The Irrefutable Law of Decision Making

When we go to business school, we were trained to think rationally, using the full set of analytical skills and subject knowledge that we have been taught. Whilst it is not possible for us to be taught solutions to every possible business problem, the broad-based curriculum of most business schools prepares graduates to make informed decisions based on available data and possibilities. As a result of such education, many of us function methodically, and to a certain extent – logically.

Yet, when you start looking at some of the greatest inventions in the world, and some of the smartest business decisions in history, very often you will find that these flout the established ‘logic’ and ‘truth’ of the day. In fact, some of the greatest businesses of all times were built against what was then common sense, and defied conventional wisdom.

THE BEST BUSINESS WISDOM IS NOT EVEN WISE

When Steve Jobs re-joined Apple as its CEO after a stint outside the company, one of his first initiative was an odd looking all-in-one PC called the iMac – bucking the trend for ‘clones’ and customisation at that time. The result? The iMac became one of the best selling PCs of all time, and Apple today continues to lead the PC industry.

Similarly, when Genting founder Lim Goh Tong proposed to build a resort in a mountain far from the city, his closest friends thought he has gone crazy, and bankers stayed away from what they thought was an illogical, completely emotional decision. We know better now.

Employees and suppliers thought Ingvar Kamprad was not thinking straight, when one day he declared that IKEA furniture will be flat-packed and customers will have to assemble it themselves! Defied conventional logic, they sure did!

Sometimes, the wisest thing to do is not even wise at all. As entrepreneurs, we need to balance our entrepreneurial instinct with what we know to be logical. Once in a while, we need to act irrationally, defy logic, and let our instinct take charge.

TOO MANY CHEFS KILL THE BROTH

Like this famous proverb, sometimes, too much education kills our entrepreneurial instinct. I’ve known many great business people, some with close to zero formal education, and many with letters piling up behind their names. With few exceptions, I find that the more education one has, the longer and more thorough the person tends to think things through.

I’ve seen MBAs that put out spreadsheets and charts just to arrive at the same decisions they would have without the spreadsheets and charts. Don’t get me wrong – I’m all for informed decision and measurability. But very often, in business, speed is the essence. And if you are going to get your CFO to crunch the numbers to arrive at a decision that you know you need to take anyway, you may have lost not just time, but precious opportunity.

Another case in point is this publication. While our team works towards ensuring we’ve the best articles, the best layout and the best strategy in place before each issue, our less thorough competitors are taking advantage by making empty promises with the hope of delivering them later. Not surprisingly, they achieve some short term success at our expense. Would I do it differently? I don’t know. But what I do know is that the better educated one tends to be, the less risk one is willing to take. Professional and academic pride kicks in, clouding one’s judgement and allowing one to hesitate a moment too long.

Just compare the street-fighting style of Richard Branson, Steve Jobs and Donald Trump, and you will understand the secrets behind their success. Despite the huge conglomerate that they head, they remain entrepreneurs through and through. Not surprisingly, their competition, headed by paid CEOs, may have better management, featured more often in ‘Best Place to Work’ lists, and are loved by investors and analysts alike. Yet, our street fighter trio continue to kick asses again and again. Unlike Trump who actually finished school, Branson and Jobs never did. And all of us know another genius of our time who never completed school – who now work full time giving away his money.

Again, don’t get me wrong. I am not against education. People like Lee Iacocca, whom I admire, was an excellent scholar. What I am advocating is a need for us, entrepreneurs, to realise that sometimes, we need to stop analysing and follow our instinct. Our intrinsic need to worry and our self-doubt rob us off precious time. If all of us are to do things the way they are meant to be, the world will truly come to a stop.

The irrefutable law of decision making, dear readers – is to just do it!

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This article appeared in the December 2009 edition of SME Magazine . Get a copy of the SME Magazine at your nearest bookstore!

Shortcuts to Success

In the age of Quad Core and Mach 3 travel, no one seems to have the patience for anything nowadays. A person in front of us in a queue is one too many. The same kiasu-ness is now so ingrained among entreprneeurs and businessmen, that we are constantly looking for shortcuts and other ‘lubangs’ to success.

Some will argue that success in business is about finding the fastest way to your objectives. I would agree if in so doing, we do not neglect our integrity and ethics. However, many of us tend to forgo the very principles we are brought up with, in favour of shortcuts to success. Expediency rules.

A few examples come to mind. One is our tendency to now ‘buy’ talents rather than groom them internally. Some would say that’s smart management. After all, aren’t clubs in Premier League known to pay millions for top players? Again, I would agree, if job hopping among senior executives is not as prevalent as it is today and by so doing we are not starting a talent-pinching war among ourselves. Some of us are blind to the fact that not all sweet-talking MBAs are any good or have any loyalty to you or your business. And certainly, few of these people stay long enough to do good for your business.

