A business lunch and insights into dealing with a business truism.

I was at a business lunch recently, and inevitably someone began to discuss the challenges that come with business; I was instantly reminded of a core business truism... something fundamental to all that is defined as business and very complex. It goes like this - 

 Profit = Revenue - Cost*

• Revenue: money generating from the products or services you sell.
• Cost: the money needed to run your business (tangible and intangible)
• Success is defined as profit moves towards, and ultimately above zero.

Reflecting back on my salad and our conversations around the table, this is what I walked away with. 

Business is a people activity

No single person can run a business alone... it's simply too complex to have all the skills and knowledge needed, let alone the time. This is where building strong business relationships are important with trusted, smart and reliable people. As the old saying goes, "If you want to go fast go alone, but if you want to go far go together". 

Asking the right question is more important than having the right answer

Asking the right question that uncovers the answer to a better "line of sight" or understanding of a situation is key. It is much better to say, "I don't have the answer, but will find it", than not know what question to ask and in turn not get the answer you need. The old adage of "You don't know, what you don't know" rings true here, and remembering that business is a people activity, will help. The more good people involved in the discussion, the better chance you will ask the "right questions".

Listening is much more important than talking

Sharing thoughts, perspectives, knowledge and insight are important for you when tackling this truism. Let someone else have a turn sharing their thoughts. It will serve you well.

The Customer

If your business lunch doesn't include talking about the customer, then what you are having is just a lunch. Customers are - 

• The people who will buy your product and/or service contributing to revenue generation.
• The employee who will implement activities that either generate revenue, or help pull cost out of your business activities.
• The community where your business operates and is involved... this indirectly generates revenue and reduces costs, as well as supports sustainability.
• The shareholder who looks for profit and good governance.

Revenue is not easy to generate

Great ideas lead to great products... however, contrary to that popular saying, "great products sell themselves", they in fact don't. Generating revenue involves a large amount of work to develop customer relationships, communicate the value of your product, overcome aggressive competitors, and offer a service proposition that will have the customer purchase from you again. It is hard work.

Patience

Just because you want it really, really badly, doesn't mean others do; it takes time to communicate ideas, change perspectives and influence behavior. Endurance, persistence, risk tolerance and dedication are also other characteristics that will serve you well when dealing with this truism. 

In the end, it is your decision

Depending on your position in an organization, your decisions may or may not have direct ramifications on revenue or costs (or both). But we all have a part to play and responsible for the decisions we make; stand by them, and make them work. 

Revenue versus Cost

There is an attractive "bunny hole of a discussion" with regard to whether revenue generation is more important than effective cost management and governance. This is a pointless debate and is analogous to arguing that the heart is more important than the lungs in terms of keeping the body alive. It's best to focus on what you need to do and be as effective as you can be. 

One of the stories around the table involved someone working through a complex situation and they metaphorically said, " It just seems like every time we turn over a new stone we find a 'squiggly'"**. I laughed and laughed... not because of the problem they were dealing with, but because a very accomplished individual used a word like "squiggly". And this is why I like business.

Business is not easy and the truism of "Profit = revenue - cost" can take a lifetime to solve. But as you work through it, you are challenged, rewarded, learn something new everyday, meet amazing people who use the word "squiggly" - When you look back on it all, you will more often than not be proud of what you have accomplished, had fun and laughed. 

gpe

* If you believe this truism doesn't apply to you, then you are either not in business or you have "some" work ahead of you.

** Saying squiggly instead of worm as a metaphor for a "problem" just struck me very funny and also illustrates that they weren't necessarily nice looking problems (with all due respect to worms).

It's all going according to plan... but is it really?

We'll it's April 1st; not only is it April Fools Day, but this signals the end of the First Quarter (assuming you manage to the calendar year). This is very exciting day!

As an aside, April Fools Day is a day that you can play harmless practical jokes; these jokes, as well as the victims, are known as "April Fools". In theory, there are no consequences, harm or foul for your humorous activities, but remember, some people don't have a sense of humor and long memories, so tread with care. Apart from the obvious merriment, it is also a natural point in the calendar (particularly in business) to determine if you are "on target" to meet your plan objectives for the year.

There is a Six Sigma* saying that goes something like this, "In God we trust, everyone else bring data." I've always liked this saying, as it reminds us that hard, objective information lets us understand a situation and by extension, measure how we are doing against our objectives. Measuring first quarter results against your objectives gives you insight in to how you have started the year - Are you off to a great start, or are you falling a little short and need to course correct?

