Business 101

I guess that everything you really wanted to know about business you already learned in kindergarten, or maybe even earlier. I was talking about some of my projects last night and summed up the same business process at work with each organisation. Basically, business is about connecting someone with a need to someone with a solution, usually through some kind of referral system.

For instance if I need to get my roof fixed, I ask some friends and neighbours to recommend a good contactor. I take this information and filter it by who recommended whom and what my needs are. I then contact my first choice, engage the contractor, and then become another referrer (positive or negative) of these services.

In the corporate world it’s the same. An executive sees a problem, goes through his or her network and comes up with some recommendations. If you can provide a solution, and have some kind of relationship with one of that corporation’s networks, then you have a chance of doing business with them (I know, RFP’s are different, but networks still have an influence).

Therefore, doing business is – the act of connecting a problem with a solution though a reputation-based referral system (network).

This underscores the importance of understanding how networks work. You are only as good as the reputation that you have within the referral networks of your prospective clients. This is temporary and requires constant work and a slip can lead to ruin (e.g. Vioxx, WorldCom, Kryptonite Locks, etc).

So don’t think "markets", think "networks".

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