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Businesses are made of ideas – ideas expressed as words


“People like to think that businesses are built of numbers (“the bottom line”) or forces (“market forces”) or things (“the product”) or flesh and blood (“our people”).  But this is wrong.  Businesses are made of ideas – ideas expressed as words.”

So says James Champy.  He is exaggerating.  Enterprises have all these attributes at once – they are numbers, forces, products and services, people, ideas, and ways of combining inputs to produce something better or cheaper than before; and having something left over for growth of the business and of its owners’ cash.  Ventures are living entities in motion that add to the wealth of the world, and through which we can create and capture all these things.

Yet there is great power in viewing enterprises as ideas, kinetic ideas, ideas incorporated within the stuff of group activity, ideas inspiring and driving life for founders, co-workers, and customers.

An idea can be expressed in numbers, in a mathematical formula, in a chart, in a picture, or, with greatest flexibility and perhaps greatest eloquence, in words.

If numbers are the music of enterprise, then words are the lyrics.

Are ideas driving and inspiring your business?  If not, there is a powerful lever that is lying around unused.  And, with a bit of hard thought which only you can provide, it is within your reach.

The Best Lyrics are Fresh, Short, & Repetitive

They are new twists on eternal truths.  There is a plentiful supply.

It is easiest to see this with a new venture.

Every new business must start with an idea. The 80/20 principle can help you arrive at it.

The progressive, useful, dynamic part of life consists of the amazingly productive, small minority of forces which produce nearly all the results.  That describes current reality.  But it also describes future reality, reality not yet unfolded.  The 80/20 principle is dynamic, leading to new results from new minorities of forces.

Lurking within any productive 20 percent, there is another 20 percent, and within that, another 20 percent.  And so ad infinitum.

This becomes most apparent over time.  Really fantastic improvements come in a time series, where the process of new value creation is repeated over and over, time and time again.  The transistor, the semiconductor, the microchip are brilliant examples – astounding results flow from a successful process, such as miniaturization and use of fewer and fewer inputs for greater and greater impact on the world, which can be replicated ceaselessly, and faster and faster, like evolution on acid.

Self-service is another case in point.  Supermarkets, filling up your car, mail order, ordering online, social media.  Eventually you become the product.  There are dangers with any innovation, but the problem is not generating momentum – it is stopping it having bad side effects.  There are always new ways to mobilize self-service, an idea that is a century old.

Nor is the trivial 80 percent of business and life without its virtue.  The trivial 80 percent may appear to be waste, but if we view the process as dynamic, each 80 percent is necessary, the quarry from which precious stones are mined. Without the trivial many, the vital few cannot emerge.

The trivial shall always be with ye.

Life is an experiment. Unless we go down blind alleys, we will never find the few alleys which are not blind.  We are stuck in a maze, the maze of wasted resources, wasted time, wasted emotion, wasted talent, wasted energy – and the 80/20 principle signposts the way out.

Natural Selection & Business Genes

Nature is wildly inefficient.  Some biologists suggest that for every species alive today, 99 have lived but become extinct – a 99/1 relationship.  Charles Darwin’s account of natural selection can be viewed as a description of how the 80/20 or 99/1 relationship can operate over time.  The trivial many – unsuccessful prototypes – die and give way to the vital few successful prototypes.  These then give birth to many variants, and the environment selects a vital few of these to survive … and give birth to many variants, in a never-ending chain.

The dynamic 80/20 process of natural selection over time is an apt way of viewing ideas.  Genes drive the reproductive system of natural selection. Genes are pure information – they are ideas; and ideas work like genes. Humans, like animals and plants, would be useless without the genes that drive us.  Similarly, ideas – what I call “business genes” – drive success in business.

Business genes are packets of beneficial economic information, ideas which are useful for business.  Success in life comes from good genes (and luck, intent, and adaptation to circumstances).  Individual creatures end up with good genes if they are the best available vehicles for those genes.  Likewise, success in business is much more likely from using great business ideas; and being the best available vehicle for those ideas in a specific market.

Business genes are useful ideas about which products and services to provide, to which customers, in what ways; about which suppliers and contractors to use and how to produce what is offered to customers; about how to deliver the product offerings; about how to find the right partners and employees, and inspire and coordinate them; about how to generate an economic surplus and a higher return on cash than had previously been possible; and about anything else – especially network effects – that define a successful business and give it potential to create new wealth.

Which business ideas are the vital few?

The trick is to identify the vital few ideas which can bring you success.  This has two sides.  One, you need great ideas which have proved themselves.  Two, you need ideas which fit what I call your “20% spike” – your power alley, the signature skill where you are exceptionally adept.

Great ideas always exist in a chain of successful ideas – they have many ancestors and many descendants.  The best place to look for your new business idea is in the small minority of ideas which have already proved themselves great winners – the vital few business genes.  Then experiment. Tweak the idea in many ways until you find the vital one variant which makes you most successful.

But great ideas will only stay with you, or avail you anything, if you are the best possible vehicle for them.  If you can’t take the ideas and make better use of them than anyone else, fortune will desert you.  Choose ideas that resonate with your most creative 20 percent, ideas that find their destiny in you and your team.

Finally, great ideas are only the start of the road to fortune.  The ability to execute the ideas better than any rival is also essential.  This may require a different kind of business gene – one concerned with the method of organizing the business to deliver a fantastic product or the lowest possible price.

But beyond the ideas, the business genes, there is also pure execution ability.  There is no real parallel to this in the rest of nature.  Execution ability may be hard to find, but it is easy to recognize through previous execution brilliance, and it is possible to buy it in.  The greatest idea in the world will founder if there is poor execution or if another team with a similar idea has better execution.  The person or team with the best idea, if they do not already have a distinguished track record in execution, must import the best possible executors of the idea.  The best ideas in the world deserve and require nothing less.