What COVID Told us About Business

 

Even though the economy and nature have had a symbiotic relationship throughout human history; and business markets and cities have had a symbiotic relationship for 12,000 years; how we see business today is more of a function of our cultural orientation to the ideas of business.

The cultural rationale of our business – the reasoning and logic we use to drive action – is shaped by the evolution of our culture, which is a function of our understanding of the business world. Education, training, and experience are three big contributors to culture. From our education we understand “why” business works. From our training we understand “how” business works. From our experience we understand “when” business works.

The COVID-19 pandemic exposed the cracks in our thinking and the decay in our 12,000 old ecosystems. As business owners and managers, how we treat our customers and our employees during the pandemic was a direct reflection of our cultural rationale – thus the ultimate tell of how we perceive the purpose of business.

Those with more of a community mindset see the purpose of business as a community service. With their cultural rationale they quickly adapted and evolved to safely fulfill the purpose of serving the community and thus continued to thrive. Those with more of an investment mindset see the purpose of business as a vehicle for the extraction and accumulation of economic wealth continued to put customers and employees at risk.

The Great Jigsaw Puzzle - Society

The road to understanding is like the layers of an onion. Each layer we add is based on the content of the previous layer.

We all start out as infants, but we are not the same. At birth, we are uniquely configured individuals, not different.

Therefore - we are not comparable. We are born with the ability to feel, we are not born with judgment. From birth, we learn through our common senses, but judgment is not something that is self-taught. We are raised to judge based on differences that don't exist.

75% of the people born to this planet have a natural gift of perception focused on the "depth" of reality - but not the breadth. Their perspective is like a snapshot with a narrow window, and layers of detail.

The other 25% of the people have the gift of perception focused on the breadth, but not the depth. They see the high-level arc of reality. They can connect the past to the present and project the future.

There are cultural bridges that connect the two sides - religion and science.

The bridge of religion once explained the mysteries of life in terms of magic and then by miracles. It has evolved with the bridge of science, which seeks to transform mysteries of the unknown into understanding the known.

Because we are so unique as individuals, not two people share the same exact perspective on religion or science. On one bridge we are asked to trust the interpretation of an individual preacher; on the other bridge, we are asked to trust the findings of individual scientists. Even if we think we agree, we discover we don’t when we discuss it in depth. Thus, the world is highly fragmented.

Nature designed us to complement, not replicate each other. We evolved to collaborate, not compete. Those who feel they are better than others have lost their way. Divided we are myopic, blinded by our unique perspective of reality. Together we connect our perspectives and see the bigger, richer picture. That is why a civilization divided onto itself will always fall. We cannot respect the uniqueness of individuals because we don’t see it when we only see them as different.

Noah May Have Built an Ark, But Moses Built an Economic Arc

For many who look to the possibilities of the future, the Star Trek economy is the ultimate stage of economic development. A time when humans built a space age version of the Garden of Eden. Unlimited energy and automation provide capacity and capability for limitless production – and money again is no longer needed, and the fulfillment of needs is as simple as asking.

I can’t help but think the connection to Moses and the book of Genesis and the story of the Garden of Eden is extremely important. It represents a time when the technology of nature produced all that was needed for a human community to survive and thrive on the planet. The Garden of Eden is the symbolic description of the first livable economy. Which could indicate the ultimate livable economy has been between 2 and 4 million years in the making. Its evolutionary stages are driven by technology – the sum of knowledge, experience, techniques, skills, methods, and processes used in the production of goods or services or in the accomplishment of objectives.

For this blog I have borrowed from an organization known as the Partners for Livable Communities the definition of “livability” and modified it slightly. Livability is defined as the relative sum of the factors that add up to a community’s quality of life—including the built and natural environments, economic prosperity, social stability and equity, educational opportunity, and cultural, entertainment and recreation possibilities.

The first livable economy evolves when the efforts of our ancestor’s population fulfilled what Dr. Maslow called physiological needs of the population – these are biological requirements for human survival, such as air, food, drink, shelter, clothing, warmth, sex, sleep. The economy is a symbiotic part of the community. Fulfillment of the physiological needs means a community will grow. Fail to fulfill the needs and the community fails to survive.

This first liable economy was also a caloric economy, long before markets, money, wages, and wealth. A time when the value of effort is equal to the value of fulfillment. A time when a day’s effort harvested a wage that paid for everything needed to live for a day. The average cost of food, clothing, and shelter.

