A Different Approach To
In economics, when we speak about resources, we really mean "a means of
any kind". In a business, resources can be categorized as
Entrepreneurial, Proprietary and Operating.
You need to know and understand and use this
Perhaps the most important point to make about resources is that they
are not valued by how much they cost but in how they are deployed. That
speaks to their use in business as a means to combine into a potentially
higher value product or service. The sum of the whole exceeds the
exchange value of its parts when combined into some strategic
Each category has common characteristics.
are inherent in the individual and should be the focus of development on
the part of anyone thinking about going into business. They include:
Time and effort
Proprietary Resources give a business their competitive edge and can be
developed or purchased. They include:
Strategies and methods
Operating resources are generally available in the open market
and have to effectively manage via traditional measurements and means
such as budgets. It is where cash flow is king and insolvency is where
there is none or little of it.
Operating resources reflect, as Peter Drucker said, what your business
looks like. For that reason, they will not be addressed in this article.
That leaves us the creative blocks where, as Ray Tilley
said, there are about a dozen ways of doing things and only 4 of them
It makes sense because creatively, opportunity and vision intersect and interact with
entrepreneurial and proprietary resources and some strategy is formed
around a value proposition. This mixture manifests in some way of doing
Opportunity and Vision
Without opportunity and some kind of vision to capitalize on it, there
can be no business. Typically, someone has an idea they believe can make
them money. Most often, the idea is based on an insight gleaned from
some kind of experience or exposure to a customer's needs. But before it
actually becomes a business, a lot of questions must be asked and
answered to ensure there truly is a customer and market, and that the
idea can transition into opportunity and vision and a viable business
Time and effort
This is basic economic output of all individuals. Time multiplied by
effort equals output. It is in fact work. Ideas are a dime a dozen.
Execution is often where many people fail, either because they simply do
not execute or they apply their time and effort incorrectly.
Output is very much dependant on what the time and effort is used for.
Unskilled labour sells time and effort and not much else. Skilled labour
provide their capabilities and experience to enhance the value of their
output. Entrepreneurs use their time and effort organizing those who
sell them their time, effort and skills.
Many successful entrepreneurs also understand that time and effort is
finite so they might as well use it to drive the largest possible
vision. It is the same equation banks use when they say that large loans
and small loans consume similar amounts of time so it is more profitable
to concentrate on large loans.
Essentially, entrepreneurs must learn to make the best use of their time
and effort. They must learn to manage their time, to delegate out tasks
where feasible, and to roll up their sleeves and pitch in whenever and
wherever they are required.
The time\effort requirement is also a major limiting factor in starting
a business. Most people not in business for themselves must somehow
sustain their lives with monies earned working for others, meaning
selling their time and effort making someone else's vision happen. This
means that before someone can start a business, they need sufficient
money to invest in the business and live while the business generates
insufficient cash flow to meet both business and personal needs.
For many, this is a difficult if not impossible barrier to cross, yet, a
way must be found. For most people, a combination of a part time job, or
part time devotion to the new business, a working spouse, reduced
spending and expectations, and creative start up financing is the
Entrepreneurs have some core skills and expertise which they use to
create a business, but they also need "business" skills to successfully
operate one. These include:
- communication skills (speaking\listening\reading\writing)
-problem solving skills (computation\calculation scientific
reasoning\critical thinking, task organization)
-supervisory\leadership and motivational skills
-planning and organizational skills
-knowledge\information research skills
-time management skills
Any focus on entrepreneurial self improvement must therefore focus on
developing the above sets of skills. You should continually acquire
knowledge from relevant, effective data sources, observing, analyzing
and properly describing the new things you encounter.
You must also build topically relevant, practical libraries, and use
various sources to confirm data and eliminate bias. Actively think
about\imagine\process\understand the latest relevant information, and
put new skills into practice immediately. Actually experience and learn
how to use new skills effectively.
Entrepreneurs typically obtain new information and specialized skills
from the following sources: they buy expertise; they build information,
technical, and support networks from among mentors, capable advisors,
business associates; they read relevant, informative and imaginative
books and publications; join trade association, attend trade fairs,
seminars; they build a book\magazine\clipping library of useful
information consisting of important, practical, useful things to know
about their various areas of need and interest.
Ingenuity is all about cleverness and creative, original thinking. It is
about problem solving.