 Measuring how you are doing relative to expectations is key; it is a main reason why plans, goals and objectives need to be developed... as well as physically written down. It's all about having them down on paper in "black and white", and is the reason for the "M" in a S.M.A.R.T Objective**. "M" is for measurable - Measuring performance to your goals after the first 90 days -

• Develops an objective view of how you are performing to your goals.
• Indicates how effective your initial implementation has been.
• Offers an opportunity to"course correct" or initiate new activities with time enough to be impactful.

Data does not feel or think...it just is; having data and measuring it against your planned objectives eliminates these two statements: "I feel everything is going according to plan" or "I think everything is going to plan"; it allows you to say, "I know everything is going according to plan!"

If you find yourself saying "I think" or "I feel", there is a good chance you are not working from data. Data is knowledge, and knowledge is KING.*** 

gpe

* Six Sigma is a set of techniques and tools for process improvement and functional excellence. It was developed by Motorola and popularized by Jack Welsh who made it central to his business strategy at General Electric; it has been adopted by many businesses to drive improvement.

** SMART is an acronym, giving criteria to guide in the setting of objectives:

• Specific – target a specific area for improvement.
• Measurable – quantify a target of progress.
• Achievable – can the objective realistically be achieved, given available resources.
• Relevant – is the objective in-line with your strategies and plans
• Time-bound – specify when the result(s) can be achieved.

*** I know a dear geophysicist who is probably gritting her teeth over my loose definitions of data and knowledge. My only defence... the use of artistic license to hopefully illustrate a point.

How much is your idea worth? It depends...

The following is the original and the rewrite can be found by clicking here. 

First of all, I should point out my career has involved working in a cutting edge industry where the work was fun and challenging; offered me the advantages of travel, expense accounts, bonuses and stock options - Great times, invaluable experience, and a body of work to be proud of. I don't do that anymore... I'm now involved, more and more, with people who have an idea and are passionate about bringing to life. It's a wonderful opportunity I have been afforded...

I was at a networking event recently, which brought entrepreneurs and seed investors together for mentoring and guidance. It was there, I met someone who could be considered a "poster child" for the modern entrepreneur - His new economy "Uber-esk" idea, a very slick website, and an air of confidence that you could not help but like... did I mention he was still in his third year of university? That same week, I also met a person who was being creative with expanding the business, another who was wrestling with how to manage through a current cash flow problem, and then ended the week having dinner with two close friends*. 

In our conversations, we discussed our business ideas, our visions for the future, the challenges, and what we were doing; with excitement in the possibilities. We were creating value and worth with our ideas; the revenue we expected to generate or the valuation of these ideas with our favorite seed investors. It was here, that I realized the worth of an idea was much more than just monetary. And how valuable ideas really are - 

• Ideas feed your life goals - We all should have life goals, and as they say, "they should be BIG, so you can grow into them". Ideas are the birthplace for meeting those goals.
• Ideas drive accomplishment - "I have an idea, why don't we do this..." (or some other iteration), sets activities in motion, and this is how accomplishment happens.
• Ideas feed knowledge - more often than not, an idea will lead to something that you have not done before; simply said, "you will have to learn how to do it".
• Ideas feed your well-being - Ideas, by their very nature develop creativity, accomplishment and success. All good feelings.
• Ideas are self perpetuating - Ideas beget ideas, particularly if they are shared... "That's a great idea and that makes me think of this idea... we could probably try this... that gives me an idea..."
• Ideas are the birthplace for solving problems - If you want to solve a problem, the largest list of ideas you can come up with will hold the answer.

Ideas are curious little things though... it's not what they are, but what you do with them, that defines their worth. Three options come to mind -

• You bring your idea to life - this is simply where you dedicate your energy and emotion to your idea; then work very, very hard to make it a reality. It's fair to say the more complex the idea, the more of a roller coaster ride it will be - Don't forget to enjoy the ride.
• Give your idea away to someone who will make it a reality - if you have decided not to make your idea a reality, let someone else do it. What is served by holding onto it?
• Holding on to an idea and doing nothing - There is no advantage to holding onto an idea and doing nothing with it - It's even worse when you say you are going to make your idea a reality and never make the attempt. 

The worth and value of an idea is in its execution... the shame of an idea, is not attempting to execute on it at all.

gpe 

* Dinner with Big D and The Duke was a good time and I wish them great success with their ideas.