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You live, you learn You live, you learn
by Joseph Gatt
2020-07-02 09:25:21
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Making the most out of experience in business.

Three examples of businesses that did not adapt, and what they should have done.

Example 1: Khaled is an Algerian immigrant in France and a black belt in Vovinam, Vietnam's national martial art. He and one of his masters discuss the idea of opening a Vovinam school in his local district village in Algeria.

The business idea is excellent. Extra-curricular activities in Algeria are very, very rare. The village does not even have a soccer club, despite the popularity of soccer. Parents would love to send their children to practice a martial art.

livlea01_400The school opens (minimal bureaucratic hassles because Khaled's uncle is a colonel in the army) and parents flock in the register their kids. Around 50% of the village's boys try to apply, demand is huge. Cash flows in.

Is that the end of the game? No. Khaled and his master see their dream turn into a nightmare. The children behave like monsters, are completely incapable of following orders, start fighting with each other like they are on Street Fighter, laugh, jump, and do not obey orders to stay still and quiet.

Khaled's master, who is Vietnamese, is shocked at what he sees, and returns to France. Khaled stays but stops the program for children, trains a few adults, makes very little money, then closes the school and goes back to France.

Example 2: Nancy and Brian open a restaurant in Dallas. They specialize in steak and barbecue, and want a family atmosphere for the restaurant.

Restaurant opens, and it's hard to see and empty seat. The restaurant becomes very popular, money flows in, life is good.

This bliss lasts for about 3 months before something happens. One couple keeps coming back every day, and argues very loudly, and the couple seems to be negotiating their divorce settlement at the restaurant. At this other table, this group of elderly men mistake the restaurant for a tavern, drink very heavily, yell, swear, and behave like they are in an adult pub.

Given the atmosphere, clients start avoiding the restaurant, and except for the crazy couple and crazy group of elders, no one really comes in.

Example 3: François opens a box factory near Paris, France. The concept is simple: he mass produces cardboard boxes on demand, with sizes on demand, for those who need the boxes.

Many people need boxes. Pretty much all factories, retail stores, movers and so on need boxes. Demand is good.

Demand starts pouring in, but François is disappointed and shocked at the hard-sales negotiating tactics his clients use. Most of them behave during negotiations in ways hinting that boxes should really be “free” and that a cardboard box is “useless” and that if “people don't charge for trash, so people should charge for boxes.”

François, out of fear of losing his clients, often gives in, and basically sells his boxes at a loss. François gets huge orders, but instead of making healthy profits, he is losing money.

So what should these guys have done?

-Coming up with rules: when you start a business, you will see the good side and the dark side of doing business. Some days will be great, some days will be a nightmare.

If you notice a pattern among the things that are giving you a nightmare, you need to come up with rules.

Example: the Vovinam master should have established rituals among his students, such as staying in line, and imposing a “silence” rule, and a rule that “anyone who speaks during the lesson will be suspended and will have to sit at the corner.” The restaurant could have improvised a “one drink only” rule for that specific table of drunken elders. The box factory guy should have imposed a rule according to which he can not sell his boxes below a certain price. 

-Getting help from someone to advise, establish and enforce the rules: Perhaps you need a lawyer to help you establish the rules. Perhaps you need someone in the community to help you enforce the rules.

Either way, in business, you want to try to get help to find ideas that can work. The Vovinam teacher should have called fellow masters in France or elsewhere and see how the deal with the problem. 

-Using experience: Here's a great trick. In the Vovinam lessons case, on the first day of the session, the master could have said the following: “look children, in the distant past, children were jumping all around and mistaking this hall for a boxing ring. In this enclosed area, you follow our rules. No talking, no fighting, and you follow the master's instructions.” 

Using body language and hints: In the restaurant's case, it can be rude to invite guests or clients to leave the restaurant. But what you CAN do is mess with their minds. You can play a song and repeat the same song endless times until they leave. You can blast music so loud that the ruddy tables can not help but leave. On a good day when there are a lot of tables, perhaps you could use soft, classical music, and if one table starts misbehaving you play heavy metal music, and switch back to classical as soon as the table behaves again. Then you hint the heavy metal thing was an unrelated accident.

Using learned techniques: In business, as you gain experience, you will, over the years, establish a repertoire of techniques that work. You will have studied human psychology. In the box factory case, François, during heated negotiations, should really tell his penny-pinching clients “so you guys are expecting me to starve and eat rats and flies just because I sell boxes for a living! Even box salesmen deserve to eat properly!” 

Using design and layout: Over the years, in any business, you will realize the importance of interior design and layout when it comes to running a business. Some retailers (such as grocery stores) change their layout and design frequently. Restaurants over the years learn the importance of space between tables and the height of tables and the placement of tables and so on. Meeting room design is also very important. Example: in meeting rooms, it's never clear who should sit where when two negotiators enter a meeting room. So a lot of times you have this “dance” where the two negotiators are awkwardly moving around to figure out where they should sit, which can affect the outcome of the negotiations. So the idea is you want to prepare by putting your name on your seating spot, and, for example, the logo of the invited company on the guest spot. That saves you from the awkward dance.

In sum, you gain experience when doing business. You want to use that experience to your benefit, learn from past mistakes, and perfect your business game. But keep in mind that your business will always be a work in progress. 

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