Generally speaking, original, creative thinking and solutions spring
from exposure to people and exposure to something new and fresh that
sparks the imagination. If this inspiration can be distilled down to a
process, that probably looks something like this:
-engage others and get their input and viewpoints
-define and articulate what you are looking at
-ask questions related to purpose, structure, composition,
evaluations, explanations, origins
-tie the new into what is already familiar and see if it fits into
-stand back from details periodically to try and grasp the bigger
-play with metaphors, similes, relations etc
-envision and model future states and scenarios
Bottom line is that ingenuity is really only recognized after the fact
and its exact source and path into being differs. The broad arena in
which it happens is via observation and discussions with smart, engaged
people asking insightful questions.
Capabilities refer to the ability to achieve specific outcomes using
inherent skills, tools, methods and resources. Much is based on
experience in education and learning the craft commonly used to achieve
the specific outcome.
Strategic information is information relevant to your business.
It includes developments within your industry and market, technological
trends, legal, political and economic developments, demographic shifts,
changes in materials and processes, and almost anything that has the
potential to change how and what you do. Strategic information also
includes information about your customers. Who they are, what they want,
how and why they buy, how they prefer to pay etc.
Typically, you have to keep your eyes and ears open. You must create
networks of people and organizations that keep abreast of state of the
art developments, read trade publications, attend trade shows, join
trade associations and keep up to date on current events in the news.
Travel is also a good source of information about developments and
methods that can influence the way you operate.
The Internet is another
great search tool and it is useful to organize useful links and maintain
libraries of downloaded materials you can sort through and
synthesize and learn from. A lot of what is new is based on ideas that
break down barriers and boundaries and bridge others, allowing them to
offer up something in a new way.
Several years ago I developed the following Activity Output Equation as
part of a presentation.
-ideas equal nothing
-add directed time plus effort equals work
-add knowledge and information equals planning
-add know how, skills, motivation equals execution
-add experience and reputation equals success
Ideas in themselves mean nothing. Everyone has ideas. Time and effort is
simply a measure of work or output. Add knowledge and information, and
you add the capacity to plan. Add know how, skills and motivation, and
you will design realistic, appropriate plans and act on them. Add
experience and reputation, and you are almost guaranteed to succeed.
In fact, experience and reputation can take a bad idea further than a
good idea driven by inexperienced leaders who lack credibility. This, at
least in my mind, is a self evident truth. It is reputation and
experience that gets branded and if done successfully, reputation and
experience, and the associated brand, creates a proprietary resource and
a formidable competitive edge.
Simply look at Canadian Tire, VISA, Heinz, and a host of market leaders
to see just how true this is. In fact many successful brands are
decades, some hundreds of years old and continue to consistently capture
a significant market share.
Now the following line you've heard and read many times, in fact, so
much that you are probably desensitized to it, so read it as if you have
never read it before, and take it as gospel, a primary reason for your
existence, and a focal point for significant time and effort.
Here it is. To gain reputation, and become a credible alternative or
solution, you must consistently deliver quality and service at a
competitive price, and always be there when the consumer is ready to
This is a simple concept but complex in application. Just what does
quality and service mean to your customers, and what is a competitive
price? Does quality include packaging, materials, look and feel, long
lasting, your facilities? Is service "now", in a reasonable time, the
ability to exchange purchases, guarantees, after sale service? Is the
price comparable to similar items, complementary items, can you charge a
premium for your extras? And when and how is the customer normally ready
Your best approach is to ask the right questions, and see how successful
companies do what you are trying to achieve, and talk to your customers,
employees, suppliers, and advisors to understand their opinions as to
what constitutes quality, service and price.
Once you decide on how
you want to look to your customer, consistently deliver it and
constantly work it and constantly think about how it might be done
The last thing, which the urgently creative would put first, is the
appropriate brand name and image.
How you look and how your customer experiences your product or service
is dependent on your raison d'etre. What exactly do you do that allows
you to compete, and what can you do that other's cannot do?
Most entrepreneurs tend to choose their own trade names and brands, not
wanting to spend their startup resources to hire expensive talent to
develop and research alternatives. They are either inspired by a name
and design, or do a methodical search of magazines and other
publications and borrow from others. For example, the advertising
industry has journals and periodicals that contain examples of award
winning and cutting edge advertising. Another source currently widely
used is clip art software. Many of these packages include royalty free
images while others have restrictions which come with reasonable terms.
