Tuesday, 13 November 2012

A better way to do business.

I'm going to apologize ahead of time if this sounds sales-y.  All I can do is speak from experience, and my experience comes from where I work.

Ever get those moments of transcendence?  Where you stand back and realize that something very ordinary and day-to-day that you take for granted is actually really amazing?  I often get those when I say bedtime prayers with my son, and I realize that we are SO blessed to happen to be born into one of the most comfortable, prosperous places on the face of the earth.  We didn't choose to be born here.  We found ourselves here, and as a result, we have the opportunity to live one of the most comfortable existences in the HISTORY of HUMANKIND.  Unbelievable.

On a slightly less cosmic scale, I'd like to share something really unique that I'm a part of.  I just call it my job, but I happen to be part of a completely new way to do business.  A better way, I daresay.

Anybody remember that documentary, The Corporation?  Where they talk about how North American law gives Corporations the same rights as humans, but none of the responsibilities?  And as a result, corporations act like sociopaths, but cannot be penalized or imprisoned?  Who is a business accountable to?  Shareholders.  And shareholders tend to be pretty brash.  Like, if you have a bad quarter, they dump your stock and buy Apple.  Or just Apple products, depending on what your stock was worth.  This results in corporations sacrificing tomorrow to turn a profit today.  It's like drinking coffee instead of getting enough sleep.  It works for a bit, but in the end, it's damaging.

It makes me think of carpet and paint.  Because everything makes me think of carpet and paint.  But also because of these 2 stories:

Imagine a company that makes a LOT of paint.  Like 100,000 gallons a year.  They start by making a pretty high quality product.  And they charge as much for it as people are willing to pay.  But out of that budget, they have to pay for a big sales staff, a TON of marketing, a complicated distribution system, and a corporate jet.  And because they're already charging as much as they can, what do they do to make a little more money?  Cut costs.  And how tempting is it to squeeze the quality of your product?  I mean, half a cent per gallon isn't much.  When you multiply it by 100,000 gallons it adds up, but the paint quality doesn't suffer that much, does it?  Well, no.  Not the first time.  But that's a dangerous game.

What if a company decided to turn that whole thing on its head?  Instead of going big, they went small, and their philosophy was to put the BEST ingredients in the paint, regardless of cost.  Then they killed the sales force and the distribution chains, and the 100,000 gallons of inventory.  Well, not literally KILLED the sales force.  Just never hired them.  Then, they let companies buy into a management group, and they get to market and sell the paint themselves.  Now, instead of 80% of the money going into the business and 20% going into the actual paint, those numbers flip, and almost all the money the company makes goes into putting the best ingredients into the paint.  Big paint companies could never TOUCH that - too much overhead.  People are only willing to pay so much for a can of paint, and they have to mark it up to pay for their bulky organization.  Suddenly, the fact that it's a small paint company becomes this company's biggest strength. And they're in paint heaven, because they get to use all the geeky cutting edge paint technology everyone else says is too expensive!  Read more about this company here.

Okay.  Now imagine this story:  Imagine if the shareholders in a corporation weren't traders and gamblers.  Imagine if they had more skin in the game than just a few bucks in stock.  Imagine, say, that the corporation was a flooring retail organization.  And imagine that the shareholders were all owners of family-owned flooring stores throughout the world.  Now, if the president of that organization had a suggestion that would cost the business money in the short term, but in 5-10 years would put it in a much better position, do you think the shareholders would be a little more receptive to the loss?  That they wouldn't dump and run?  No way!  They'll get behind it and see it through.  Because they've got a lot more invested in that result.  They're not worried about the opportunity cost they're sacrificing by keeping their money there, because they've built the business with their own hands - it's directly related to their ability to succeed in business.  They're ALL IN.

Here's a model that makes the whole system a lot less parasitic.  Decisions are made with longer term vision, and the end result will benefit the customer, the supply chain, and the industry.  I think a lot of people would agree that the system is broken.  A lot of people don't realize that there are already successful alternative models out there.

Zoomed in, you might not be able to tell that we do things any different than the next guys, but this is a whole new way of doing business.  And every once in a while, I zoom out to 5000 feet, and realize how lucky I am to be involved in something so unique.

So that's one of many reasons I still look forward to work almost every morning, after over 7 years on the job.  There's a lot to get behind here.  You should check it out.


  1. Nice Dan:) I just had to write a book review of The Corporation and now I wish I hadn't handed it in yet:(

  2. Thanks Karen. Hot dang - it would've been awesome if you had cited me in a paper! But I think you need a degree for that. They're very snooty about that sort of thing.