THE BUSINESS WE MEANT TO BUILD - Chapter 15 - The Force Is Not the Rules

THE BUSINESS WE MEANT TO BUILD - Chapter 15 - The Force Is Not the Rules | Travelling Around Australia with Jeff Banks

The Force, if we want to continue stretching the metaphor, is already inside the business. It is in the value being created, the customers choosing to return, the cash moving through the bank account, the reputation accumulating one interaction at a time and the reason the owner began the journey in the first place.

THE BUSINESS WE MEANT TO BUILD

How good businesses lose their way

Chapter 15 – The Force Is Not the Rules

There is something rather appealing about the idea of the Force, perhaps because the Force itself seems to sit beyond all the rules that have subsequently been built around it. The Jedi did not invent it, nor did they own it, and for all their accumulated wisdom they occasionally seemed capable of misunderstanding it almost as spectacularly as anybody else. They studied it, developed disciplines around it and passed those disciplines from one generation to the next, but somewhere beneath all that structure remained something much simpler and considerably more fundamental.

I sometimes wonder whether business has developed much the same way. Business has been around for considerably longer than business schools, management consultants, entrepreneurial podcasts, social-media influencers and the endless procession of people prepared to explain the five things we must do before breakfast if we are serious about success. Somewhere underneath all of that accumulated knowledge remains something remarkably basic: somebody has something that somebody else wants, the two agree on an exchange, and hopefully there is enough left over after the transaction for everybody involved to regard the exercise as worthwhile.

We have managed to make business considerably more complicated since then, although I am not entirely convinced that complication and improvement have always travelled together. Perhaps business has its own Force, something fundamental that exists underneath the strategies, theories, trends and fashionable language that we build around it.

It is not particularly mystical, and I doubt anyone will ever make a successful movie franchise from the excitement of positive cashflow, acceptable margins and customers paying their accounts on time. Nevertheless, those rather ordinary things seem to possess a stubborn importance that survives every new theory we build around them. Customers still need to want what we provide, the price still needs to make some sort of commercial sense, promises still need to be honoured and eventually the money coming in has to bear some relationship to the money going out.

None of this is particularly exciting, which may explain why we spend so much time looking for something more interesting. The fundamentals can appear almost too ordinary when compared with the promise of the latest system, platform, strategy or innovation that appears capable of changing everything by next Tuesday.

Over many years of sitting across tables from business owners, I have heard variations of the same conversation more times than I could possibly count. Somebody has returned from a seminar, spoken to another business owner, listened to a podcast or discovered that a competitor is doing something differently, and suddenly the conversation is no longer about whether the idea makes sense for their business. It has quietly become a conversation about how quickly they need to adopt it before they are left behind.

The language usually gives the game away, because the phrases tend to sound remarkably similar regardless of the industry involved. Everybody is doing it, the industry is moving that way, customers expect it now, a competitor has started doing it, or apparently successful businesses are already there and we had better get on board.

Perhaps they are right, and that possibility is important because questioning the rules should never become another excuse for believing we are cleverer than everybody else. There are plenty of occasions when the crowd moves in a particular direction because the crowd has noticed something we have not, and stubbornly remaining where we are while congratulating ourselves on our independence is hardly a sophisticated business strategy.

The problem is not that somebody else has an idea. The problem begins when their idea becomes our instruction before we have bothered to ask whether the circumstances are remotely similar, whether the numbers support it or whether the destination they are pursuing is even one we want.

That is where I think the white noise begins, because we are surrounded by ideas presented as obligations rather than possibilities. We are told we must grow, scale, automate, outsource and embrace whatever technology has most recently promised to change the world. We must niche while simultaneously diversifying, build a personal brand while ensuring the business can operate without us, develop recurring income, improve our systems and spend more time working on the business rather than in it.

Quite a lot of that advice is perfectly sensible, which may be precisely why it becomes dangerous when the word must is attached to it. A useful idea can become a rule remarkably quickly, and once it becomes a rule we often stop asking what problem it was originally intended to solve.

We remember the instruction but lose the circumstances surrounding it, and eventually we can find ourselves faithfully applying yesterday’s solution to a problem we may not even have today. At that point the wisdom is no longer being used as wisdom; it has become ceremony, something we continue doing because somewhere along the way we forgot to ask why.

That is probably where my comparison with the Force starts to interest me most. There are things in business that really are rules, and pretending otherwise is unlikely to produce enlightenment.

