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Chronicles from a Caribbean Cubicle

8/28/2007

The Kinds of Business I am Not In

There is a temptation in business to try to build the company around whatever seems to be hot at the moment.

The logic taught in MBA schools is as follows:
  1. Do market research- Figure out what people want by asking them what their needs are
  2. Start a Business - Find a way to provide it to them at a price that can make a big profit
The logic seems to make sense, and it has created a generation of what one might call "profit chasers." People start companies in order to make as much money as they can as quickly as they can, and they are particularly susceptible to the latest offers that come along.

On the other hand, there is a new and growing school of thought that this thinking is limited. Instead, the new thinking is as follows:
  1. Follow your passions and interests until you become an expert
  2. Find ways of packaging and selling your expertise to those who appreciate what you have to offer
  3. Continue to innovate and expand your offerings, always paying attention to where your interests are taking you
I have become a firm believer in this new approach to business, which I will call Business 2.0. I started a company in the Business 1.0 model that didn't work -- a t-shirt company that just seemed like a good idea that would make money. Instead, it lost it (even while teaching me some stern lessons about running a company).

Living in the Business 1.0 world is cold and hard. People take jobs for companies they don't like, doing things they don't care for, earning enough to pay their bills at the end of the month. This is as good as it gets. In Business 1.0, people give as little as they can, while trying to get as much as they can in return -- what economists call "maximizing their utility." In this particular world, it always makes sense to pursue to highest paying job, no matter what.

In the Business 2.0 world, however, the single-minded pursuit of profit and tangible gain is set aside to some degree for other commitments, such as personal fulfillment and making a difference. There is a commitment to learn, expand and grow, while taking care of one's psychological and emotional needs along the way.

I observed an interesting contrast between these two models recently in two web sites that focus on methods of making profits through blogging.

One, problogger.net, is clearly Business 1.0 while the second, stevepavlina.com is clearly following the alternate model. While one model is not necessarily better than the other, I will say that the second is more likely to do a couple of things that i personally like:
  1. Business 2.0 is more likely to lead to a fulfilled life -- it passes the deathbed test because it is asking the question "what is my life for" at each step of the way.
  2. Business 2.0 is more likely to produce well-managed companies that are strong on innovation simply because one is likely to find more innovation by people who love what they are doing, than by people who are "paid to do a job" and are focused on "doing what they need to do."
I guess that my point here is that each of us has a choice in life, regardless of what we might argue to ourselves and others. I do know what many people complain that they have no choice, and they are more likely to bake what Kahlil Gibran, author of The Prophet, calls "a bitter bread."

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3 Comments:

  • Francis:

    Business 1.0 reminds me of the management theory stemming from the ancient book Art of War while Business 2.0 remind me of the Bhagavad Gita which promotes inner happiness while pursuing business success.

    How does these two theories apply if at all in your work or perhaps some variation thereof?

    By Blogger Mushtaq, at 9/03/2007  

  • I have read portions of both books, and I think this is a brilliant connect you have made.

    Can you send me along any quotes from the Gita -- I don't know it as well.

    By Blogger fwade, at 9/09/2007  

  • Hello Francis:

    I think that the Art of War read as a metaphor is just as applicable to Business 2.0. as it is to Business 1.0.

    Darren's blog has evolved. It emerged from his passion and, for, me stays true to that. Having said that, my blog is firmly in the Business 2.0 genre :)

    By Anonymous Galba Bright of Tune up your EQ, at 9/19/2007  

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