The sad truth is, few businessmen would have any qualms about pinching their competitors staff, if that means they would learn their competitors secrets and steal their clients. Again, that’s good business to some.

Another phenomenon that has hit many SMEs is the eagerness to raise fund rapidly to expand their business and hopefully make it big in a short time. Words like ‘mezzanine financing’, ‘investors’ prospectus’, ‘IPO’ and ‘exit strategy’ are being brandished even by mom-and-pop operations. Some of these companies seems to have lost all interest in taking care of the basics of business: developing good quality products and services, building relationship with supplier, staff and clients, and earning money the traditional way. Perhaps the lessons of Lehmann Brothers have not sinked in for many of us. Many of us are still caught up with the dotcom tagline: if you have an idea, money will start pouring in.

I don’t discourage businesses raising fund from whatever sources for whatever reasons. But it is good business sense to realise that businesses cannot be built on air. Many of the dotcom wonders that you read about have also gone through hardwork and setbacks like you and I. And business news are so full of unchecked facts nowadays, you should not allow yourself to be swayed by news of a competitor hitting it big through some investment from some mysterious funders. The truth is, money don’t grow on trees. And businesses don’t just grow on their own. If you thought labouring for your business is futile; well, it’s at least a notch better than day dreaming.

This brings us to another shortcut many are resorting to. I call it the ‘sugardaddy phenomenon’ (or ‘sugarparent’, to be gender sensitive). The government call it SME assistance program. Again, I would say go for it as it means free money in many cases. But if you are going to be building a business on the back of government handouts and nothing else, you will be steering an empty ship to nowhere. Real businesses are built on solid ideas and real products and services. There’s really no shortcut to success.

The lowest form of ‘shortcut’ to success must be those among us who bribe our way through. Some of us would be tempted to offer inducement to get that one lucrative project. After all, some grease between palms make some people easier on the cheque, and shorter on the memory. But consider the long term costs of such business experdiency. Many of the truly successful people I know are men of true integrity. Hard to believe, but it is true. Integrity and ethics do make good business sense.

Rich Kids, Poor Kids
I have nothing against direct selling. But before you are convinced by an eager sponsor hoping to pin you somewhere among his downlines, make sure you understand what you are getting yourself into. Like any business, it’s 99% effort and 1% luck. 99.9% of everyone who joins a direct selling business fails. And that’s a higher failure rate than conventional business. So YES, direct sales can be a route to success and financial independence, but NO it is not shortcut to success either.

Some of us are born with a silver spoon. Nothing to be ashamed of. In fact, capitalize on it. But again, that is no short cut to success. Your daddy and mommy can only help so much, the rest is still up to you. One of the inmutable laws of success in business is this: value creation. If you are not creating value with what you do, if you are a consumer of idea and products rather than creator of value, then you will never meet success.

I am going to tell you the real shortcut to success. It is one fact that the world’s three richest men: Warren Buffett, William Gates and Carlos Helu Slim, agree upon. It is called hardwork.

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I wrote this for SME Magazine October issue. If you haven't got your copy of SME Magazine, get one today!

SME 2nd Anniversary Gala

I would like to thank all friends, supporters and government officials who joined us at Shangri-La Hotel Kuala Lumpur for our 2nd Anniversary Gala.

Your support has given the entire SME team the inspiration and stamina to continue working hard to delivering a magazine that represents you and your aspirations.

Thank you for sharing with us this beautiful two years and we hope to have you with us for years to come.

May god bless you.

Long Tail or Tall Tale?

There’s so much talks about the ‘long tail strategy’ of late that if you are like me, you would start wondering – does it work? Well, I tell you upfront that I am never a fan of ‘theories’. Theories are for academics, not entrepreneurs. And ‘The Long Tail’, to me, is nothing more than a theory.

A bit of backgrounder is in order here. Chris Anderson, editor of Wired magazine, made a huge splash with The Long Tail, which was first published by the magazine in 2004 and then as a book in 2006. In a nutshell, the long tail theory says that the abundance and ease of choice on the Internet has shifted sales potential from a small number of mainstream "hits" (at the front of the demand curve) toward a near-endless number of lesser-known choices at the tail (hence a ‘long’ tail).

