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Commercial Awareness
With the commercial landscape being transformed as it has been in the recent past, it is now becoming more important that Managers are commercially aware. By that we mean the ability to view a situation from a commercial or business perspective and make decisions based on the wider environment in which we operate. Working in isolation or with short-term thinking is becoming less acceptable.
Managers need to be able to not only look at the bigger picture but also understand its complexity and the possible repercussions, both positive and negative, of their decisions. By understanding the landscape in which we work, we are better placed to make the best decisions. In turn, Managers become more of an asset when they think strategically.
When devising plans or implementing change, the well known PESTLE analysis model can be used to help gather relevant information on the commercial landscape. ‘PESTLE’ is a mnemonic for the six factors listed below. Each factor can be used as a heading, thus providing a structure for the collation of information.
POLITICAL - Have you considered the internal and external politics? Will the changes be embraced or resisted?
ECONOMIC - Will the change affect cash flow? Will it improve the gross margin? What is the wider economic picture? Can our customers afford it?
SOCIAL - What effect will it have on our staff or the local community (Corporate Social Responsibility will become a vital component of success in the short to medium term)? What wider sociological trends may affect your business (e.g. a trend towards healthy eating, the increased popularity of staying in rather than going out)?
TECHNICAL - Do we have the skill-set to embrace new technologies? What technical barriers or opportunities exist?
LEGAL – How do corporate rules and national and international law affect us? What impact will the need to comply with the relevant laws have on our plans?
ENVIRONMENTAL – How will the environment be affected at both micro and macro level (e.g. are there considerations about working conditions, our neighbours or waste disposal)?
The PESTLE model is just one of many tools you can use. The key is to think about the bigger picture.
T.I.P. (To Improve Performance)
- Being commercial aware is now a requirement.
- Understanding your industry and its marketplaces will add value to you.
- If it was your money you were playing with, would you do it?
Remember: If you are not contributing more that you are costing then you are a liability, not an asset. Managers have a responsibility to develop themselves.
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