Commercial managemement is …

September 8th, 2014

I’ve seen peopJust about the ┬ús?le in the same organisation use the term freely, meaning quite different things and it has a different application in some types of industries. There’s people I can think of with similar job titles, in different industries and organisations who have very different roles. For example:

  • “Commercial” and “Personal” departments; commercial is about commerce and business so deals with other businesses, and personal deals with end-consumers.
  • “Commercial” and “Projects”; commercial deals with the costs whereas projects with the services / products they are delivering.
  • Maybe Commercial is the department which is responsible for the operations of the business, all the support functions, supporting sales and production.

In all of these descriptions, they are right for that business and industry … not always easy to understand if you are not within that business or industry.

However, as a wider description, commercial management is about understanding how an organisation (business, charity, NFP, public-body) works, how the costs, income and finances flow, and looks at the organisation as a whole. In many organisations, the people responsible for making decisions which affect costs, income and finances do not have a full understanding of the commercial implications of their decisions. Worse still, many who are directly involved in managing the finances aren’t seen as “commercial”. Why is this …

  • Do they have sufficient fundamental skills and knowledge about costs, income and finances?
  • Do they have access to all the information?
  • Do they resist asking questions, maybe because they believe they should already know?
  • Are they so concentrated on the detail of each individual cost, they do not see the bigger issues?
  • Do they understand what is “value” for the business / directors, as opposed to the cost?

What do you do to improve commercial understanding and management within your business?

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