Business is an activity whose main objective is to make profit. Continuous accumulation is a built-in feature of all business organizations. However, it is not always easy to make profit, at least not today. In advanced industrial economies, almost all small startups fail. In the US, 95% of new small businesses fail within five years of origination. There are many factors that cause businesses to fail. Some of the exogenous factors affecting a business are difficult to foresee, while others can be anticipated and somewhat mitigated, assuming there is capable management with foresight at the helm!
From the outset we would like to declare that we do not fully subscribe to the preached conception of business (business schools, media, etc.) Business as an activity that is largely predictable (business plan), straightforward (sales forecast) and ultimately profitable (pro forma profit), is not a sound conception. We believe business is anything but predictable! Since many businesses are stuck with such outdated doctrines, they tend to spend precious time fiddling with their books to satisfy expectations (mostly by outsiders) about their performance, including revenues, profit, growth, etc. What is usually expected of businesses (by shareholders, banks, analysts or other stakeholders), tends to undermine the operational reality on the ground. There is hardly a business that doesn’t exaggerate and paint a bright picture about its future. In so doing however, these businesses end up employing all sorts of trickeries to substantiate their exaggerated claim. One would assume such unappetizing activities are more in tune with stale government bureaucracies rather than entities dynamically engaged in continuous value creation! Unfortunately the global reality is, corporations have become pretenders and not performers. We believe corporations have set themselves up for continuous failure and it is because of such misguided conception the global sheeple (human mass) is forced to bail them out ad infinitum! TBTF (Too Big To Fail) is now the motto for all corrupt and inefficient business organizations as well as their cronies in power/governments. See Korten’s article on page 28 and Meijer’s article on page 44.
Another major problem with business is; it tends to attract, rather disproportionately, psychopaths and sociopaths. These types crave for obnoxious attention, exaggerated entitlement, obsessive control and perennial manipulation. Unfortunately ordinary business is like a magnet to these born greedy. Enlightened self-interest is not something that comes readily to such accomplished crooks in business. See Aivazovsky’s article on page 45. Look at what is happening in the world of finance/banking today, the apex of all businesses, the supremo predator! Literally all the big/major banks in the world are insolvent and need the continuous injection of money (capital, etc.) from their sheeple (human mass) via all sorts of state institutions (central banks, etc.) Why? Because banksters became so selfish they forgot the very meaning of honesty and truthfulness, the very foundation of their business, at least as expounded by the banksters themselves! The world is now paying a dear price for their hubris by way of falling living standard in the OECD (reduced pension, increased taxes, etc. for example 37% of the Greeks now live below the European poverty line) and unsustainable economic arrangements in the peripheries! See the article on Mozambique on page 41.
It is helpful to divide business organizations into two broad categories. The first are businesses run by formally and rigidly established bureaucratic entities. These tend to be quite big! The second are enterprises run by entrepreneurs. In the case of the former the model is in close proximity with the hierarchical and stifling organizations of the state. Business schools teach this model as if it were the ultimate in business formation, without pointing the myriad shortcomings associated with these dying dinosaurs! If this conception of business were viable we would still have US Steel, Sears, GMC, (General Motor Corporation-government controlled), RBS (Royal Bank of Scotland-70% government owned) and many other corporations still operating as healthy private entities. The logic of the business dinosaurs is; since changing old ways might rock the boat risk taking is not prudent, hence should be avoided, thereby forfeiting the only fighting chance the business might have to survive the changing/future market. ‘Stick to your knitting’ might not be all that appropriate in the business world, always in dynamic flux! In the immortal words of the father of modern management: ‘The best way to predict the future is to create it.’ Peter Drucker. In many formally setup business organizations, as opposed to those created by entrepreneurship, corporate executives are, by and large, ‘empty suits’, fancy attire without much in the way of substance! Many just love the trapping and portray themselves as ‘hot shot’ executives, without really being one! Remember our old characterization of Africa’s parasitic elites as ‘belly thinkers’? Well, today we have a more sardonic version. See Heran’s article next column.
On the other hand, enterprises run by entrepreneurs tend to be agile, hence necessarily small, resourceful and often creative. These entities can see change from afar as they are not massively invested in old stuff and staff. They are usually in tune with the times and are willing to take advantage of gaps that might exist in the ever-changing markets. See Smith’s articles on page 41. Entrepreneurs are not always driven by the profit motive. Many have an innate drive to do something different. Steve Jobs remained an entrepreneur until the end. Many an entrepreneur considers escape or liberation from the ordained world of the status quo as the major challenge of life. Enlightened entrepreneurs tend to have a burning desire to be free, free from the old, from the established order. We admit, freedom in its absolute philosophical sense is absurd, but individual freedom (from the world of the ordinary) can be approximated if one can secure means as well as attain hard earned obscurity. Our short hand for freedom: Freedom = Anonymity + Means!
Here is the sentiment of one Ethiopian entrepreneur: “I’d rather lose money in trying to do something interesting than make plenty of it sitting idly,” Bekele Molla. Good Day!