9 Ways to Find Your Bliss in Business: Values, vision, & purpose in running a business

 

An Eighty Billion Dollar Secret Formula Revealed:  

           May, 1886:  John "Doc" Pemberton records his new  formula for the flavoring, and the syrup of "Coca-Cola."   Note the top entry, page 189:  3 drams F.E. Coca, or "Fluid Extract of Coca" = Cocaine.

 

1.  

Business vision:

        Business involves work.  A lot of work.  Often you're in the dark, with flickers of illumination to guide you. 

 

           "I see a worthwhile need to be met and I make trial after trial until it comes. What it boils down to is one per cent inspiration and ninety-nine per cent perspiration." -Thomas Edison, 1903

           Business involves that 99% of toil & perspiration, and 1% of inspiration & insight.   

           The nature of business is such that every entrepreneur and every manager requires insight to cope with industry competition, crisis, and change.  

           It can require insight to cope with challenge.  And, it requires insight to cope with opportunity.  Bill Gates coped with it.  Wayne Huizinga coped with it.  Steve Jobs coped with it.  Daniel Ludwig coped with it.  Armand Hammer coped with it.  Jeff Bezos coped with it.   Billionaires all.  Self-made.

 

2.  

Business Vision: 

           Business is fundamentally about generating wealth and sharing wealth.  Your partners grow as you grow.  

           "With this brewer's vat," said Dr. Johnson, perceiving the possibilities of launching a brewery, "we could become rich beyond the dreams of avarice."  

            You must nurture the key people whose investment -- whose belief -- whose sacrifice --- make possible the campaigns that generate prosperity.  "Only those who fight will conquer."  Only those who feel appreciated will fight.  

           At Hughes Tool, Cheung Kong, Federal Express, and Microsoft, founders amply compensated those actively present at the moment of creation.  Founders Howard Hughes, Li Ka-Shing, Fred Smith, and Bill Gates generously rewarded the loyalty of their key chiefs of staff.  

           1853: John Jacob Bausch sets up an optical goods shop in Rochester. When he needs more money to keep the business going, Bausch borrows $60 from his friend, Henry Lomb.  Bausch promises him that if the business grows, he will make Lomb a full partner. The business grows, they form a partnership, Bausch + Lomb is born.

           1886:  "Doc" Pemberton forms Pemberton Chemical with 3 partners.  It would give birth to Coca-Cola, Inc., with Asa Chandler buying the Coca-Cola formula and trademark. 

3.  

Business value:

Business is about creating value

& working to strengthen your brand value.

 

Three estimates of Coca-Cola's brand value:  

$79.2 Billion,  $78.4 Billion,  and  $34.2 Billion 

           What would those billions have been worth in 1886, when Coca-Cola was launched as the core product?  Or, five years later, when Asa Chandler launched "Doc" Pemberton's venture as Coca-Cola the corporation?  

           The net present value of today's Coca-Cola brand back in its start-up year was about  $6,000:  

 

yet,

           That's right, folks -- under Generally Accepted Accounting Practices, that fat $80 Billion dollar brand does not show up in its Annual Report --  not even under the catch-all, "goodwill".   It is invisible. . . 

           The rationale is this -- and notice the huge variations in quantifying Coca-Cola's brand value:  “That difficulty in assigning an accurate money value is the characteristic which distinguishes intangible assets.  This characteristic suggests that analysts should remove intangible assets entirely, and reduce net worth in direct proportion when analyzing financial statements.” –Donald E. Miller

            So business is about perceiving the value that's not written down.

           It's like what Rudolf Steiner -- founder of the Waldorf Schools -- said about perception.  He wrote that you can look at a seed and fail to see its capacity to grow-- if you only look with your eyes.  

           So you look with your mind.  You train perception through cognition.  With greater ability to think, comes a greater capacity to understand.  And with greater capacity to understand, comes greater insight.   Greater vision.   

 

4.

Business vision:

Business is about perceiving a seed idea's capacity to grow.   

           Let us say that you are playing five-card, draw poker. 

           The hands have been dealt.  You are about to discard, divest a card or two.  In your hand you see: 
-an Ace of Spades 
-a King of Spades 
-a Queen of Spades, and 
- a Jack of Spades.  .  .
          But you do Not (yet) have the Ten of Spades.  Your hand without the Ten is worthless.   It has no value.  Unless you add value.   Unless of course you add the Ten of Spades.  

            That Ten would give you the Royal Flush, in spades.  That would be worth all your bets, you would have everything.  

           It would be like Intel after it gambled everything -- harnessing technology to reinvent electronic circuitry.  Intel integrated its 8-bit chip.  It geared up for a whole new technology, instead of doing a Dumont or a Packard and resting on what was working.  Management planned strategically for a 16-bit future, and from fourth place disruptively targeted the leader, Motorola.  

