The Answer to Business Success is 34

In the radio series and first novel, The Hitchhiker’s Guide to the Galaxy, a group of hyper-intelligent beings specially built a supercomputer called Deep Thought to answer life’s ultimate question of life, the universe, and everything. Deep Thought computed and checked the answer, which turned out to be 42. The problem was no one could figure out what the question was. The number 42 is a segue to the principles of 34, the answer to the ultimate question of business success. Unlike in The Hitchhikers Guide to the Galaxy, what follows is an explanation of what the numbers mean and how they can guide you to developing a successful business.

Over the years spent as a business consultant, I focused on serving small to medium-sized businesses. My client referrals mostly came from a partnering accounting firm and law office. The businesses I worked with fell into three groups. They were either a startup looking for capital, a business facing some serious financial trouble, or management was struggling to operate the business properly.

The failure rate of business in the first five years is about 50%. The cause is almost always due to the lack of innovation, quantification, and orchestration. Studies suggest that the lack of capital or funding is the number one cause of failure. Yes, the lack of money will kill any business. However, I believe this to be a symptom of a deeper underlying problem. Also, ineffective management often is cited as another leading cause of failure. Both speak to the absence of understanding the three fundamental building blocks of a successful business – innovation, quantification, and orchestration.

There is a distinct difference between a business that fails or marginally survives and one that becomes a cash cow. A cash cow business has innovated a concept that can offer unique and significant benefits in the customer’s eyes and has clearly defined who that customer is. Good research makes for good innovation. You can only achieve a unique product or service by developing a solution that services an exclusive customer base. A one-size-fits-all solution rarely succeeds and certainly does not guarantee exponential profits. With a clear definition of the business concept, efficient systems can be devised to deliver the product or service.

Quantification is establishing systems where the results can be measured and modified to deliver outcomes as efficiently as possible. Systems must be duplicatable for scale and capable of delivering consistent results. Successful franchise operations are an excellent example of scalable systems that can deliver dependable results. Building good processes when you know exactly the customer’s exact expectations is much easier and more precise.

Orchestration is the art of building sound systems and then finding the right people to operate them rather than the other way around. We all have heard of the business owner who, after a disappointing quarter, saying, “we need more sales, let’s hire more salesmen,” which is like a publisher saying, “I want to publish more books, let’s hire more typists.” Orchestration is the systemization of the three functions of a business. All businesses only do three things, generate leads, convert leads to customers, and customer fulfillment. All three taken together create a marketing result which is the exchange of goods and services for compensation. The extent of systemization of these critical functions will determine outstanding success.

To my earlier point of failure, being a result of the lack of capital, my experience suggests that a business that can show it (1) can methodically generate leads, (2) convert leads to customers, and (3) deliver on customer expectations built upon (1) an innovative concept that (2) is clearly defined and (3) has excellent operational systemization that (4) can be duplicated, never has any problem in attracting capital or financing. So the business success answer of 34 implies that a business has only three functions – to generate leads, convert leads to customers, and fulfill customer expectations built upon four criteria being an innovative concept, clearly defined with systematic delivery that is scalable. To my earlier point that lack of capital is not the cause of most failures but a symptom of poor business design and execution. If you can build a business on the principles of 34, you will succeed and never have any problems attracting capital or financing


Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: