What is commercial acumen?

Two managers are placed in identical commercial environments, they have exactly the same information, but they behave differently. One manager creates value for the business. The other does not.

Why does our commercially astute manager perform better?

We might explain this difference by saying someone has "good commercial judgement"... only that doesn’t really explain it. So what do we really mean?

It might be helpful to consider what commercial acumen isn't. And I think we could probably agree that it isn’t just...

• Being intelligent.

• Being financially literate.

• Having lots of experience (although experience often helps).

• Having all the information.

• Following best practice.

• Finding the perfect answer.

• Always choosing the option that makes the most money today.

• Avoiding risk.

Instead, commercial acumen might be the ability to make good decisions when the answer isn't obvious. Because if the answer is obvious... no judgement is required.

So why isn't the answer obvious?

Because commercial decisions rarely involve choosing between a good option and a bad one. More often, they involve choosing between competing priorities. Judgement exists because every option improves something whilst making something else worse. For example: Profit vs growth or Speed vs quality. There is rarely a perfect answer. And once we recognise these tensions, commercial judgement becomes less about finding the "right" answer and more about making the best decision in our particular situation.

Competing priorities also create uncertainty. We rarely know exactly how stakeholders or markets will respond, or what unintended consequences our decisions may have. Good commercial judgement therefore involves:

• Acting despite uncertainty.

• Recognising trade-offs and accepting that every decision has a cost.

• Balancing competing priorities rather than optimising a single measure.

• Understanding how different parts of the business interact.

• Considering both short and long-term consequences.

• Thinking in consequences, not just actions.

• Applying knowledge appropriately, rather than simply possessing it.

Good commercial judgement is often characterised by questions rather than answers and by process, rather than outcomes.

Perhaps that's why commercial acumen is so difficult to define. It isn't a single skill or body of knowledge. Instead, it emerges from how people combine experience, knowledge, analysis and intuition when faced with uncertainty and competing priorities.

It also explains why two managers, given exactly the same information, can make very different decisions. Commercial judgement isn't just about what you know. It's about how you think and act.