           “There were three of us in the race,” recalls Bill Davidow, Intel’s marketing strategist.  “Motorola was going to be first, Zilog second, and Intel was headed for obscurity.  If we whipped Motorola, we would win.   We made our goal not simply regaining market share but restoring Intel’s preeminence.”

           Intel boldly put everything behind its chip, made the 8086 embedding 20,000 active transistors to make the 8086, to make history, to ride its industry's inflection point and to dominated the world market space. 

            In appraising a business, the point (relative to a victory like Intel's) is whether its assets have functional market value -- or productive asset value -- above and beyond the fixed value that "generally accepted accounting principles" might assign to them -- or even assign no value to such unmeasurable "intangible assets."  
           Which brings up a difference to how the traditional auditor and the entrepreneurial C.F.O value a branded asset.  

           What an auditor might see as "unmeasurable" the C.F.O. -- or shrewd investor -- might perceive as "immeasurable".   Not without measure -- but beyond measure.  Like the value of that Cocoa-Cola brand.

           The C.F.O. at an Apple or a Coca-Cola or a Procter & Gamble knows the brand value is everything.  And the auditor knows that as far as putting a value to "intangible assets" like brand -- according to U.S. accounting standards, there is no consistency of value.  And therefore, no value to be assigned.  In contrast, the C.F.O. values every active, productive corporate business asset -- such as a branded product -- whose market value changes as a function of the market strength of the company that owns it. 

           The value of a productive asset -- whether tangible or intangible, whether its book value or market value -- what I would call a functional value -- is a function of the health of the underlying business.  

           Because the value of a deployed, active asset is a function of the value of its target -- of the market value that has been captured to date by the brand, and that can be captured in the future competition for the market space.  

           (A steel-trap grasp of this idea -- valuing the brand as a weapon -- as a strategic-positioning unit -- is what fuels the corporate culture of an N.E.C. or a Citigroup, and drives business planning, development, and strategy.)   

5.  

Business value:  

Business is about transforming the hand you're dealt: 

               Business is about seeing the cards in your hand, and then playing your hand to maximize their greatest value.  

            You take a hand that is not even playable.  And then you play the odds and walk away with the pot.          

           Business is when you don't win the pot--- you take it.

 

 6.

 Business purpose:

            Business is about personal realization, achievement --here are six dozen examples.  it's a testament to entrepreneurship in every industry:  

•           It's Ford Motors, Firestone Tires, Fisher Body, Turner Broadcasting, DuPont Chemicals, Doheny Oil, Mellon Bank, Hughes Tool, Otto Orkin, McKinsey, Learjet, Parker Pens, and Hewlett Packard.  
•            It's Disney, Boeing, Olivetti, Eastman Kodak, Tata Steel, McCormick Reapers, Osborne Computers, Getty Oil, Tesoro Oil, Remington Arms, Smith & Wesson, Kaiser Aluminum, and Hilton Hotels.  
•            It's Forbes Magazine, Fred Meyer, Smucker's Preserves, Parke-Davis, S. C. Johnson, Li & Fung, A. S Watson, Albertson's, Price Waterhouse and Procter & Gamble.  
•            It's Coors Beer, Eckerd Pharmacy, Cadbury's Cocoa, Gucci, Ferragamo, Rockwell International, Fuqua Industries, Wal-Mart, Mars Chocolate, Hershey's Chocolate, Wrigley's Gum, Dell Computer, Sandoz, and Bausch + Lomb.  

•            It's Chanel, Nordstrom, Ralph Lauren, Eckerd Pharmacy, Merrill Lynch Coopers & Lybrand, the King Ranch, the Roney Plaza, Joske's, Buick, and Arturo's.
•             It's Harley Davidson, Garmin, Hasbro, Mattel, Harvard College, Leland Stanford University, Borden's Milk, and Berlusconi.
•            It's Macy*s, Jones Day, Skadden Arps, Boni & Liveright, Théatre Antoine, Estée Lauder, Enrico's, Pear's Soap, Consolidated Edison, Lamborghini, Westinghouse, Gillette Razors, Kellogg's, Consolidated Edison, and Maserati.     
•  The founder's name gives the brand its pedigree -- its cachet -- its promise -- its value.

           “All business enterprises are the creatures of human beings.  They are the objective forms whereby businesspeople carry out their purposes; they are the outward embodiment of the moral, social and economic ideas of those who manage them.  A business does not expand of itself; it expands as the result of the motives, passions, and hopes of the men who operate it… All motives for expansion arise out of the preconception that there is increased strength, excellence, or value in increased size." -Arthur Dewing, Professor of Corporate Finance and co-founder of the Harvard Business School

           "In the individual business enterprise, the world  -- as it records the standing of a business and the reputation of the manager who guides its destinies – measures the success of the business by increased size, and secondarily by increased profits.