There is an important distinction the Partners for Livable Communities makes in their principles of livability. A Livable Economy is molecular – or local and cultivated organically. Because it is the efforts of the population fulfilling the needs of the population it adapts to the environment and conditions of the population.

When an economy is functioning normally, the efforts of the population easily fulfill the needs of the population. Common cause variability in the efforts or needs of the economy tend to be random and exists within the processes of the economy. However, special cause variability tends to be the result of influences outside the process. Over time, four ideas are gradually introduced into our thinking about economics – markets, money, slavery, and wealth. These become the factors that ultimately lead to the technology that forms the Star Trek economy.

Markets of course are core to the formation of larger collective societies, like towns and cities. The diversity of markets eventually fuels the need for trade between markets. Money represents ways to capture, store and transport value. Slavery includes the ownership of humans and the intentional manipulation of wages known as economic slavery. The invention of wages creates a way to form two separate markets, one for the value of effort and one for the value of fulfillment. By separating effort and fulfillment, the arbitrage of wages is possible and economic slavery and be used to accumulate wealth.

To counter, labor organizes and strikes for livable wages. Capital then invests in technology to eliminate labor. Without the efforts of labor spending in the market, the economic variation of expansion and contraction increases. Economic swings become longer and deeper – until the need for markets, money, slavery, and wealth are eliminated with the artificial intelligence and nano technology of the Star Trek economy.

Small Business and 12,000 Years of Lessons Learned 

Successful business owners make running a business look so easy. Make no mistake, no one was ever born with expert business skills. Success is a science, learned by mastering its formulas and the constructs of its many systemic relationships. Until recently, it was thought there was only one business science.

Attempting to fuel economic growth, government has been easing requirements for starting businesses and increasing access to resources. The result has been surprising as the small business economy keeps shrinking. Research discovered that small businesses are not struggling to start, they are struggling to survive, after they start.

To understand the cause, we needed to answer the question – why after 12,000 years of evolution of economic evolution were local businesses now struggling. Little did anyone realize that the development systems that evolved with business markets and organized the apprenticeships that educated and developed business owners had slowly vanished.

With the emergence of what we call “big” business in the 1860’s, there was also a new science with new formulas. Old “smaller” business was a local economic entity that evolved around processes mastery, skilled labor, and economies of scope. The new “bigger” business, was a regional and then national economic entity, growing from smaller local business, was evolving around process factoring, arbitraged labor and economies of scale.

From the very beginning, the paths of the two business economies were divergent. Following the development of business schools 150 years ago, the system for developing business talent, once comprised of craft guilds, merchant guilds and chambers of commerce, was completely disrupted. Today, with more than 400 business schools in the United States, the average annual cost of a business education $20,000. Unfortunately, local business owners are rarely able to take the time get a two-year degree, let alone spend four years to become experts in the science and formulas of big business before launching their entrepreneurial endeavor.

So, it is not surprising that data from the U.S. Bureau of Labor Statistics, indicates 20 percent of small businesses fail within their first year. By the end of their fifth year, roughly 50 percent of small businesses fail. After 10 years, the survival rate drops to approximately 35 percent and after 20 years only 20 percent of the original businesses remain.

Survey after survey of failed business owners list lots of reasons for their failures, in depth research indicates that 90 percent of business failures were due to the owners’ lack of knowledge, skill, and experience.

Business owners that were re-exploring and re-discovering on the job, the principles and practices of business success, burned through their capital before they learned the formulas and mastered the science of success. In other words, they don’t know what they don’t know.

In support of this findings, independent research by the United States Small Business Development Center concludes that 90 percent of small businesses getting assistance from an established source of expertise were still in business after five years.

We can turn around the failure rate. Because small business success is more about working smarter, not harder, the completion of a fundamentals of business program must be central to permissions granted to operating a business. It must include information the business owners and managers need to understand their rights, authority, responsibility, and accountability to the public, before the business is licensed to experiment on an unsuspecting public.

Because such a program will advance the health, fitness and resilience of businesses and the economy, it should be developed in collaboration with those resource providers who will benefit from working with more informed business owners and managers. The successful completion must demonstrate understanding and be recognized by public and private institutions on state and local level.