“In all affairs, it’s a healthy thing now and then to hang a question mark on the things you have long taken for granted.”— Bertrand Russell, The Problems of Philosophy
Business is one of the most complex and multidisciplinary areas of human experience, and trying to understand how businesses work can be remarkably intimidating, even though they surround us every day.
Businesses are so much a part of daily life that it’s easy to take the business world for granted. Day after day, businesses deliver what we want swiftly, efficiently, and with remarkably little fuss. Look around: almost every material good you’re surrounded by right now was created and delivered to you by some sort of business.
Every successful business
Take away any of these things—value creation, customer demand, transactions, value delivery, or profit sufficiency—and you have something other than a business. Each factor is both essential and universal.
When I deconstructed each of those factors, I found additional universal requirements.
None of these functions is rocket science, but they’re always necessary, no matter who you are or what business you’re in. Do them well, and your business thrives. Do them poorly, and you won’t be in business very long.
Every business fundamentally relies on two additional factors: people and systems. Every business is created by people and survives by benefiting other people in some way.
To understand how businesses work, you must have a firm understanding of how people tend to think and behave—how humans make decisions, act on those decisions, and communicate with others.
Recent advances in psychology and neuroscience are revealing why people do the things they do, as well as how to improve our own behavior and work more effectively with others.
Systems, on the other hand, are the invisible structures that hold every business together. At the core, every business is a collection of processes that can be reliably repeated to produce a particular result.
By understanding the essentials of how complex systems work, it’s possible to find ways to improve existing systems, whether you’re dealing with a marketing campaign or an automotive assembly line.
I have spent several years testing these principles with my clients and readers. Understanding and applying these “business mental models” has helped me start new businesses, and in several cases go through the entire product development process (from idea to first sale) in a shorter period than previously understood.
These concepts are important because they work. Not only can you be able to create more value for others and improve your own financial situation, you can find it noticeably easier to achieve what you set out to do—and you’ll have more fun along the way.
The entire Business section on this blog will be based on these principals, keep walking with me