Looking to accelerate your contribution at work? Refresh your perspective by thinking commercially about your business and the tasks you’re required to perform. Commercial Thinking, is one of our favourite developmental elements at WiseAmigo, so keep reading to find out how this strategy can help you to be better at work.
What is Commercial Thinking?
Commercial Thinking, or commercial awareness, is simply the knowledge of the business and industry your role operates in. When applied to work it shows whether or not you have a deep understanding of the commercial models and strategies that underpin the business, product or service you provide.
Having a grasp of how a business makes money or stays afloat is critical. With it, you’re able to make links between different commercial levers in the business. Without it, there’s a risk of being naive to the realities and inner-workings of business. The more senior your role, the more you engage with business strategy and the more important commercial thinking becomes.
For those new in role
So if you’re new in role, it’s important to demonstrate an awareness of the business’ basic commercial workings, and apply this to your everyday operation. You should get to know the different types of customers: business-to-business (B2B), business-to-consumer (B2C), or some combination of the two.
Get to grip with the costs of the business, where these come from and how money is spent across the business. Know what sells and for how much. Explore the various profit margins across the different services, products or departments. Understand where the business sweet spots are. Tune-in to where the big sources of revenue come from and the specific clients, or perhaps industries, that account for this.
For those going into a new role, here is how you can engage with commercial thinking:
- Focus on how the business mission relates to the industry and customer base: know what the foundations of the business model are – the true levers for success.
- Determine where the business spends and recoups money, and how the business is sustained. Understand where business opportunities lay – either for revenue or cost savings.
- Learn about recent sales or key investments in the business – get to know what has paid off.
- Explore and discuss client proposals with others as well as business plans or forecast documents
- Understand who the main competitors are; know what the commercial priorities for both the business, and the market are.
- Consider the external influences on the business’s commercial model – such as political, economic, sociological, technological, legal and environmental factors (PESTLE).
- Read business pages of websites or newspapers to stay in-tune with industry news
As you gain more experience
With more experience, you’re expected to make business decisions with a good understanding of how those decisions affect the commercials, and vice-versa. Committing to decisions can result in either the most profitable project the business has seen or the biggest loss of the year, so your understanding needs to be well honed.
At this point, a much stronger awareness of the market is required. So, knowledge of new and existing competitors, market share and position, reputation, innovation, new versus repeat business, reduced overheads, high margins and return on investment are all key.
As you gain more experience you come in contact with more challenges which are often opportunities to increase commercial knowledge. To turn maximise those opportunities you can:
- Get involved in business cases, plans and client proposals. Bounce commercial ideas around and test them out.
- Try different models out, merge, adopt and drop ways of working based on the best returns or ways you can reduce costs.
- Show awareness of the main metrics, business Key Performance Indicators or client priorities, and how the commercials compliment or conflict with these.
- Take a lead and ensure teams keep the commercials front of mind. Play devil’s advocate – stress the financials and commercial considerations of ideas or decisions.
- Look outside the business and gain a fuller appreciation of the wider commercial landscape.
Assuming leadership roles
As a leader, you create the commercial models required for success and apply them to the market to ensure there is a commercially sustainable business. More than knowing about profitability in the here and now, leaders forecast the likely commercial or financial journey over a number of years.
Using a combination of techniques, your job is to make an educated guess about the longer term commercial plans. Working backwards to present day, you determine the necessary investments in people and resources, as well as the opportunities and risks along the way, to effectively keep the commercial vision in check.
For leaders, being commercial involves a much more sophisticated and holistic appreciation of the market. To develop this you can:
- Strive to have an in-depth awareness of commercial drivers for major clients, competitors and operators in your sector.
- Actively influence the political, economic, sociological, technological, legal and environmental factors that can impact the business.
- Quantify commercial risks and deploy tests to model possible routes to increased revenues or reduced costs.
- Create a team mindset of constant testing and evaluation. Nobody ever gets it all right first time. Continuous improvement is the only way.
- Engage with those around you who have better commercial knowledge. Forge alliances with heads of sales, finance and operations to refine your understanding over time
So whether you’re new to this or a savvy operator, the commercial landscape can change rapidly and it’s possible to slide right back to square one just as quick. Businesses and the environments they operate in a vacuum of controlled chaos and are disrupted by new entrants. Our commercial knowledge today may be redundant tomorrow, so it’s critical to stay up to date, forward-looking and aware of what you’re facing. Good luck!
“I am essentially a hack, a commercial person. If I had a hobby, I would immediately make money on it or abandon It.”
– Orson Welles
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