Tax legislation is not greatly influenced by our personal philosophy, employment obligations do not disappear because we dislike bureaucracy, and a contract does not necessarily become optional because somebody has recently read a book about disrupting established industries. There are occasions when compliance is simply compliance, however unfashionable that may sound, and ignoring it is not innovation so much as choosing a fight with a rule that actually exists.

There are also commercial realities that behave very much like rules even though nobody has written them into legislation. A business can only lose money for so long, cash can only run out once, and continually selling something for less than it costs to provide tends to produce a fairly predictable ending.

We can argue about accounting treatments, timing differences and strategic investment along the way, but sooner or later enthusiasm generally has to sit down with arithmetic. Arithmetic can be an unforgiving conversational partner, particularly when it finally catches up with a business model that has spent too long surviving on optimism.

Those things feel reasonably close to the Force because they remain relevant regardless of the latest fashion surrounding them. Beyond them, however, sits an enormous collection of assumptions about what a successful business is supposed to look like, and I am not sure those assumptions deserve the same reverence.

Growth is considered good, bigger is generally considered better and standing still is often interpreted as falling behind. Yet none of those propositions answers the rather more personal question of what the owner was actually trying to build in the first place.

If somebody creates a business that produces the income, freedom, challenge and lifestyle they wanted, I am not entirely certain they have failed merely because somebody else’s definition of success required another three branches and fifty more employees. Perhaps we need to be careful about mistaking somebody else’s destination for our own, especially when the road towards it may take us further away from the reason we started.

Price competition is one of the easier places to see the problem. A competitor reduces their price and the immediate reaction is often that we must respond, as though their decision has somehow rewritten the laws governing our business.

Their costs may be different, their market may be different, they may be deliberately buying market share or they may simply be making a mistake that we are now considering copying. They may also know something we don’t, which is why their decision deserves examination rather than immediate dismissal.

That is why the answer cannot simply be to ignore them either. Their decision gives us information, but information and instruction are not the same thing, and somewhere between the two sits the responsibility to look at our own customers, costs, margins, reputation and objectives before deciding what their action actually means to us.

The same caution should apply to the ideas I happen to like. I believe reputation matters enormously, and I would generally rather see a business compete on service and value than begin a race towards the cheapest possible price.

Peter Merrett’s ideas around making work and relationships meaningful sit far more comfortably with me than reducing every interaction to the lowest possible transaction, but even that preference should not be allowed to become another unchallengeable rule. There are markets where price matters enormously, customers for whom relationships are largely irrelevant and circumstances where beautiful service wrapped around the wrong product merely creates a very pleasant path towards declining sales.

The same applies to continuous improvement. I have long liked the thinking behind CANEI, the idea of constant and never-ending improvement, because complacency has destroyed more than a few businesses that once seemed untouchable.

Yet continuous improvement without direction can become continuous tinkering, and there is little virtue in becoming progressively better at something customers no longer particularly want. Even a principle I value deserves to be asked what purpose it is serving, because otherwise I am merely replacing somebody else’s unquestioned rule with one of my own.

Perhaps that is the real test of whether we are questioning business rules properly. It is easy to question the rules we dislike, particularly when they come from people whose confidence exceeds our enthusiasm for listening to them.

It is considerably harder to apply the same scrutiny to our own favourite ideas because those are the ones we have already decided make sense. If we are going to challenge orthodoxy, intellectual fairness probably requires that our own orthodoxy gets challenged as well.

That might include the Discipline of Boring, an idea that has considerable attraction in a world forever searching for the next exciting answer. There is much to be said for doing the fundamentals well, following systems, answering customers, watching cash, understanding margins and resisting the urge to abandon a perfectly sound direction every time something shiny appears on the horizon.

Yet even boring can become laziness if we use it to avoid looking outside the window. Sometimes the shiny new thing really is a change in the world rather than another distraction, and the businesses that survive are often those capable of telling the difference without automatically embracing everything new or automatically defending everything old.

Artificial intelligence is an obvious contemporary example, but it is hardly the first. There would have been business owners who regarded websites as unnecessary, online shopping as a novelty and social media as somewhere teenagers wasted their time, and some of them may even have been correct for quite a while.

Change rarely arrives with a convenient notice advising exactly when scepticism should be converted into action. The difficulty has always been deciding whether we are watching noise or witnessing something that genuinely alters the way our customers will behave, and I doubt there is a formula that answers that question for every business.

