Beg, borrow and steal
This past Saturday I was a featured speaker at the Stockholm School of Entrepreneurships's Start-Up Day. My session was titled - Informal Resource Acquisition. The conclusion was the level of resourcefulness of the entrepreneur and his or her team is a key determinant in entrepreneurial success. Further, the fewer resources (including money) that you have to get from external parties (investors, banks, etc.), the more of the company you will get to keep when and if you ultimately do have to raise external capital.
Along those lines, I just found a great little article from the Wall Street Journal that is right on point. It is the story of that one of the original viral websites - HotorNot.com. After it's launch in 2000, the founder calculated that the bandwidth charges (which remember were much higher then) would cost him a $100,000 a month. The article details how his resourcefulness spared him from paying a single cent.
What Is the Oldest Rule in Business?
Simply this, Make a Profit, and more specifically a cash profit. It sounds obvious today; however, during uncertain economic cycles the old rules are push aside for new rules. But of course, when the time is right the old rules return to with a vengeance. However, the old rules are always good enough of the successful companies. Opportunistic organizations exist (only) to make profit (value) for the owners. This is the role they have been given by their owners. This is an important point. The business, as legal entity, has some legal responsibilities depending on the country in which it is organized. In most countries, primary among the responsibilities is to do what the owners want assuming it is legal and follows the appropriate guidelines. This means that each firm should do what their specific owners require. I work under the premise that owners what to create value or wealth. If your owners are not interested in that, perhaps you should stop reading this blog.
This single-minded focus of some successful organization may seem cold, calculated, and even ruthless to some, but that is why the firm exists. It is not a charity. However, if you decide to run your business opportunistically at end of the day you will have more than enough money to give to charity or anybody else.
What is Winning Ugly?
Most companies (and people) want to win looking good. Huh? For example, let's assume that all the numbers work out and there is a tremendous business opportunity in the market - in the garbage disposal market. How many companies or people would jump at that opportunity or one equally as good in the septic tank installation, cleaning and maintenance business? The fact is that most business and people would much rather be in more glamorous industry, one that they can be proud of and one that allows them to hold their head up high. As a result, the market for business opportunities is not exactly perfect (efficient). This means that there are business opportunities that have enormous possibility for above normal or super profits; those go unexploited.
Occasionally you come across special companies. For them creating value by exploit opportunities is what drives them. They do care if they do not look good. They would much rather win ugly. Winning ugly is succeed or winning by with regard to the more superficial things such as press image, fleeting public sentiment, opinion polls, trends, etc. As long as they are succeeding (creating value) and are not doing anything illegal or immoral, they are proud and can hold up their heads high.
These special businesses are willing to let the other firms have the adulation and the glory, so long as they create value for the owners and customers. For them image is not everything, value is (almost).
If you find examples of these companies, let me know.
Finally some positive news from the Swedish Government
The Swedish government announced a significant and surprising move to increase the creation of new ventures and to foster a greater degree of entrepreneurship. It was reported in yesterday's Dagens Industri that the capital requirement for a new limited company - aktiebolag or AB - would be drastically cut from the ridiculous 100,000 SEK to 1 SEK. This change will put us in league with the UK and the US with respect to capital requirements instead of those bastions of entrepreneurship like Germany, France and Spain. It also rockets us past our Nordic neighbors, especially Denmark.
It is about time that Sweden actually embraces capitalism. Furthermore, during this time of financial crisis, it is recognition by the policymakers that it is the entrepreneur that creates value. It is the entrepreneur that creates new products and services. It is the entrepreneur that creates jobs. It is the entrepreneur that expands the tax base. It is the entrepreneurs that move society forward.
The Principle of Masala
The Principle of Masala is simply this: A diverse pool of talent, adds value and strength to the organization. Masala is a Hindi word for spice mixture. The mixture of spices is what adds that something extra to the dish. It is not just one or two spices but many. In addition, the flavors of the spices individually are much less tasty than the masala itself. Diversity is important in so many ways for the successful organization as well. So let’s be clear. I am not in favor for diversity for its own sake. Diversity helps the level of organizational creativity, ideation, opportunity development, problem solving and ultimately and most importantly in value creation.
