Insightful Stuff that Peter Drucker said:

* Management is doing things right; leadership is doing the right things.
* There is nothing so useless as doing efficiently that which should not be done at all.
* A manager's task is to make the strengths of people effective and their weakness irrelevant--and that applies fully as much to the manager's boss as it applies to the manager's subordinates.
* Management is so much more than exercising rank and privilege, ... it is much more than "making deals." Management affects people and their lives.
* Rank does not confer privilege or give power. It imposes responsibility.
* Executives owe it to the organization and to their fellow workers not to tolerate nonperforming individuals in important jobs.
* Most of what we call management consists of making it difficult for people to get their work done.
* The most efficient way to produce anything is to bring together under one management as many as possible of the activities needed to turn out the product.
* Increasingly, politics is not about "who gets what, when, how" but about values, each of them considered to be absolute. Politics is about "the right to life"...It is about the environment. It is about gaining equality for groups alleged to be oppressed...None of these issues is economic. All are fundamentally moral.
* What's absolutely unforgivable is the financial benefit top management people get for laying off people. There is no excuse for it. No justification. This is morally and socially unforgivable, and we will pay a heavy price for it.
* Unless commitment is made, there are only promises and hopes... but no plans.
* The best way to predict the future is to create it.

Buying "Australian Made" is irrational.

I believe and deliver the following argument to anyone who is interested; however, it is not mine. The Economist published an article on this subject in the 90’s which had me sold back then. I am amazed that people still lean on the shaky notion of patriotic buying habits. I refer to the article, but have long since lost the actual document, I can’t refer you to it.

Before I continue, you should note that I am making my argument under the following assumptions:

1. The belief that real growth in our economy via an increased GDP is a good thing.
2. That a surplus budget, low interest rates and low unemployment etc are all good things.
3. I assume that competition in the marketplace is a good thing that results in a wealthy Australia.
4. The above in turn means more money available per capita into our economy and that will breed new services, innovation and products in response to cheaper imports or new offerings.
5. I assume that the above then means more taxes for our government which means better services, safety nets, education and public goods.

Ok, so my assertion is as follows:
Rather than buying Australian, when you are faced with a choice, you simply buy the best product (for your needs) for the best price (you can find).
Example:
If you had to buy a fridge, and had the choice of two identical fridges, one made here, and the other made in say in China, and the one from China was $100 less, then I say you should buy the Chinese one. Paying $100 more for the Aussie product helps no one. Not Australia, not your community and especially not you and your dependents.

Here is my rationale:

Lets say I owned the fridge business. I make the fridges here in Oz for $700 and can sell them competitively for $1000. For the argument, let’s assume that the $300 is what I make as the owner after all my costs, including labour are incurred. With that $300, (assume no personal tax in this hypothetical, to keep things simple), I can spend on living, food, cars, holidays whatever.

It is important to also understand that what I spend on my life, particularly as discretionary sense (ie; other than the necessities) has a multiplier effect. Feel free to look it up, but a simple example is:
I spend $50 getting my lawn mowed, the gardener pockets the $50 (I have what I want in the fresh cut grass), he’s left with $40 after costs and spends it on say a hair cut from his neighbour. The neighbour is left with $30 after costs and on it goes. Of course the costs are going to other businesses, and then there is a multiplier effect with them, including if he saves it, given the bank then lends it for investment and earns money on it. Anyway you get the idea, a dollar is more than just a dollar. Let’s assume for this argument that the multiplier effect here is 100. So my $300 take home profit is actually $30,000 for the economy.

Ok, so now I find out that I can make the very same fridges in China for $200. I change my business, sack my staff (in line with obligations under whatever law is in place) and now I get $800 per fridge not $300. Of course that means a greater multiplier effect of $80,000 which is more money for investment, and a better standard of living for me and my family.
What about the poor worker I hear you say… what is he or she doing?
Well I ask you this. What did you type your last letter on? A typewriter or a computer with software? What about the poor typewriter maker from 30 years ago? What about them? Shouldn’t you all be reading this on typed paper?