The key is to create and support a reputable product or service, and
devise a memorable name, image and design that supports the qualities
and perceptions about your product or service you are trying to
Everyone knows experience is the best teacher. Experience develops
know how, which is real power. The phrase "knowledge is power", has been
attributed to several people actually but is overblown. Knowledge is
Power is the ability to influence reality, that is, events, which are
described by circumstance, time and place.
Know how is the engine of achievement, it is the art, the craft, of
getting things done. It transforms knowledge, which is intangible, into
Experience in or with an industry or market is a prerequisite to getting
into a related business. You must have a working knowledge of how things
are normally done before you can successfully compete. In fact,
management experience is one of the key elements investors, bankers and
suppliers look for before they will provide monies to a business.
Experience is key. Get it. Enough said.
Legal rights include agreements, patents, copyrights, trade marks,
and industrial designs. In each case, you obtain legal, sole ownership
of something that no one else can duplicate.
For example, you might have a protected territory in which you alone
can distribute a product or service, or hold a patent or patent license.
Both are powerful tools to protect your market.
Agreements are negotiated contracts, while patents, trade marks and
industrial designs are generally filed and registered with the
Canadian Intellectual Property Office (CIPO) to obtain prima facie
evidence of ownership. Note though it is up to you to police and
discover any infringement.
Generally speaking, simply informing the infringing party of your
ownership and providing them with the registration details will be
sufficient to stop someone from using your property, but things can also
get messy if they continue and you seek damages.
Note each class of legal rights are subtly different.
Copyright, for example, is automatic and conferred upon the creator of a
work. As soon as I finish this article its copyright belongs to me. I
might have a publishing arrangement whereby I assign my right in return
for payment. If it was music, the rights get more complex in that there
are songwriters, lyric writers and publishers. There are performance
rights, and there are "platform" rights for streaming, radio, movies
Given the complexities of intellectual properties and legal agreements,
you definitely want to use the services of experienced legal counsel.
Having said that, there are things you could do for yourself and CIPO is
on line and has lots of guidance.
Many years ago I read an article in Reader’s Digest that concluded
everyone is five or six people removed from knowing any one particular
person in this world. This statement, later popularized as "six degrees
of separation", is based on a mathematical relationship. The assumption
is that everyone knows an average of 50 people, and the fact that you
know someone, who knows someone, who knows someone...etc. Of course it
is simply number play, in this case 50 times 50 times 50 times 50 times
50 times 50 (15,625,000,000). Make some adjustments, for example, I know
you, you know me is duplication, and this number roughly equals the
world's current population.
The usefulness of this concept is to understand that you can reach
anyone in this world if you give some thought about the intermediaries.
The implied strategy is to target the person or type of person you want
to meet, and chart a course towards them through those who you believe
will know them, or know someone who knows them...
Networks are essential to business people because they deliver
information, influence and support. Networks include your circle of
friends, fraternal and service organizations, trade associations,
recreational clubs etc., and each network usually has some members who
are potentially useful to you.
Networks of people and organizations are like parts of a wheel. Everyone
is at the hub of their own network, with spokes radiating out to a
"wheel" of contacts. At the same time they are at the end of someone
else's spoke, which has a wheel and a hub attached.
This concept is important to grasp for a number of reasons. One is that
you should target people or organizations with spokes leading to where
you want to go. To do otherwise may lead you to an interesting person or
maybe a pleasant lunch, but with respect to your objective, its a waste
Ensure the hub you target, whether it is a person or organization, has
the necessary characteristics and contacts you require. Assess their
reputation and demonstrated network, its historic method of operation,
and its historic success in delivering either the contact you need or
In dealing with formally organized infrastructures, like larger
organizations and corporations, it is useful to understand its
structure, that is positions and their related responsibilities. This is
because the position is generally more important than the person. People
who fill positions have powers that emanate from the responsibilities
they discharge. And they eventually move on. So deal only with those
people\positions have the power to grant or help you attain your
The second reason the hub spoke concept is important useful is that you
can locate the hub by finding the wheel. In other words, you find a
network by defining its type and, through close examination, you can
find at least one key individual who has close ties to all individuals
in the network. This allows you to build a very effective network using
only a few key "hubs" to act as your window into target groups. The
point is that not only do you work more efficiently, with fewer people,
but your relationship with the hub gives you credibility with the wheel,
ie., you are part of the network by virtue of your relationship with a
The key in all this is to network strategically.
Identify and target those individuals who can help you accomplish your
goals, become aware of the environment in which they operate, and look
for ways to establish working relationships with those who can help you.
