If you take the opportunity to walk into a bookstore and wander over toward the section on business books, you will see a vast multiplicity of titles on all manners of business, investment, and strategy. Many of these books outline a 'system' for acquiring wealth that involves some clever means of generating superior profits from what appears to be a minimal amount of work.
However, there is a relatively simple principal that is the basis of all business success. That principal is that you should always seek to offer a product or service that provides a greater 'use value' to your customer than they pay you in 'cash value.' Thus, the fundamental basis of business success consists of finding out what the customer wants, and profitably providing it to them at a reasonable cost.
How Can It Be That Easy?
The truth of the matter is that success never is easy, never has been easy, and never will be easy. However, the fundamental principals of success are simple, and they are straightforward. The problem that most people run into is that they do not apply the principals of success consistently. The building blocks of greatness are constructed from consistent application of timeless principals. These simple principals such as providing a reasonably priced product or service where the value to the customer exceeds the cost of providing the product are truly powerful.
The simple elegance of this principal is that you will be making a practice of only conducting business in a manner where both you and your customer or employer benefits from every transaction. If every transaction is mutually beneficial, then you will literally be helping to make the world of each customer a better place by conducting business. Conversely, every time that somebody demands something for nothing (i.e. 'get rich quick' schemes or more money without providing more service) they are making the world a worse place by trying to capture resources from others without providing a commensurate service in exchange.
What Capitalism Is Really About
It has become popular to believe that capitalism is about "greed" or the belief that "greed is good." This represents a fundamental misunderstanding of what a market economy is all about. Capitalism does not laud greed as being an almighty virtue, it recognizes self-interest (referred to many as 'greed') as being an inevitable part of the human condition. Thus, the question is not whether or not greed will be present... greed is always present. The question is how to harness the power of self interest so that it delivers a value that exceeds its cost to the customer.
Unfortunately, many people fail to draw a line of distinction between business activity that benefits the customer and using political avenues to extract resources from the public treasury. Economists refer to this second activity as rent seeking... and it is the exact activity that capitalism was designed to counteract. When government entities control resources, the people with the most wealth will be those who have garnered the most political clout. In most cases, there is no real service that is provided to the public in this struggle for power.
Conversely, when an entrepreneur such as Andy Grove or Steve Jobs creates products and technologies that create transformational changes in peoples personal, professional, and financial lives, it becomes quite apparent that the value created by those people's innovations vastly exceeds the (considerable) wealth that they achieve in their lifetimes. Thus, the spite and ire being leveled against capitalism should really be directed at the government's repeated use of public funds to funnel favors to people and businesses who are politically connected.
What About People Who Are Employees?
This principal also outlines the way to success as an employee; by providing more value to your employer than they pay you in compensation. Similarly, if you are looking to advance in your career, the best method is to look for ways that you can provide more value for your employer than is currently being delivered. Generally speaking, advancement and promotions are justified when the candidate is already doing work at the next level of proficiency... so why not ascend to the next level of productivity without being told to do so?
In the end, there is one true universal secret to business success, and it is not a secret. It is a simple, fundamental truth that delivering value to the customer for a price that is higher than your you costs will create success. This simple axiom has many reprocussions throughout our personal, professional, and financial lives. The only lingering question is whether we posess the mental and moral discipline to carry through these principals of success until our goals and ambitions have been achieved?
Having started my own part-time business a year ago, I've been reading bits and pieces about business and leadership. Your post has helped me to understand a greater context for business.
ReplyDeleteThanks for writing this :)