Thursday, September 11, 2008

Checking the Surf

If you are starting a small business today, you’ve never been in more danger of drowning and going under. Unless, you are a little bit scared, slightly paranoid, and place a much higher priority on survival as opposed to success.

Here is why.

It has been well-documented that about 80% of small businesses don’t survive their first two years of operation. They crash and burn for entirely predictable reasons, most of which Michael Gerber reveals in his smashingly remarkable best-seller “The E-Myth Revisited”. (See, Sept. 4, 2008 posting: Re-Visiting, Re-Gifting)

What has not been documented to this point is how that 80% figure has been climbing since the year 2000. I have yet to uncover any quantifiable research to support that, however, first-hand observations from the foxholes of small business tell me the world has become a much different place for entrepreneurs, as compared to the late 90’s.

I mention that late 90’s because, that’s when my business begin its first shaky steps along the bumpy, winding, path to success. And, as I shared with a group of would-be entrepreneurs the other day, I believe it was a lot easier to get an infant company up and walking back then.

Back in the days before the World Went Flat.

Since the year 2000, the Industrial Revolution and the companies and thinking that emerged from it, has been rapidly steamrolled and flattened by the 21st century Digital Economy. Pulitzer Prize winner, Thomas Friedman contends in "The World is Flat", that traditional hierarchies and rules that governed the way we lived for centuries have been "flattened" forever by technology; leveling the playing field not just for countries and corporations, but for individuals. Friedman also makes a compelling case that the year 2000 represented a “perfect storm” of change with a Triple Convergence of a new platform (called the Internet), new work-flow processes that allowed for horizontal collaboration (which is why you can download your boarding pass at home) and about three billion new players (China, India etc.) entering the global marketplace, almost overnight, to compete and collaborate as never before.

Here is a short story Friedman shares to illustrate the point.

What does this "flat world" mean when it comes to starting a small business?

Let’s begin with the fact that business owners and shareholders are largely indifferent about where profits come from or where employment is created but still want sustainable companies. Which means a job now needs to be justified every day in terms of its value creation because in more and more cases, the job goes to the best, smartest, fastest or cheapest – no matter where they reside. You can’t afford to keep your head down as your new or existing business requires less automation and more ideation.

Prior to the year 2000, I'm of the opinion that owning a small business was a lot like playing checkers. Patterns were predictable. There were few surprises. You enjoyed a stable playing field with time to think and plan. You could actually see your opponent as both of you employed a limited number of options/tactics while operating in a confined, defined space. And in the late ‘90’s and the decades before, the world was a slower, more forgiving place with higher numbers of trusting and patient customers.

But since 2000, and especially over the last 36 months, owning a small business has become similar to riding a surfboard. The currents are unpredictable patterns with surprises and sudden shifts by the nano-second. The constantly shifting playing field demands you think quickly, on your feet with little time to plan. There are many options when it comes to the equipment you want to use, who you buy it from and where you want to use them. And all of this happens in an ocean of unlimited space with unknown threats, and less trusting, hurried customers.

Checker player or surfer? Which one are you?

More importantly, what do you need to be?

It has been my experience that people starting companies rely far too much on habitual beliefs and conventional wisdom based on outdated, Industrial Revolution concepts, rendering their vision obsolete, even before opening day. Sadly, even when timeless truths are revealed about business in a new, flat world, most owners cling desperately to their checkerboards, hoping and praying the riptides of globally-influenced change from the Hang Ten crowd won’t wash over them. Avid surfers know that swell is generated when wind blows consistently over a large area of open water. Why would anyone expect the Sea of Commerce to react any differently to this tsunami of change?

It’s a new brand wave out there.

Is it time you traded in one board for another?

"In surfing, coming to terms with death -- or at least the possibility -- is an ongoing crisis in big waves. The set is building outside, and it's so beautiful, aesthetically. People are watching in awe from the beach: the blue water, the stiff offshore winds, the 40-foot walls charging in from the open ocean. If you're out there with nothing but your body, your wits and a surfboard, that set can be your coffin” BRUCE JENKINS, North Shore Chronicles

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