose your favourites and keep on top of reading them regularly.
Also, keep up-to-date on more general business news. Knowing what’s going on, will help you understand current events and trends on a deeper level, as well as appreciating what those events might mean for your industry or sector. It gives you a wider view.
Top Tip: Keep up to date with economic news and industry news
The Economist and the FT are good business publications that you can read to develop your commercial awareness.
Industry publications you should read, to keep up with trends and developments in your sector
Trade organisations and professional networks are also good sources of information about industry events and happenings. LinkedIn has a vast array of groups you can join.
One of the advantages of developing commercial awareness is that it helps you form robust opinions, which are informed by the factors, influences, and trends that you see around you. When you get your information from reliable, objective sources, you help to ensure that your judgement is sound.
Lastly…
4. Evaluate and Prioritise Projects
Another part of developing Commercial Awareness is learning to evaluate and prioritise projects, so that you can ensure that your ideas are good before you try to sell them.
It’s important to remain focused on company priorities and prioritise projects that fit with your organisation’s strategy, sense-check them to make sure that the idea is practical. It’s easy to get carried away with a new exciting idea – but step back, review and check.
A Cost-Benefit analysis tool is a good way to get your feet back on the ground :0) it will help you decide whether projects are worth pursuing; and are likely to benefit your organisation financially.
Top Tip:
Use Net Present Values and Internal Rates of Return to decide whether to invest in projects.
You might need some help here from someone in your finance team, to check you’re using correct terms etc.
Coming soon: Examples of PESTLE & SWOT analysis
Many thanks to our sources:
image MaxPixel ,
kent.ac.uk, Mindtools,Wikipedia,
Related Dovetail articles:
Business news roundup
Why your business needs marketing
Does Multi-tasking work?
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