One hundred years ago, the businesses with the most capital (think factories, etc.) were the biggest and most valuable. Companies like U.S. Steel and American Sugar dominated the Dow Jones. Towards the last quarter of the 20th century, the economy changed to a "knowledge-based” economy. Employees, processes and intellectual capital, while not reflected on balance sheets, represented the majority of the value of most businesses. In fact, today fixed assets on a balance sheet are barely considered assets of value. The word "fixed" combined with assets bring up thoughts of stodginess and slowness.
Today, business is all about speed. The pace in which markets are changing and the speed with which a company must react is ever increasing. Customers want products and services faster, and in most cases, cheaper than ever before.
So how can companies compete these days? Here are a few ideas:
Don’t strive for perfection; that takes too long. Just be better at what you do than everyone else.
Be lean. Outsource as much as possible to reduce overhead as well as the need to eliminate positions that may become irrelevant as you streamline. Just as the capital-based economy evolved to a knowledge-based, we are now moving to an outsource economy. While the book can get a little redundant, Tim Ferris’s The 4-Hour Workweek describes this shift.
To come out on top of this evolving economy, we should be prepared to make quick decisions without all of the facts, and implement them. “Ready, aim, fire” is now “Ready, fire, aim, adjust.” The irony with this is that while most businesses were created because the founder saw an opportunity to outperform a more established company, small businesses often have trouble with change.
In a recent interview with NY Report, Alan Patricof, the grandfather of venture capital, said the main reason a business with potential ends up unsuccessful is that management "is so determined in their original concept that they don’t have the ability to improvise and to change their model to accommodate the realities of the marketplace."
If you are like me, you pretty much know what changes you need to make, but sometimes wait another day to implement them. If it helps, implement the changes one at time. Just make them quickly and start right now.
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