Find groups that interest you and would be of interest to your targets.
Work with membership lists and find your likely prospects, and arrange
to meet them.
Once you've established the target, there are techniques to establish
relationships, build credibility and gain access to further networks.
Start by establishing your objectives. One generally networks for
information, influence, achieving common goals, among other interests.
Target those you believe have what you want or need. Start by listening
and exploring common ground, and establishing your mutual interests.
Understand and communicate your strengths and what you bring to the
process. Know there is a time for socializing and a time for business.
Do things together. Do things for others such as trading information and
giving help. Bring people together.
The general idea is to establish your credibility and to plant seeds for
future collaboration by making no promise you can't deliver and to
perform well in everything you undertake. Build a reputation for
integrity and trustworthiness, and work hard to make common goals a
Once you have established credibility, you can ask for influence and
referrals. By building credibility and a successful track record, people
become attracted to you, or at least, when you take the initiative in
making contact and they investigate your background (and they will!),
you have a sound reputation to build your new relationship on. A final
word. Remember the 80\20 rule. Find the 20% of your network that
delivers 80% of the result, and actively work with them. The rest should
be kept informed but not take up too much time and effort.
Strategies and methods
Strategies are general plans that support the achievement of goals with
the means or resources you have available. Management is about making
decisions how to get to where you want to go. It involves very practical
questions. How and when does who do what to make "x" happen?.
For example, marketing is about how you inform your market about
why\where\how customers should buy what from you. Distribution is about
how you get it into their hands at the lowest cost
Where the "x" is a relatively minor objective or task, generally
speaking not much thought goes into the planning and delegation process
and simple follow up is anticipated. Was "x" done?
But the "x" could be a very complicated goal with significant dollar
exposure if things go wrong.
Faced with such a significant investment and commitment, a more
sophisticated approach is warranted. As a first step, you should
probably ask the following questions:
What is the question or objective?
Why is it necessary?
Is it achievable and how?
Who will be involved in achieving the objective?
What practical and realistic alternatives exist that will achieve the
Is it the simplest way to go?
The first two questions are dictated by circumstance, typically a major
decision such as purchasing new equipment, adding or dropping product
lines, adding capacity or some other major change or commitment.
The third and fourth question address the methods and assembles the
participants. Who is affected? Who has the required expertise? Who can
successfully steer this project through to its conclusion on time and on
The fifth question is answered after doing some practical thinking about
how to get to where you want to go with what you have available.
Once you have settled on a handful of possible methods, assess these
alternatives on the following basis:
How much money and what other resources are required to implement each
alternative and when is what required?
How exactly must each alternative be implemented?
Which alternative is simplest?
How long does it take before your investment is recovered under each
What is the relative risk of each approach?
What are the physical, financial, organizational and personnel impacts
What are the strengths and weaknesses of each approach?
What impact might economic, industry and competitive factors have on
If the project comprises more than one phase, what are the principal
characteristics and requirements of the various stages to completion?
Once you have gone through this process of comparing the alternative
solutions, it should be quite easy to choose the best available
Strategies are resources in themselves. The above model is a fairly
generic approach to developing a strategy, but many common business
strategies exist. The need for successful strategies is why business
books are so popular. Books are an excellent way of disseminating
strategy, and many consultants have become wealthy writing about good,
bad, and even recycled strategies. As with everything, caveat emptor is
Care must be taken not to be fooled into adopting strategies just
because books about it are in vogue. Re engineering was an example of a
recycled strategy and a fad which may have done more harm than good.
Successful companies have always looked at their processes and sought
ways to improve them.
Back in the late 1940's , General Electric pioneered Value Engineering
which asked three basic questions. What does it (product, process etc)
do? How much does it cost? How else can it be done? Almost fifty years
later, a snazzy new name, several books, and proper timing (companies
were looking at ways to become more competitive), and Re Engineering was
In itself the examination of processes is a good idea, but many
companies simply downsized without proper thought.
The best approach to judging any new\emerging strategy is probably to
discuss it with several trusted, experienced business advisors before
going ahead, and certainly to test the validity within your operation
before widely adopting any strategy with potential to significantly
impact what you do and how you do it.
And in doing so, remember resource cost money but are valued in how they
are deployed. That means they can be worth a lot, or not much at all. In
the latter case, it's where red ink comes from.
© 2015 John B Voorpostel CPA, CA, CMB