How Dumb is Your Business?

How dumb is your business? At the risk of drawing the ire of corporate elitists, I submit to you that the dumber your business is, the better off you are. The truth is that great companies are those which can thrive and prosper in the absence of sophistication. As odd as it sounds, businesses that are not dependant on smart talent, capital, or technology can scale faster and easier than those businesses burdened with the aforementioned dependencies. In today’s post, I’ll share why I believe dumb is the new smart…

The simple truth of the matter is that if your business requires smart money (which equals expensive money), or your competitive advantage is tied to a superhero key employee, or your business is built around maintaining a technology advantage, you have more weakness in your business model than you do strengths.

Let’s drill down on the talent argument a bit deeper. I’m not suggesting for a moment that you don’t want to hire tier-one talent. However, I am clearly stating that you don’t want to be dependant upon tier-one talent. Talent is clearly a plus as long as it is a value add and not a business requirement. If your company’s long-term business plan requires the acquisition or retention of the uber employee then your business not only has a risk management issue, but it is likely not scalable. If your company can’t be operated by mere mortals, you need to reexamine your business logic. Here is a simple rule of thumb…the bigger the key man policy the less scalable the company is.

The dumb factor not only applies to talent, capital, and technology, but it also extends throughout the entire value chain. It applies to your branding, marketing, supply chain, and ultimately to your customer base. If your customer has to be a rocket scientist to understand your value proposition you have problems. If your employees cannot simply and effectively explain what you do you have problems.

The last point I want to cover is that of growth as it relates to dumb businesses. Both scalable and non-scalable businesses can achieve growth and sustainable success. However, it is important to understand the distinction between the two.  While a business cannot scale without growth, a business can grow without being scalable. If your business model requires implicit customer growth your business might grow for a time period certain, but it isn’t scalable.

The moral of this story is that while sophistication and complexity often go hand-in-hand, they don’t have to be synonymous. Focus on driving-down the most complex tasks to the lowest levels of the organization, and then leverage with talent, capital, and technology while avoiding the creation of margin eroding dependencies.

Related Post: Keeping it Simple