Managers when recruiting and hiring must primarily care about - not who you are, but rather what value can you add.
One interesting point, especially when governments are concerned with diversity in business, is when the businesses focuses on merit, diversity is a natural result. No one gender, race, ethnic group, religion or nationality has a lock on talent today. In the past perhaps, one could have made some very limited argument in that direction; however, with the growth of global education, no one group has a monopoly on talent, thank goodness.
The added importance of diversity for the value creating organization
Where do new ideas come from? That’s simple, from differences. Creativity comes from unlikely juxtapositions. The best way to maximize differences is to mix genders, ages, backgrounds and disciplines. The successful organization gets an added bonus when it focuses on acquiring staff by valuing merit. The added bonus is a diverse talent pool. The research on creativity and group dynamics makes it quite clear that diversity across whichever dimension can lead to higher levels of creativity. This is obviously valuable for most organizations. For example, the creation of business opportunities itself is an act of creativity.
However, there are a few hidden advantages a firm gets by using diverse talent. Adding diversity to your organization by hiring more women, minorities, and foreign nationals, you get access to underutilized pool of talent. While other firms hesitate, the successful organization swoops in and grabs as much underused talent as it can.
Secondly by using women and other diverse groups, there is another advantage. Society has told these groups that they were often less than the majority, less talented, less capable, just less. When the smart organization hires these people and tells them that it believes that they are talented, useful and valuable, what do you think the result is? Once you unleash them, they are going to work extremely hard to create value for the company. I dare say harder than the average majority person.
The value-centered organization tries to create value whenever and wherever possible and one of the best ways to do that is with diversity. But don’t think that having a diverse workforce is easy; in fact, it is very hard. Coordinating diversity is tough. However, as a result of the special organizations’ culture, employees that fit the culture, and their overriding goal of creating value for the owners (customers), managing this diversity should be a little easier.
Ok, so what is the situation here in Denmark? Well, there is not a lot of good information on diversity of Danish management. One study I did find looked at corporate boards in the 500 top businesses in the Nordic region. Denmark not only had the lowest share of women on boards (6%), but also had the lowest foreign representation (6%).
What does all of this mean for Denmark?
As you may know Denmark has been named as the best place to do business in the world over the next five years by the Economic Intelligence Unit’s business environmental rankings. However, there are two areas that Denmark needs to address, if it is to continue to be the best place to conduct business – its incredibly high total tax burden and a dwindling labor supply. While I may address taxes in one of my columns, I will just look at the labor situation.
Denmark has record low levels of unemployment, which is socially a good thing (except from an employers’ perspective where there is upward pressure on wages). However, this could lead to major problems, if we expect to grow the economy rapidly in the future. However, this is a solution. Immigrants and women are currently being underutilized in the workforce. Denmark can succeed and blow past the neighboring countries and in fact the rest of Europe, if smart managers realize that seeking out the best people will lead to increased value creation. If managers focus on value creation, the faces of the factory floor as well as the boardroom will certainly change. And they will change without government interference. Yes, this may be hard for some mangers and some businesses, but it also may lead to a sustainable competitive advantage at the business level as well as at the country level.
Just a quick note
"Danish-American Business Forum is a leading and independent non-profit interest and network association in Denmark for companies and institutions with activities in the US." I was recently elected to the Board. I have also become a regular contributer to their quarterly newsletter. See here and here.
Rejected twice in one day
McGraw Hill, the biggest and baddest business book publisher in the world, was very interested in my book. It has been it has been a hard struggle, because I live in Europe. In the enlighten publishing world I may as well live on Mars. No well-known agent would rep me and no big publisher will touch me.
Finally, I was able to find representation and an open minded business book acquisition editor at McGraw Hill. The editor wanted me and took the book to the editorial board.
The book went up this week to the editorial board and was rejected by the marketing geniuses because they did not think they could sell enough copies with me being on Mars . . I mean in Europe.
In my agent's email in which I received this news I also learned that she was dropping as well, because she does not think she can sell me despite the quality of the work.
So what will I do next? I have beginnings of a plan. Stay tuned!
