Tuesday, November 11, 2008

Personalities: business and personal

Book publishers have personalities. It is no doubt obvious, but it surprises me that publishers and other businesses have personalities. Some publishers have the personality of cooperation for the betterment of everyone. Other publishers have the personality of maximizing for themselves short-term gains with little regard for others, including those retail stores that are selling their products.

It is, in my humble view, through the difference in a business' purpose that the different personalities appear. Is the main purpose of the business to maximize short-term profits or to meet the needs of their niche market and ensure their long-term health?

Here is my view of business history since World War II. At the end of the war many returning GIs started their own businesses. There became Lapenski Fuel, Magdanz Hardware, Tuell Funeral Home, and Shorey’s Books to name a few. From what I recall and can determine, the purpose of each business was “to find a need in the community and meet it.” The local community was vital to each business. You can see that by the support that they gave to community organizations from supporting bowling teams and children’s sporting teams to Scouts and school projects. Ah, more community involvement: when the local drug store saw a student shopping in the middle of the day, the store owner would often phone the school to see if the kid had permission to be not-in-school.

Sometime later business thinking changed. Perhaps it was in the 1960s when the emphasis on the individual bloomed. Perhaps it was the same time that the view of sports changed to that famous statement “winning isn’t everything, it is the only thing.” The big business model expanded to state and to act as “the bottom line is all that matters” and “it’s nothing personal, it’s just business.”

I think that the results from this thinking changed to optimization of short-term profits for the owners while short-changing the long-term reliability of the business. The other event that encouraged this movement was the retiring of the many small business owners who began their businesses at the end of the war. A small business owner has a few choices for leaving the business: passing it on to the offspring, selling it to the highest bidder, or the famous “going out of business sale.” The offspring typically grew up with the business in the family and they knew the amount of commitment and effort that the parents put into the business, likely at the expense of better parenting. The offspring chose to do something else. Selling to the highest bidder encouraged larger businesses to expand by purchasing others. Offering shares of stock in the larger businesses allowed the managers to raise enough money to purchase more smaller businesses, whether funeral homes, hardware stores, or fuel companies, or bookstores.

Today’s result is that we have a few corporations that are now so large that the people and the government cannot allow them to fail because too many individuals will lose their jobs and the economy will become even worse.

When there are fifty auto manufacturers in the U.S. and three of them fail due to poor business practices of maximizing short-term gains for the owners and neglecting the long-term health of the business you have “a market correction” or a result of “you reap what you sow.” A few manufactures fail. But when the nation has only three major auto manufacturers and the decisions that they have made will put large numbers of wage earners out of work, then we have a nation-wide economic crisis. It is likewise in the financial industry where a few very large corporations have swallowed hundreds of small financial institutions over the years.

Each business has its own personality. We choose our friends in some respects by their personalities. Perhaps we choose the businesses we associate with in some respects by their personalities too. Can you name five businesses that you really enjoy working with and five that you work with but don’t enjoy? Does the personality of each business affect your feelings about those businesses?

The obvious next question is, “Why do you continue to work with those businesses that you don’t enjoy?”

1 comment:

zik said...

Great post John. I've had many discussions thought my life with old timers that feel the biggest loss America has felt over their lifetime was the slow death of the small town community.

I see the short sighted decisions business make all the time, especially in the banking industry. I once got charged $35 to make a payment on time by phone. At that point I realized that somebody running that business had made the conscious choice set up a trap for their customers. I paid off the card the next day, closed my account and started a business blacklist. It's a list of businesses that I'll never do business with again.

Now, years down the road I'm in a much better financial position. I regularly get calls from these business I've blacklisted asking me to come on board. I let them know my past experience and why I won't work with them. If enough people take this approach it will force businesses to change their approach, unfortunately people tend to forget when they've been wronged too easily.