I feel for people who lose their jobs because the role becomes redundant but that is why we have safety nets and support to get re-engaged in the employment market. I know it’s not always a fairy tale ending but we are collectively better off. Their kids will be better off, with better education and other services in their life. Of course, this type of activity pushes the bounds of innovation, so I may be able to make my fridges here for $150 using robots or whatever, which would mean taking risks and maybe entering new markets and hiring new skills or retraining my staff.

This is a macro argument, but I think that that is what government programs are there fore. Saftey nets when the economic system loses someone through the cracks.

My personal view is that paying more for poorer quality products just because it’s got an Aussie flag on it is ludicrous.

If we all focus on looking after the best interests of our selves and families, then the benefits will come around via better economics.

Some caveats:

Fully costed – If the Chinese factory is secretly using child labour or spilling industrial waste in the river it is playing without fully realising its costs and or not fully informing the market of the social and environmental costs. You may find that if the Chinese factory fully costed its fridge business, then the Australian company would be competitive. In that case, I say buy the Aussie product.
Also, if the market knew that kids were being used and industrial waste was not being disposed off appropriately, then the demand for those particular fridges may plummet in Australia.

If the market is fully informed, and the costs have been fully realised, then on a apples for apples, or fridge for fridge situation, go for the best price and quality every time.

Finally, we launched Pitch Club! Here's what happened.

Ideas are amazing things.

Something happens and ‘pow’, you get it! Or it just emerges over a period of time. I’m talking about that awesome idea, product or venture that keeps creeping back into your head begging for something to be done with it. But what?

As mentioned above, there are many ideas spawned across the planet. The assumption is that the ones that don’t make it were just not developed enough, or as the MBA’s say, ‘feasible’.

Some of these idea originators visit an accountant, lawyer and maybe a friend, which is little more than an exercise in getting ‘buy-in’ from people who you believe ‘know about these things’. The truth is that few accountants and lawyers are equipped to provide any real guidance with respect to ventures. On the positive side, this is an activity that has the makings of an evaluation of sorts.

My experience is that people, generally, don’t have access to frameworks to evaluate their idea so they can actually make decisions on going forward, changing tack or stopping altogether.

They assume they just don’t have the money and time, but again, my experience is that this is generally not the case.

How can one decide they don’t have the money and the time, if they don’t know how much they need with any certainty.

Using the metaphor of climbing a mountain, you need to know the mountain exists (validate your assumption), know how to get to it (road map), equip yourself for the journey (tools, skills) and, if possible, take someone with you who can act as a guide,..not a leader,.. the leader?

That’s you!

There is an old, slightly crass saying in business circles, “Ideas are like assholes, everybody has them”.

It’s a fact that many people bump into ideas they think are business opportunities consistently. Studies show that about 6% of the working population have business ideas every year. Not including newly industrialised economies like China, that means that just between Australia, Canada, USA and the UK (about 410 million people), that about 10 million ideas a year, over 28,000 per day or 1 idea every 2 seconds.

Many of these ideas never see the light of day of course, but for the ones that are pursued there is a pretty consistent statistic. Of any 100 that viable or even practical; 90 will never get started, seven will fail, two will be the walking wounded and one will be a major success.

With those types of statistics, you wonder why anyone would even bother. Personally, in my experience, there is a euphoria that is like discovering a new land or underground treasures when one sees a new business opportunity then set out to make it happen. It is like the excitement I felt as a kid when, along with my two ‘investigator’ buddies Bill and Tom, we set out to discover the mysteries of our little suburb in Richmond . It’s an adventure, and the fact that we don’t know how it will go makes it all the more exciting.

Since then I have been a serial entrepreneur or what my wife calls a ‘Glitter Bunny’.

While I am content, my track record to an independent observer in terms of monetary windfalls would show both highs and lows. More recently, as a consequence of marriage and fatherhood, I have put some elements in place to shield my personal life from these highs and lows, but for me it’s about the adventure. The money is second to the freedom it gives me to live an exciting and fulfilling life where a simple idea over a coffee one day, becomes an asset on someone’s personal balance sheet a year later.

