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Careers Advent Calendar: Understanding Commercial Awareness

Employers often look for commercial awareness in candidates. Here are three things we learned from the Open University’s free Commercial Awareness course:

1. How to understand an organisation and how it creates value

When researching an organisation, you shouldn’t just look at what an organisation does, but how it does it; explore the activities and processes within an organisation. From the outside, two organisations may appear to be delivering equivalent services or products in the same way. They may have broadly similar suppliers and workforce sizes, their location and other large-scale features may even be comparable. Yet the costs incurred by processes inside these two apparently similar ‘black boxes’ may be vastly different. So, although what goes into each organisation and what comes out may seem pretty much the same, the ways in which they create value could be radically distinct.

2. How to understand an organisation’s value

An organisation is a machine for adding value. In its simplest form this means it takes an input at one value and, if successful, converts it to an output at a higher value.

The concept is seen most clearly in manufacturing, where raw materials are worked on to produce finished goods that customers value and are prepared to pay a premium for. Whilst the raw materials or components already had worth, the process of manufacturing added more value.

Commercial awareness means being aware of how change to one aspect of an organisation’s system can have disproportionate, far- and wide-ranging impacts on many other components.

3. Where you fit in in the value chain

The course mentions three components in the value chain: 

  • creativity: coming up with a new product or process
  • manufacturing: churning out the product (this is the tangible part of the chain but it adds less value than you might think)
  • marketing, branding and advertising.

When it comes to applying for a position within an organisation, ask yourself

  • Does your role fit neatly and exclusively into one of these three stages?
  • In terms of a value chain are you closest to the ‘inputs’ or the ‘outputs’ of your organisation? (Roles close to the input end might be procurement, enquiries, goods received, etc., those nearer to the output end might be invoicing, delivery, after-sales services, etc.).
  • We talk of a value ‘chain’ – but to what extent does a linear chain (receiving work and passing it on, with added value) represent your work situation? 

Reflecting on the above will help you demonstrate your commercial awareness to a potential employer. 

Access more useful resources to build your commercial awareness on our website

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