If there were such a formula, somebody would undoubtedly have packaged it into seven steps by now and sold tickets to a seminar explaining how the rest of us had been doing it wrong. That possibility alone probably explains why I remain suspicious whenever somebody claims to have found the universal answer to a problem that looks different in almost every business I have ever seen.

This is why I keep coming back to the underlying Force of the individual business. The closer we remain to our customers, our numbers, our employees, our suppliers and our reason for being in business, the better chance we have of recognising when something outside genuinely matters.

Distance from those fundamentals makes us increasingly dependent on people outside the business to tell us what is happening inside it. That seems an odd way to run anything, particularly when the person delivering the advice may understand their framework perfectly while knowing very little about the history, ambitions and peculiarities of the business sitting in front of them.

The extraordinary abundance of information available to us has made the problem both better and worse. We have access to ideas, research and experience that previous generations of business owners could scarcely have imagined, yet every useful piece of information arrives surrounded by another hundred opinions competing for the same attention.

The challenge is no longer merely finding information; it is deciding which information deserves to influence us. That is where white noise becomes particularly troublesome, because volume can so easily masquerade as importance.

Almost everything now seems capable of changing everything. Artificial intelligence has changed everything, younger generations have changed everything, remote work has changed everything, the latest economic announcement has changed everything and whatever social-media platform happens to be fashionable this month has apparently changed everything as well.

If everything continually changes everything, I sometimes wonder how the bloke who simply answers his telephone, does what he promises and sends out an invoice ever manages to survive. Strangely enough, quite a few do, and some of them have survived through several revolutions that were apparently going to make their businesses obsolete.

Perhaps that is because underneath all the revolutions, customers still tend to appreciate getting what they thought they were buying. Employees still prefer some understanding of what is expected of them, suppliers still like being paid and owners still eventually need the business to produce something worthwhile for the effort and risk involved.

The wrapping changes continually, while the underlying commercial relationship often changes rather less than the commentators would have us believe. That does not mean the wrapping is irrelevant, but it may mean we should be careful about confusing presentation with substance.

None of this suggests we should close our ears. Listening is one of the most valuable things any business owner can do, particularly when the person speaking has seen something we have not.

The accumulated experience of other businesses, advisers, employees and customers can save us from learning every lesson through personal pain. The danger only appears when listening ceases to be the beginning of the thinking and quietly becomes the end of it.

There is a difference between seeking advice and surrendering judgement. Perhaps the useful habit is not to ask whether a particular business rule is right or wrong in some universal sense, but to wonder what sits underneath it.

Why did this idea work, what problem was it solving, what assumptions did it depend upon and do those assumptions exist in the business standing in front of us? Those questions do not guarantee the right answer, but they may help us avoid accepting somebody else’s answer simply because it arrived confidently packaged.

That is also why I resist the temptation to finish this discussion with my own list of rules. It would be wonderfully ironic to spend an entire article questioning business commandments and then conclude with ten commandments of my own.

I certainly have beliefs formed from decades of watching businesses succeed, struggle, change direction and occasionally disappear, but experience should perhaps make us more curious rather than merely more certain. The business owner sitting opposite me still knows things about their dream, their customers and their appetite for risk that I cannot know for them.

Perhaps my role has never really been to tell them what their dream should be. Sometimes it is simply to help clear away enough noise for them to see it again, and perhaps to point towards something in the numbers, the market or their own behaviour that deserves another look.

The decision that follows remains theirs because advice that leaves somebody dependent on the adviser has probably strengthened the adviser more than it has strengthened the business owner. Good advice, I suspect, should eventually make the person receiving it more capable of thinking for themselves, not less.

The Force, if we want to continue stretching the metaphor, is already inside the business. It is in the value being created, the customers choosing to return, the cash moving through the bank account, the reputation accumulating one interaction at a time and the reason the owner began the journey in the first place.

It can be influenced by outside knowledge and occasionally transformed by outside events, but it cannot be understood merely by collecting more rules. Somewhere along the way there has to be enough quiet to examine whether what we are being told actually belongs in the business we have, rather than the business somebody else assumes we should have.

Perhaps the challenge is learning to hear it without pretending the rest of the world has nothing useful to say. That requires neither shutting out outside advice nor assuming our instincts are automatically superior to everybody else’s experience.

It may simply require enough curiosity to listen to the noise, enough discipline to check it against the evidence and enough confidence to decide which parts genuinely belong in our particular business. The people telling us the rules may be completely right, but they may simply be describing the Force as it operates in their galaxy while we still have the rather more difficult job of understanding what is happening in ours.

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