Importance of financial acumen

Business Acumen, Geek 5

One of the Geek 5 risks is that geeks often lack basic business and financial skills.  In school and early career, geeks often focus so intensely on their area of expertise that general business concepts get neglected.  If you are interested in moving from a technical role to a more general leadership role, you need to get savvy about business.

 For Geeks, gaining financial acumen is important for three reasons:

  1. Important understanding – Financial skills are more than a ticket to success.  The skill is important for a reason. The foundation of any business is the finances of the company.  Financial acumen will expand your understanding of the costs and challenges of doing business in your industry.You’ll gain a better understanding of how outside economic forces impact your company and how your company’s decisions impact your bottom line.  In many cases, this also directly impacts your personal bonus and compensation!
  2. Critical skill – As a leader, you will be called upon to make important and probably costly decisions for your company.  You need to know how to assess the best course of action.  For example, think of an IT Leader who needs to decide between a costly, gold-standard software package and a lower cost, lesser known package.  What does she choose?  How does she compare costs and assess short and long-term value?  How do you expense the package or is it a capitol expenditure?
  3. Credibility with senior leaders – As you rise in your career, financial skills becomes a ticket to play.  They are expected from all leaders at a certain level.  You need to talk the same talk as other leaders at your level and above.  You don’t need to turn into a Finance guru or get an MBA, but you should be able to contribute intelligently to a financial conversation and decision.

In the next post, I’ll point you to a website that can help you build your financial acumen.

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