It’s All About You (and the laws of business)

Summary. Given all the factors used to predict success when starting and growing a business - the personality and talent of the founding solopreneur is the most critical, far more significant than the original business idea. You must know the laws of nature to work in the sciences and the same is true here – what are the universal laws of business demanding accommodation like gravity. Businesses fail to reach their potential not because of the initial idea, but because the founder cannot grow and change to fit the circumstance. The challenge is always bigger than you, it is about how to deploy your talent by emphasizing strengths and mitigating weaknesses.
The laws of nature relevant to understanding business:

• Law of Systems – understanding the uncontrollable and controllable factors effecting the market and then creating a picture (map) of the strategic landscape


• Law of Organizing – methods for aligning and integrating business; structure, control, and processes


• Law of Cycles – the stages of business development and tactics for building systems, process, and infrastructure incrementally

Law of Systems is about processes, inter-relationships, and control. It’s the recognition that the behavior of any part of a system (a collection of processes and sub processes) has some effect on the entire system; and when individual components are performing well, the system as a whole is not necessarily performing equally well. A systems model generally has two parts—variables that can be controlled (Adding Value) and uncontrolled (Resources, Consumption, Environment). That means by understanding the uncontrolled factors influencing suppliers, customers, raw materials, etc., I can design a response in the areas under control (business model, service processes, production processes, etc.) that takes advantage of any gaps between what people want and what is available. A systems perspective in business has many applications but during the early stages, it provides a methodology for analyzing the market and designing strategy.

• Resources: patterns or trends that drive the type and use of raw materials – your fuel


• Adding Value: patterns or trends that drive how you provide value by enhancing raw materials to be worth what you charge – the engine


• Consumption: patterns or trends that drive why customers purchase and how they derive value from what you add – the passengers


• Environment: macro patterns or trends that transcend companies, regions, and continents which influence resources, adding value, and consumption – the network of roads, availability of gas stations, income of the passengers

Law of Organizing represents a method of analyzing and building an aligned and integrated operation, it provides a path for action to sequence which components of the business to build incrementally. The key variables that drive tactics in your operational script:

• Processes: Financial, Customer, Strategy, Production, People
  


• Control: Direct Supervision, Input, Throughput, Output, Mutual Adjustment


• Structure: Apex, Operating Core, Mid-Level, Technology, Support

Law of Cycles are the predictable but not pre-ordained stages of business development. As covered previously, the early stages will occur as the business matures but real success happens much later and without guarantee. Perform well enough and you will progress, do not, and suffer premature death.

I Concept: turning your dream into an initial plan with enough detail to start and is sufficiently right to build upon over time. Creating a comprehensive business plan that serves as a living operational script.

II Startup: Obsession with finding customers to create and stabilize cash flow, spreading or sharing risk throughout the value chain with customers, suppliers, stakeholders, and employees.

III Adjustment: reviewing the initial business plan against reality and updating, building the first level of core processes, hiring the first wave of people, enhancing the current offer and/or creating new products and services to take advantage of uncovered opportunities.

IV Growth: building infrastructure – the next level of core processes – the heart of the house, the professionalization of management, and the second wave of hiring. Growth is at its most extreme and will expose defects in purpose, process, structure, and people.

V Balance: growth is sustainable and real profitability is achieved, executives focus on the future while management focus on the present, 25% of your revenue is from NEW products and services, and the company’s assets and operations are optimized – getting all it can deliver.

The power of this approach is combining the three laws of business into a single model (Business Development Cycle—BDC®) which provides an immediate script to focus energy now and determine what is next. You cannot do everything in the beginning and making the attempt prevents you from focusing scarce time and resources on the most critical. Building a successful business is incremental even when it is an internal startup in a large corporation.