Beyond set rules

Much of the education of an aspiring entrepreneur involves acquiring processes and methods. Most of them are a product of someone’s success captured in a formula or framework. An example is that of the business model canvas, a template for understanding the logic of a business; how a business runs and makes money. One can say that this is the condensed form of a business plan. Another example is that of a vision statement, where the formula goes like this: tell us where your business is in 5 or 10 years, use words such as to be number 1, leading or best, and state the area or location where this will happen. Do not get me wrong, these are all good and useful, however, more is needed in running a serious business. What else, aside from processes and formula are needed?

Let me introduce you to Bruno Munari an artist, designer, and inventor. He is best known for his “Useless Machine” artwork. Pablo Picasso considers him as the modern da Vinci. One can understand Munari’s design philosophy from this statement:
“Today it has become necessary to demolish the myth of the ‘star’ artist who only produces masterpieces for a small group of ultra-intelligent people. It must be understood that as long as art stands aside from the problems of life it will only interest a very few people. Culture today is becoming a mass affair, and the artist must step down from his pedestal and be prepared to make a sign for a butcher’s shop (if he knows how to do it). The artist must cast off the last rags of romanticism and become active as a man among men, well up in present-day techniques, materials and working methods. Without losing his innate aesthetic sense he must be able to respond with humility and competence to the demands his neighbors may make of him.

The designer of today re-establishes the long-lost contact between art and the public, between living people and art as a living thing. … There should be no such thing as art divorced from life, with beautiful things to look at and hideous things to use. If what we use every day is made with art, and not thrown together by chance or caprice, then we shall have nothing to hide.”

It was that statement that made me interested more in him because this statement can also be said about entrepreneurs today, and I thought that maybe we can learn a thing or two from him which we can relate to business. This is what I found from one of his essays:
“The secrets of any trade that is pursued with serious intentions are more than a series of rules and working methods based on logic and experience and applied so as to obtain the greatest possible effect with the least amount of effort. They also include a continuous process of observations, thoughts and ideas that are pushed ahead even if at the beginning they seem to have no logical basis.”

Munari’s statement tells us that aside from set of rules, or formula, one must also include observation, thoughts, ideas and action even if it seems illogical. The important element in his statement is observation and illogical action. First, observation. Based on his essay, he said that observation can stimulate deeper research. So, it is the ability to observe that gives rise to thoughts and ideas.

One day, Munari was driving, and he saw a bush and quickly observed. This observation triggered different images in his mind. The form of the bush reminded him of an exploding grenade. Then explosion triggered the image of fireworks which he then related to the growth of a tree.

Observation begins by watching something carefully and understanding the characteristics and behavior or something. The purpose of observation is to gather information and turn that information into something useful. In the case of Munari, the ideas became an essay, or it may have inspired his future artworks.

In business, one use of observation is understanding customers’ behavior; how they eat, what they do before they eat, what they do after they eat. In the famous case of Jollibee, it was observed through research that Filipinos smell their food before they eat and that gave birth to the famous “Langhap Sarap” tag line. The point is, by deliberately not relying on set of rules, adding observation and thoughts, it can bring about new ideas and insights.

Observation is so powerful that it is part of the famous Toyota Production system. One of their principles is called Genchi Genbutsu, which means go see for yourself. The idea is that the people do have to be in the place where things are happening to be able to see, observe and gather information.

One of the products of observation is Toyota Sienna. A Japanese engineer went to the US to study how families use their vans. To do this, he brought his family and went coast to coast by road. After weeks on the road, he reported his information and ideas. The result was a bigger leg room on the second row so that children will have space for their toys and other essential items. This simple change made Sienna an award-winning van.

The previous examples I gave have a logical basis since those doing the study were directly observing and having firsthand experience. What could be a business that was pushed even if the ideas born out of observation seemed illogical? Netflix mailed VHS to people at a time when people were used to going to Blockbuster Video to borrow and return movies. Another example is Pet Rock. It literally is a pet rock. An example or a stupid and illogical idea that sold millions of units in its first few months. These 2 examples were illogical, yet they became successful and I am sure that there are many others out there.

