These days, many tech job descriptions list business acumen under the applicant’s requirements.
Have you noticed that too?
Business acumen consists of three main areas:
Let’s walk through this.
In general, a company can make money through several different streams.
Most companies generate revenue from paying customers. A customer either pays a one-time fee or, more common today, a recurring payment, also known as a subscription.
The more paying customers the business has, the more revenue it generates and, in turn, also generates more profits.
Let’s get more specific and use Slack as an example.
Slack offers Chat and Collaboration for teams to work more effectively, mostly if team members work from different physical locations.
Slack generates revenue from paying customers. The more organizations sign up, the better.
But, how does Slack acquire new customers?
It’s a two-fold problem. For one, people need to know that Slack exists. The company achieves this through advertisements online and on billboards.
If a single person signs up, they don’t get too much value out of it. It only becomes useful once more team members join. Therefore, they have their team members sign up as well.
Who is Slack’s target customer? It is not everyone.
They target organizations that benefit from streamlined collaboration across physical boundaries.
Often, though, getting into these organizations through the front door, meaning following a standardized purchasing process, is tiring, especially if you’re brand-new.
How does Slack get introduced into organizations then?
They come in through the side door. For instance, a few people within an organization send information back and forth via email. If you ever used email extensively, you know it’s easy to lose track of conversations and information.
They decide to give Slack a try. Signing up is easy, and sharing information is more straightforward.
They open a set of different Slack channels for various topics and start collaborating in real-time.
The only limit: They can only access the last 10,000 messages within the workspace. It’s not ideal, but acceptable for now. Other team members start to join because the information they need is only available in these Slack channels.
And soon, the workspace has grown enough that employees can make a compelling case to leadership to convert to a paid plan.
Slack grows its reach and makes it easier to convert non-paying into paying customers over time.
Lastly, to make this work effectively, Slack needs to understand precisely how their customers make money.
Why you need to know how your customers make money
Whatever you offer to your customers comes at a price. Preferably, at a price that provides you with a desirable margin. But how can you charge a high price and have the customer pay it?
Let’s find out exactly how you can generate value for the customer.
Slack understands that their customers want to collaborate on projects straightforwardly and as fast as possible across physical boundaries.
They ask the crucial question: “If our customer can finish a week early or team members can work effectively from home, what impact does that have on their business?”
The answer can be additional revenue or gaining a competitive advantage over competitors.
Now, if Slack provides that much value, the customer has little reason to hesitate and purchase seats for all team members.
Suddenly, what seemed like a considerable expense beforehand became an investment in the team and the company.
How does Business Acumen relate to your role in Software Development?
Your primary focus might be on cutting-edge technologies you’d like to work with soon.
That’s the reason why the company hired you in the first place. You know which technologies to introduce to bring value to the table.
What if you expanded your focus not just to deliver great software but also increased value for your customer?
Invest more effort to understand the customer, where they come from, what you can do to help with as fast as possible.
It means to evaluate technology not just on its merits that affect you, but also how they can help the customer. For instance, if you choose between a cutting-edge and brand new framework and a battle-tested framework, which impact does it have on the customer?
If you choose the former, the customer might experience more bugs, less reliable software, and can’t work as productive.
The battle-tested framework might not be as exciting from a programming point of view but helps to deliver reliable software right from the start.
The customer can work uninterruptedly, and also it means fewer outages during on-call shifts.
What do you think? What impact does Business Acumen have on your daily work and position?
Share your experience in the comments.