Furthermore, because retail economics restrict stores to carrying only the best-selling products, items that are new in the market and have either lost their appeal or were never popular in the mainstream are pushed out - along with their sunk costs. But then come the Internet, with its infinite "shelf space", making every product discoverable and ready to be purchased. The book has become something of a holy document in the Internet community where companies ("from Amazon to iTunes," says Anderson on his website) want to find a way to sell old songs, movies, videos, ringtones, on-demand books and television shows from their infinite Web warehouses. Case studies flew up everywhere. Locally, we even have pseudo-experts claiming they are now experts on long tails and making all kinds of business consultations to companies.

The new ‘Blue Ocean Strategy’?
Personally, I thought it is a little bit of an oversell. Or rather, I thought the concept vastly overdramatized the effect of a small minority of "committed seekers" dedicated enough to something (comic books, copies of this magazine signed by me, etc...) to search for and purchase what the majority generally do not want. For the sake of democracy and capitalism, I sure like hell hope they are right.

However, when I looked around, in fact, it seemed that the rest of us were doing quite the opposite. The New York Times' Most Blogged, Most Emailed and Most Searched lists. Alexa’s ratings. Top TV Shows, Top Music, Top Movies on iTunes. Amazon.com's Sales Rank, and its Bestsellers list (updated hourly). Even my local DVD pirate has got a list of ‘must watch’ with him. The Internet appeared to be herding users more aggressively toward blockbusters, NOT away from them. So what long tail are we talking about?

Want some proof that the long tail is nothing more than long tale? There's a professor at Harvard Business School who has researched the long tail. Based on sales data for online video rentals and songs, Professor Anita Elberse verifies what I think: not only do hits continue to be just as important online as they are offline, but the Web is actually amplifying demands for hits.

Elberse also discusses what she and others view as an incorrect subjective assumption that Anderson made when building the long tail, which is the idea that people want to go their own way. They don't want to listen, watch or read what everyone else does, and would rather search along the Internet-superhighway for that piece of individuality. Who is he kidding? Elberse cites additional research showing how intensely social people really are: how we like sharing experiences with others and that the mere fact that others like something makes us like it even more. Just go to your Facebook account for a case study in experience sharing.

And Elberse and I are not alone. Neil Howe, who probably coined the term ‘Millennials’, draws a broad distinction between Gen X and this new influential group - the generation driving the most development and change on the Web. Among other things, while Boomers and Gen X "individuated," born-in-the-80s Millennials gravitate toward the social: chat rooms, instant messaging, Facebook. They enjoy being with each other, forming friendships and shared preferences. Rather than acting independently, Millennials who spend time customizing content on the Web do so for the purpose of sharing it with others (hence the YouTube phenomenon). The need to be accepted and conforming is never stronger than with the millennials.

Howe says it is and will be "the most connected generation in world history," and that their preferences will only solidify the popularity of mainstream, popular brands and products. Finally, Elberse and The Wall Street Journal's Lee Gomes also believe that the Internet community unconsciously may have wanted to back the theory because it flattered its citizenry. Long tail strength would fortify the value of new digital assets created outside the walls of institutional, cultural power. And bloggers are cool, say the Long Tail worshippers, because the long tail promises an audience for just about any goofy comment out there.

This is all probably true, but it's a little too much of a bullshit for me to buy.

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Read more of the same by William Ng in this month's SME Magazine!

Live on Radio! Malaysia in Recession or Not?

I'm going live on Radio 24 on Monday, 2 February 2009 from 12 noon to 1 pm with host Anita Pandian.

Among the things I will be sharing are tips on overcoming the current tight economic situation and how SMEs in Malaysia (and the region) can take immediate actiohttp://www.blogger.com/img/blank.gifns to mitigate the risks to our businesses.

Will also discuss unemployment among youths as that seem to be a topic Radio 24 says readers want to hear. Hmmm. Sure.

Those in Klang Valley, tune in to 93.9, and those outside, visit www.radio24.com.my for streaming audio.

How Not to Scr*w Up Your Business

All businesses have a life cycle. They are created, grow, mature and unfortunately in some cases fail and disappear.

You would have heard of the oft-quoted truth of businesses - 90% fail in the first year. And less than 1% survive beyond the life of the founder.

For the 10% of you who survived the first year, you have my congratulations. The next step really is what this posting is about - how NOT to scr*w up your business.

Many entrepreneurs have a habit of experimenting. That's good in many cases, but can also lead to highly undesirable results. If your business have survived its first year, chances are, you have done something right. It is going to survive a little longer, if you DO NOT end up scr*wing it up now.

I can't tell you how to scr*w-proof your business. But generally, leaving the good bits alone will do the trick.

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For more on how NOT to scr*w up your business, get a copy of SME Magazine February edition.