Business methods and formulas are there to serve as a guide, but those who are seriously committed to the business, must include continuous observation, thoughts, ideas and of course action even if there seem to be no logical basis. Who knows? That illogical idea may be the next Netflix or Pet Rock.

Chess and Business

Lately I have been playing a lot of chess, even learning from a coach. It was supposed to be my children who I wanted to put in the program, but they said they would rather not. Since I bugged the coach so much with questions, I decided to enroll myself rather than tell him he won’t be coaching my kids. No regrets! I am learning a new skill that I can play until all my hair is gone.

In those few sessions and from reading chess books, I learned some chess principles that can be applied in business. No, that would not be lessons like the typical plan and be a few steps ahead of your opponents. Here they are:

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  1. Pawns are important

We see pawns as dispensable pieces since there are 8 of them and they can only move in one direction. Once you push forward, you are already committed to it. That is why we only see them as tradable pieces early in the game. I was wrong in seeing pawns from that perspective. They are more important than I thought.

Pawns are the only pieces that can be promoted in exchange for captured pieces towards the end of the game. That gives them their value and they are the player’s last hope in the end game. 

Business application: Train your juniors for future promotion

Pawns are the office juniors and new hires in the company. They may be replaceable since there are numerous of them in the market but they are clean slates. This means that they can be trained, developed and molded to become heads who will replace leaders in the future. This assumes that these new hires have the right attitude.

  1. In the end, kings turn into warriors

The idea of chess is to win by capturing the opponent’s king while protecting your king. This is why there is such a move as putting the king inside the castle protected by pawns and a rook. But the case is different In the end game, when what is mostly left are a few pieces, maybe a pawn, knight or bishop and the king. During this part, the king is activated to support whatever piece is left. He goes behind, side or front, depending on who they are against. 

Business application: Give support to your team

In business the goal is profit and not to capture the competitor’s CEO. This means that the CEO is safe to be out there to give their support to the team without fear of being eaten by the rival company. Being out there means not sitting in the room and waiting for reports for analysis but seeing the action. By seeing the action, he will have a better perspective of the whole environment which then translates in better decision making. 

In Japan they have what they call genchi genbutsu or go and and see in english. This requires the manager to be out there in the field to go and observe. It is only when they see that they can  judge better and act accordingly.

  1. Protect your turf

The 4 middle squares in the chessboard are crucial in controlling the whole board. Putting the bishop there allows them to move along the long diagonals. Putting the knight there allows them to jump in different locations. If you don’t get to post any of your pieces there, your chances of winning drops. This is why at the start of the game, players try to dominate them. 

Business application: Get the best location for your business (retail)

Plenty of businesses do not want to spend on good locations, that means a place with high volume of traffic, primarily because of expense. However, a good location is less of a liability but more of an asset. Survey tells us that most people still buy in-store while walking in malls. 

So, how do you know which location is good for your business? One that offers the most traffic and less competition, unless you know your competitive advantage. Same goes with online platforms. Be in the most visited sites.

  1. Be excellent in every stage

There are 3 stages in chess, opening game, middle game and end game. Each stage requires different sets of skills. Opening requires that you develop pieces to give those at the back maximum freedom to move. Middle game requires decision making in terms of when and which to attack. End game requires excellence in cornering the king for a checkmate. The challenge however is that the opponent is doing the same thing and is on a quest to control the middle board creating congestion.

Business application:

In business there are different stages as well: startup, growth and decline and each stage requires a certain management skill and style. The startup requires the team to understand the logic of their business and this means identifying how the business makes money and where money comes from. There is a plan before the business starts but the plan does not always happen. In the growth stage, the phase when money comes in, the business must be able to understand and prepare for the decline stage. Here, the business is required to find innovation opportunities. The decline stage is when the business takes a different business model and applies the innovation it learned from the previous business stage.

Chess is not just a beautiful game that uses logic and creativity, it is also a wellspring of lessons that can be used in business.

Making Magic Real

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Sharing with you the transcript of my talk e given to the graduating EM students of UA&P. The first paragraph is something that will be appreciated by those who experienced the school.