So, if you are young and want to make money safely and securely, I give this advice to you: sit quietly in the corporate work place, save 50% of all your money and invest wisely. Keep your outgoing expenses below $1000 per month and once you have $300,000 of funds under management in shares or property, you should be out of the rat race. You can then suntan to your hearts content, but for me that would be a less than ideal existence.

(originally written in 2005)

I was recently awarded a Masters of Entrepreneurship and Innovation. It took me 3.5 years to study for and culminated in the normal pomp and ceremony of any academic achievement, namely a bunch of academic professors, etc., parading on stage in their respective regalia, a few mumbled words, pictures, hugs and a great looking A3 certificate naming yours truly as a pretty smart guy.

In the rattle and hum on the way to the city the next morning, I was overcome by a thought which I duly checked with a fellow MEI. If I graduated with a PhD in Astrophysics, or Mechanical Engineering, or any other discipline except say an Arts degree (sorry), I suggest I would truly have graduated. Perhaps I am wrong. Even the Arts degree is something the graduate can point to as something of merit.

I personally however, and I suspect a number of my fellow classmates, undertook the course because we sought the skills and tools to identify, evaluate and execute commercial opportunities that result in new and appropriate levels of wealth for ourselves and our families.

This somewhat stoical view comes from a degree of maturity and stands beside other worthy personal endeavours like the pursuit of health and well being, spiritual well being and, of course, the pursuit of knowledge and experience in things that ring my bell.

The school delivered reasonably well in the skills and tools department, but if I was a surgeon now and you the reader needed an appendectomy, you should be concerned.

A true entrepreneurial graduate, in my mind from my school (AGSE), Babson in the USA or wherever you went, is someone who took the learnings and applied them and put money in the bank.

Deal/Venture 1 is very important because it anoints you from the sidelines or the bench onto the playing field. In fact, you kicked a goal and chances are you’ll kick another.

Adding another layer of complexity is my situation (not unusual) where having recently and quite unexpectedly disappeared from the state of a 34 year old where life was a game laced with all sorts of the usual joys (loves, travel, excesses, half cocked business ventures), to the state of a 40 year old in the blink of an eye with two mortgages, a wife, a 22 month old and one on the way, and a new need to include ‘normality’ in my life so we can sleep at night.

To truly graduate as an entrepreneur of even the most basic merit, I need to deliver an outcome that ratifies my degree. Inside two years from graduation, I need, nay must, harvest a venture that kills my not so insignificant mortgage while maintaining enough income to prevent my wife from abandoning what may be been a bad choice in husband five years ago.

At this point I’ll quote my daughter … a gorgeous human being with insight of the whole universe … “Daddy, tick, tock, tick tock …”

I’ve been reading a bit about Solopreneures. Here's the bill of rights for Solopreneur, I like it but something is missing. Sites talk about them like Solopreneur Zone however, the spin is that we are talking about a freelance consultant/contractor rather than a Solopreneur per se. So what are they, these creatures they refer to as Solopreneures.

For me, the Solopreneur is managing a portfolio of entrepreneurial risks. The primary one is his/her own abilities to generate income as a contractor or consultant in whatever field of endeavor they choose, of course, I accept that, we all have to feed ourselves (and families). They can do this direct with the market or through a series of relationships. They can bill time and materials or take a retainer.

They are however, also managing startup business/social ventures that, particularly in the 'online' space or new technology environment, that are highly speculative, that need little or no cash investment. They have a few going at any one time, the more the better.

The point is that in a highly regulated commercial environment like Australia, purist views of the entrepreneur's are a fiction in my opinion. Sure there are savvy business entrepreneur's out there, but VERY few investors (groups or individuals) are interested in backing the plethora of entrepreneurial ventures in the Australian market. The culture here is totally not interested in supporting new ideas regardless of how many programs the Government rolls out.

Furthermore, few Entrep's have the time, money and contacts to deal with the VC's in Australia, and its also the case that Aussie VC's don't really care for startups.

The Solopreneur by definition is the startup king/queen. A leper to the established business community, until the het a gold vein... then, they have many friends.