           “And the bigger the business conquered, the bigger the man.  Business growth is the spirit of a modern Tamerlane seeking new markets to conquer.  Small enterprises become merely the pawns for human ambition in the game of business achievement.” 

 

 

7.  

Business Vision:

Business is a process of exchanges, with consequences.

 

            “The purpose of marketing,” writes Professor Christian Gr?nroos, “is to establish, maintain, and enhance long-term relationships with customers and other partners at a profit, so that the objectives of the parties involved are met.  This is achieved by a mutual exchange and fulfilllment of promises.”

           Especially in business-to-business marketing.  

           “Relationship benefits appear to be stronger correlated with the overall value measure than relationship sacrifices," writes marketing researcher Wolfgang Ulaga. "This result is consistent with past research indicating that industrial customers and their suppliers do not have an equivocal understanding of what value in relationships means.  For example, research on buyer supplier relationships in the automotive industry confirmed that manufacturers emphasize relationship benefits, whereas supplier mainly focus on relationship sacrifices.”  

           "Whereas General Motors uses more adversarial tactics to drive down costs," writes marketing professor Joseph Cannon, "Chrysler actively cooperates with suppliers to achieve similar goals."  

           And companies can redefine themselves and the services they provide.  I took a regional mall from 80% empty to 100% full by redefining it -- from being a passive commercial landlord collecting rents, to providing entrepreneurial business solutions.  I positioned the mall as the only lessor taking an active interest in its success of its tenants.  

           Companies like Cisco have redefined their businesses from being suppliers of network hardware, to becoming providers of value-added, networked-based solutions.  The benefit of that is:  

           The value you provide for branded services justifies higher prices and can provide robust revenues at a time when margins on increasingly commoditized, pure products (product offerings without services) are collapsing.

8.  

Business value:

Business is about capture --

--capturing what is already there, what the other guy has.  

           And now we come full circle:   capturing a rival's market is what truly gives a brand like Coca-Cola the power of its brand -- its brand value.  

The power of the brand is the value of the brand.  

           Writing of the Middle Ages, -- writing like a Viking -- while still active as land baron, general, ambassador and knight, Geoffrey of Villehardouin wrote about these new concentrations of wealth called cities, under his dominion in France -- and in Romania -- and in the Byzantine Empire:  

"Cities are for sacking."   

          Five centuries later, Defoe would have told him, to borrow from own mercantilist book, Captain Singleton,  that there is more money to be made in trading than in raiding --and, at less risk. 

           As in poker, so in business:  you don't win a pot, you take it.  

           That's your planning, that's your market positioning, your segmenting, your branding, and your strategy.  After all, what is planning but target-sequencing?

           So it is in contemporary commerce:  the object of targeting an objective is not to destroy it:  but to take it.  

           Objectives for a Hartz Mountain or for Microsoft's Internet Explorer might include the value destruction of a competitor (Netscape) -- but clearly not the destruction of the customers.  

           And the brand name helps the challenger to take customers, to acquire market share -- like territory on a battlefield, or a city to be taken.  Taken, absorbed, assimilated, like Turkey conquering Constantinople.  

           Or Getty Oil conquering Tidewater, RCA conquering Dumont, Chase conquering Washington Mutual, or Bridgestone absorbing Firestone like The Blob swallowing its prey--- assets, customers, factories, and name.  

 

 9.

Business vision:

Business is about staking a claim to the future:  

 

           With a Pepsi machine in every pavilion, under an exclusive agreement that pre-empts Cocoa-Cola, Pepsi absolutely dominates the World's Fair.  

           At the World's Fair:    Walt Disney partners with Pepsi the company, helps launch Mountain Dew the product, introduces "It's a Small World" the amusement ride, plans and develops EPCOT Center (it will be the world's largest construction project, and be inspired by the global nature of this Fair).   

           More importantly, Disney partners with a young UNESCO.  UNESCO was then a little-known UN agency, its focus then was championing the needs of children throughout the world.   Pepsi, UNESCO, and Disney shared an interest in that target group.

           As for children throughout the world -- all three-- UNESCO, Disney, and Pepsi -- had a vested interest in their welfare.  But I’d credit Pepsi's Sam Nattis for the idea of joining forces.  For the idea, and definitely for its execution.  PepsiCo went on to achieve competitive parity with Coca-Cola.  UNESCO, aided by the name-recognition that the Pepsi and Disney boost gave it --  saved the lives of twenty-two million children,  It continues to make a difference in the lives of hundreds of millions of children living in its 200 member countries.

 

           Value, vision, strategy -- and purpose.

 

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