Before we start, I want to give everyone a quick tour down memory lane. Back in 1995 when I was a freshman, UA&P was known as CRC or Center for Research and Communication. The CAS garden was still a driveway, and ACB was non-existent. When ACB was erected, we called it CAB, short for kabila ng CAS. The big parking building was an open parking space that turns into a mud pond during rainy season. The school was still a smoking campus. You just go out you room if you want a smoke. You can even buy cigarettes from the head guard. The ledge beside the entrance of CAS was only for the all-male EM student. But there was a time when the whole ledge was reserved for the EM students.

A lot changed but the core message of the school, blaze a trail, has not, just like my message today. It is not something new but a reminder which I think is much needed in our culture and society today.

If you watch movies or sitcoms made in today’s world, even the messages promoted on media, there are 2 prevailing ideas: you need to do things on a big scale and the need to be in control of things. My talk today is not about how to be successful or even about taking control, in fact, it is counterculture. It is about the other way around. This is what I propose: Do the little things and allow the unexpected, then you will experience magic in real life.

Magic has been my hobby for a long time now. It is a hobby I picked up from my dad. There are different types of magic: close up, parlor and stage. I do close up magic, I manipulate little objects like cards and coins.

What fascinates me about magic are 2 reasons: the wonder I get every time I see a good routine. Think about the last magic you saw that astonished you, that feeling is unlike any other feeling in this world and that same feeling is also the reason why I do magic, to bring and share magical moments. The other reason why magic fascinates me, is its philosophy and how it relates to life, which is where I draw my inspiration for today’s talk.

We all know that magic is not real, that behind every effect is a clever trick created to astonish or fool you. No, I do not fool people, I want to use magic to make them wonder. Now, why is it that every time we see magic, we feel astonished or amazed and even believe that some supernatural powers are behind the trick? That is because magic makes us experience the impossible and the unexpected, to see in front of us events that defy logic, a miracle: a coin disappears, a man walks through the great wall of China, or a thought of card, lost int the deck, appears in the most impossible location.

(Demo and analysis) Let me show you what I mean. I will not be doing magic but one of you will.

Wouldn’t it be great if we make magic real? So here are the 2 ways on how to make magic (to experience the impossible happen).

The magical moment that happened in the demonstration is because of the magic of little things and the magic of the unexpected. Let me start with the little things.

Magic happens because of the little things and moves magicians do that go unnoticed: The flicking of hands, the turning of head, and the waving of the fingers that manage the attention, or the subtleties that magicians do to convince you of a certain reality. All these little things put together leads to magical moments. The same principle applies to life.

The people who have made a dent in the universe believes in the magic of little things: one is the great painter Van Gogh who said, “great things are done by a series of small things brought together.” And then you have the great poet Maya Angelou who said, “courage-you develop courage by doing small things like just as if you wouldn’t want to pick up a 100-pound weight without preparing yourself.” Here you see, how greatness comes from the magic of little things.

Yes, little things, small work, lead to magic, to greatness. Just like in real life. However, this is counter to our culture which teaches us that we need to do big things, we need to have big vision, we need to be the most, we need to create a big impact, we need to influence, we need to change the world. Yes, it is good to go big, it’s good to have a big dream. I did not say be lazy. But this culture of big has undermined the power and magic of little daily tasks that build discipline, that build your effort muscle. This culture has put focus only on the big and the most. It led people to justify illegal means, to satisfy what they think is an end. It has disappointed people who judge themselves by the scale of their action because they think they are not enough.

This leads me to say we should not judge the little tasks and the necessary little things we need to do daily. As St. Escriva puts it, “Do not judge by the smallness of the beginnings. My attention was once drawn to the fact that there is no difference in size between seeds that give annual plants and those that will grow into ageless trees.”

In real life the little things that lead to magical moments are the little work we do for others like cooking for the family, bringing the children to school, treating a friend to lunch. Sometimes it is also about changing our little faults before changing the big social problems. Sometimes it is about fixing your bed before fixing the community. All these little things lead to moments that let others, and you, experience magical moments.

If we want to experience magic in real life, we need to give importance to the little things, those that go unnoticed, the things we do not want to do, the things we want others to do for us. In other words, we need to do the little things, the little tasks that are required of us because those little tasks create miracles in our lives. As Saint Francis of Assisi puts it, “Start by doing what is necessary, then do what is possible, and suddenly you are doing the impossible.”

