Start Your Engines: The Last BBA Lecture (Part 2: The Core of Business)
In an interesting twist of the college schedule, I had the privilege of giving the BBA seniors in my capstone course their last-ever lecture in college. Knowing this, I decided to recap the most important things they learned in business school. (Part 1; Part 3)
Part 2: The Core of Business and The Silver Rule of Business
Once you are consistently getting done whatever you need to get done, and framing your problems in solvable ways, it’s time to step back and look at the fundamental core of business:
The core of business is exchanging value for value.
At its foundation, your company creates value, and people trade the value that they have for it. Ultimately, all value comes in the form of time, money, or energy. Whatever it is that your company does, it somehow enables people to have more time, more money, or more energy. This last can come in the form of less stress, stronger motivation, or better quality of life, all of which makes people’s finite time so much more worthwhile to them. The way in which you enable people to have more time, money, or energy (i.e., the value you provide/create) is your value proposition, and this is what people will pay you for doing/making.
Remember, though, that every transaction you make — every act of creation, every interaction — has a cost associated with it, be it time, money, or energy, and that both you and the consumer must factor these transaction costs into the exchange of values. One of the tricks to business is reducing as many of these transaction costs as possible, and the ability to do so can convey a tremendous competitive advantage.
As to competitive advantage, remember that the foundation of competitive advantage lies in the uniqueness of the value you create. You must, in some way, create value as time/money/energy in a combination that is different from that of any other company. When two companies have identical value propositions, only one will survive. You need to find a sustainable way to execute your unique value proposition, such that you do not consume (in the short term or long!) more value than you produce. In this endeavor, constant improvement and innovation are the only ways to remain competitive, because almost anything you can do can be copied and improved upon in some way, and thus the very existence of your business is an invitation for others to try trumping your offering. Thus, after remembering the Golden Rules of Business (Do unto others as you would have them do unto you; Whoever has the gold makes the rules), design your strategy in accordance with the Silver Rule of Business:
Put yourself out of business (and into a better one) before your competitors do.