Ming the Mechanic
The NewsLog of Flemming Funch

Sunday, July 23, 2006day link 

 Believe Nothing
Just a little advice
[ | 2006-07-23 12:18 | 10 comments | PermaLink ]  More >

 No, That's Not an Open Market, This is an Open Market
Dave Pollard at How to Save the World, about the difference between the business done by big profit-for-shareholders driven companies, and that done by small, networked "natural" corporations that do things that actually need to be done.

Hierarchical Corporation's Offerings:
Advantages to the Customer
Natural Enterprise's Offerings:
Advantages to the Customer
  1. Recognized, popular brand (a salve for low self-esteem)
  2. Low price (possible because of massive government subsidies and favours like 'free' trade agreements)
  3. Efficiency (as long as your needs are standard)
  1. Personal relationship (knowledge, trust, partnership, friendship, even love)
  2. Customization (really have it your way)
  3. Local just-in-time service (responsiveness)
  4. Superior innovation
  5. Low pressure (since supplier is not dependent on growth for survival)
  6. Reciprocality (mutuality, flexible pricing)
  7. No corporatist costs to pass on (huge management salaries, huge margins to achieve 20%+ ROI demanded by shareholders, massive advertising, marketing, transportation and packaging costs)
  8. Resilience (reliability in the face of economic or other crises, due to superior improvisational capacity and focus on effectiveness rather than more vulnerable efficiency)
  9. Quality and durability (no crap from indifferent Chinese factories)
  10. Appeal to altruism (supplier is good to its people, its community, its environment, and good for the local economy)

Or, summarized well here:
Large, multinational, hierarchical corporations are not designed to provide customer service. They are designed to maximize margin and profit for senior executives and major corporate shareholders, by charging the customer as much as possible and giving them as little as possible. Under their charter (and under threat of dismissal or legal charges if they defy it) they can do nothing else; they are tied to this model of operation and decision-making. Worse, they have to grow each year or die. The model is inherently unsustainable, and Fortune 500 companies all, inevitably, crash and burn.

All Natural Enterprises need to do is focus on meeting customers' evolving unmet needs effectively. Talk to anyone who is buying from a small business with no growth aspirations, instead of from a 'competing' large hierarchical corporation, and in so many words they will tell you that is why. The chart at the top of this page summarizes the 10 enormous advantages a Natural Enterprise has over a hierarchical corporation, when it ignores all the absurd conventional wisdom (about growth, external financing, advertising, huge risk, endless struggle, the need to do everything yourself etc.) and just focuses on meeting customers' evolving unmet needs effectively.

As my book explains, doing this takes a lot of work, but it is low-risk, low-stress, low-cost, joyful work. It is the antithesis of what most people do (even those who should know better) when they actually start to establish their own business.
And this needs to be pointed out often:
There is no 'open market' or 'free market'. We live in the most tightly-controlled oligopolistic economy in history. These oligopolies buy politicians (and hence subsidies and favours), corner supply, buy up competitors to eliminate competition, and blanket the media with an unprecedented and relentless flood of propaganda called 'advertising'. We don't want to compete in that market, and we don't want to 'expand'. Growth is unsustainable, period. What we do instead is outmaneuver. We're better off starting businesses wherever there is a significant, researched, evolved unmet customer need that we have the competencies, knowledge and resources to fill. Every sector, every market has lots of them.
So, the anti-dote is to find unmet needs and meet them better and more efficiently than a large uncaring corporation can. Do that in every area, and network well.
[ | 2006-07-23 12:34 | 6 comments | PermaLink ]  More >

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