The magic of the unexpected.

The magician’s code tells us not to share the secret and not to repeat the magic, the reason is to maintain the mystery. If you already know what the effect of the magic will be from the start, if you know a coin is to disappear, the moment will no longer be magical. This is the magic of the unexpected. The prolific writer, Paulo Coelho, puts it this way, “We will only understand the miracle of life fully when we allow the unexpected to happen.

When watching a magic show and unexpectedly, the coin transforms into silk, the audience will be in disbelief, then astonished. Unexpected transformation is magic. This is true in real life; we experience magic when we are transformed. Now, this pandemic is an unexpected event, something we did not welcome, and something we were forced to accept. It has transformed lives of many people. It has transformed businesses. It transformed schools. Some have gained, some have lost. Is it magical? Yes, to those who see meaning in the transformation. No to those who are still grieving and to those who still find it impossible to see something meaningful behind the painful event. However, I am hopeful that one day they look back and see that the painful journey was part of the magical transformation.

The unexpected is something we do not want in our culture today because we want everything in our control. That is what we were taught and made to believe. We don’t want to be disappointed, and we cannot bear the anxiety brought about by the unknown. We want to have explanation for everything, and we disregard those that we cannot logically explain as superstition. We want to satisfy ourselves the power to be in control. This gave rise to scientism, the belief that everything can be turned into an equation; that science can explain everything or the answer to all. I have nothing against science, in fact, I am thankful to science for what we have today but to believe that science is the answer to everything is not the way to go. If we go down this route, and try to control everything, we shut down the door that lets magic happen in our lives.

Making magic real means giving up what we cannot control and allowing God to work his magic in our lives, or at least accepting that we are not in control. To let go means letting God take care of the rest after doing everything humanly possible. It is not doing nothing at all.

Whatever that transformation or magic is, will happen in the most unusual time, when we least expect it. Nobody knows when and where. The beauty of magic lies in its unpredictability. The more mysterious, the more unexpected, the more magical it will be. You will know it when it happens, but you must first change the way you see, then what you see changes. As Roald Dahl, author of Charlie and the chocolate factory said, “watch with glittering eyes the whole world around you because the greatest secrets are always hidden in the most unlikely places. Those who don’t believe in magic will never find it.”

Today’s talk brings you to the place where the road forks. You can go back to common wisdom and pretend nothing happened and follow the old template, or take the other road, and make real magic happen with the little things and the unexpected.

I leave you with these words from Albert Einstein, “there are only 2 ways to live your life, as though nothing is a miracle or as though everything is a miracle.”

What I learned from Peter Drucker about Innovation

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Listen to the podcast. Click link below

Peter Drucker is an Austrian author, educator and management consultant. He has been described as the founder of modern management, and being modern means that he approaches business with science and reason. Joseph Schumpeter, an economist, who tackled the topics of entrepreneurship and innovation, a friend of his father, is Drucker’s major influence on the said topics.

By now, most of us have heard from many management consultants and business authors that innovation is the key to survival and success of a company. This idea has been reduced to a philosophy: innovate or die, which is attributed to Drucker, but this is still a matter of dispute according to a Harvard article entitled, Innovation on the fly.

Here, I will share lessons on innovation I have learned from reading Peter Drucker.

First I would like to say that for Drucker, innovation is beyond do or die. With how Drucker characterized and defined innovation, it is easy for writers to conclude that he would say those words. In a Harvard 2002 article, he said, “innovation is the specific function of entrepreneurship, whether in an existing business, a public-service institution or a new venture started by a lone individual in the family kitchen. It is the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth.”  What I got here is not about survival and success but innovation as a tool that shifts resources to greater yield.

Drucker, it seems, is less interested in survival and success of a company and more on the improvement and development of humanity and society. He wrote this definition that appeared in his book: technology, management and society. This is how it goes, [innovation is] “the purposeful & deliberate attempt to bring about, through technological means, a distinct change in a way man lives and his environment – economy, society, the community, so on….” So here we see that the consequence of innovation is social value. This point of view, to me, is crucial in presenting innovation because often companies chase innovation for money more than creating value for others.