For me the Solopreneur is the true freedom fighter in a very new new world. They say to the Investor/VC, "look mate, I'll go it alone, you catch up when ever". They say to the Job Market, "I'll deal with it,... down shift, whatever is necessary to be free of having to stick my hand out like the modern day white collar slave".

I wrote a few years ago about the reality of big companies stifling competition. At the time I sited “Napster Patents and the Law” as the obvious example. The recent article in The Age, “Patently Absurd”, Richard Stallman, echoes my sentiments.

Some key points I have come across:

1.The movie industry that spawned in LA in the early 1900’s did so as a response to the patent Thomas Edison had in the New York area. Irony is, of course, that they are the ones now howling the loudest.

2.2004 study of Linux Kernel of the GNU/Linux OS found that it infringed on 283 different software patents.

Interestingly technologies that were never patented that delivered enormous benefit to our planet:

1. The railway track.
2. The novel (book).
3. TCP/IP (internet protocols).
4. The Printing press.

There are many more!

Big firms engaged in the provision of services or intangible products (programs) know that the balance sheet is an illusion at best. The real and only asset they have is the willingness of their people to continue to collaborate, spawn ideas and new products/services.

I’m not suggesting a conspiracy BUT businesses foundations are firmly based on its ability to manage risk. Business does not like uncertainty. In financial terms, businesses use hedging strategies to protect themselves.

What follows (and I quote Mr John Warkentin) “they circle the wagons tighter and tighter”; this is not a strategy, it’s a knee jerk reaction.

I also suggest that courts are not exactly on board either with respect to what is necessary for innovation to prosper in our community. As described in this month’s “Economist” (July 2-8, P133), patent copyright protection laws have been amended from 28 years to 95 (Mickey Mouse ©) and I quote, “It makes no sense. Copyright was originally intended to encourage publication by granting publishers a temporary monopoly on works so they could earn on their investment ….” He goes on to say that, “due to distribution of works being much cheaper ….. publishing should therefore need fewer, not more property rights to protect their investment. Technology has tipped the balance in favour of the public domain”.

Absolutely right on!

This is an excellent article, and helpful for any entrepreneur.

Pete

Two things irk me in business life, one is people who when asked how’s business going? Always reply “very busy”, like that’s a good thing.

In business many of us push the boundaries of what is achievable in a day. It’s a natural thing particularly if you are driving a new or fast growing business. In many cases, being busy is worn like a badge of honour. I suggest that if one is always (and consistently) busy (too busy to do anything else), it says more about their inabilities rather than their abilities. If the business is growing, then I propose two scenario’s, controlled growth or out of control growth.

If it’s out of control, then chances are our land as hard as you took off, and that your abilities had little to do with any imagined or real success. A hard landing may actually be deemed a crash, from which you don’t walk away.. the other one is that you ride the demand rollercoaster until you retire or die from a heart attack.

I, sadly, take some pleasure in responding to the above question sometimes in the following manner: “ yea,.. good.. did bugger all this week,…. “ …really? They respond.. ”well.. yea, its all very automated (its not really, but I’m working on it), so aside from drink too much coffee and write the occasional blog, not much else to do…of course anyone can work hard in their business, problem is most of them are slaves to it and venture have a moment to do anything else”..

All (well most) businesses that are growing face resourcing problems (ie people to do the work) and of course cash access problems. It’s normal. Working harder does nothing but make you stressed, it doesn’t fix the problem. Smart, strategic and well thought out action does.

I have never heard anyone say.. “phew,.. thank God I killed myself those three years.. now I can enjoy this business working without my contribution”.
So next time someone asks how business is going, just say..”good thanks,.. I’m bored shitless and don’t know what to do with all the extra cash I have”….

Now here is an interesting survey. What about entrepreneurs? Coffee connoisseurs?

What does it say about our society where the (legal) drug dealers and administers of said drugs are considered the most ethical. As for the poli’s, I’m sure I didn’t need a survey to tell me,… certainly I think the real estate agents got a few percentage points extra for no real reason.

I would love to see a perception v's reality study... what level of ethics do they have against some type of objective framework...

Peter