So, the first lesson is that innovation leads to improvement of humanity and society. The second one is about what it takes to make successful innovation.

Creativity, defined as ability to generate novel and unique ideas, is often thought by many consultants a per-requisite for innovation. I also thought this was the case until I read Drucker and for him, Innovation “is capable of being presented as a discipline, capable of being learned, capable of being practiced. Entrepreneurs need to search purposefully for the sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation.” The focus here is the objective search for innovation, less creativity but more research discipline. This is not to say that creativity has no role in innovation, if creativity here is defined as being able to create and make things happen, then this is what Drucker wrote as one of the requirements for successful innovation,  “innovation is work…innovation becomes hard work, focused, purposeful work making very great demands on diligence, on persistence and on commitment. If these are all lacking, no amount of talent, ingenuity, or knowledge will avail.”

So that was the second lesson, innovation is about search and hard work. The last one is about risk taking.

There is no risk taking involved in innovation. This for me is a big takeaway being educated in an entrepreneurial environment that led me to believe in the propensity of entrepreneurs to take risks. In media and most mainstream books, entrepreneurs, and innovators are sculpted into figures that present them as risk-takers. This is not the case for Drucker when he wrote, “ most of them [innovators] in real life are unromantic figures, and much more likely to spend hours on a cash flow projection than to dash off looking for risks….. Successful innovators are conservative.” That was the last one.

I learned not to see innovation from success and survival point of view but from transformation perspective. That creativity plays a little role in successful Innovation because innovation is about hard work and research. Finally, innovation is done conservatively to the point of taking little to no risk.

Philosophy of Entrepreneurism

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For entrepreneurs, even a problem has the potential to be an inspiration for a new product. For entrepreneurs, even a crisis is seen as a turning point that can be of value. For entrepreneurs, no object or action or idea too small to make lasting effect. The result is creative destruction. For Joseph Schumpeter that is challenging the status quo by bringing something new. 

How does one who challenges the status quo thinks? How do they see the hidden diamond through all the layers of garbage?

Entrepreneurism is potentiality in everything; it is bringing a being’s existence to its higher essence while maintaining the being’s dignity.  Entrepreneurism is a philosophy of how one sees potential value in oneself and everything that occupies space. Alongside seeing the potential in everything is being immersed in existence. As Martin Heidegger said, being is always involved in doing something even when it seems that they are not doing anything; that could be thinking or doing. Entrepreneurism involves a way of seeing and Being immersed.

All who created value for themselves or for others, from Thales, the ancient Greek Philosopher, who controlled olive press supplies to the modern day entrepreneur, saw potentiality while others saw nothing, and seeing potentiality was not left as potential.

Entrepreneurism works within the framework of how Business is defined by Pope Francis in his encyclical, Fratelli Tutti: Business activity is essentially “a noble vocation, directed to producing wealth and improving our world”

So, business venture developed from entrepreneurism is first a noble vocation only to be followed by profit and world improvement. Now, if we see ourselves and the world around us as having the potential to generate value to someone then that value is to be noble or carry ideals. 

No one is born a natural entrepreneur but has the potential. A case of a student of mine may be used to illustrate potentiality. Most entrepreneurs come from entrepreneurial families, however, my student did not. This student is interested in the idea of doing business and so he enrolled himself in an entrepreneurial program and immersed himself in the ideas about entrepreneurship. He became a full fledged entrepreneur who is among the few who went straight to doing business after graduating college.

The hindrance to entrepreneurism is not the lack of creativity but the blindness to the dynamism of being. Enlightenment and modernity dared us to think and that led to what we have today; science and technology, invention and innovation. Enlightenment taught us to create and even self-create, to take control of our direction, hence individuality. I want to emphasize that there is potentiality in everything, a little caveat though: potentiality is a benefit inherent in our being so is limitation. In other words, we may have free thought to see potentiality in everything but limit the creation and self-creation so that it does not create a monster. 

Entrepreneurism is then the philosophy of seeing potential in everything as well as immersed in existence, but acting within the limit that preserves the dignity of the being.